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U.S. CFOs Remain Cautious About The Economy In Bank Of America Merrill Lynch 2013 CFO Outlook

One area of significant growth in the latest CFO Outlook was international activity, with 73 percent of CFOs saying their companies are involved in non-U.S. markets. That’s up from 54 percent in the previous annual survey, and executives reported increased buying from non-U.S. markets (62 percent vs. 47 percent last year), selling to non-U.S. markets (55 percent vs. 34 percent) and operations in non-U.S. markets (30 percent vs. 15 percent).

“Companies across the U.S. are doing more business around the world, which adds another dimension to their financial needs,” Borthwick said. “We’ve seen this expansion and diversification with many Bank of America Merrill Lynch clients, who value their access to our expertise in providing global solutions at the local level.”

Other notable findings in the 2013 CFO Outlook:
  • Among potential impacts on the U.S. economy, the effectiveness of U.S. government was listed as a concern by 64 percent of executives. In addition, 63 percent listed the U.S. budget deficit and 62 percent listed healthcare costs.
  • The top financial concern for CFOs’ own companies was healthcare costs, chosen by 58 percent. That was followed by revenue growth at 43 percent and cash flow and corporate tax rates, both at 34 percent.
  • Regarding revenues and profits, 56 percent of CFOs expect revenue growth – same as last year – while 40 percent anticipate a growth in profit margin, down slightly from 41 percent last year.
  • Only 17 percent of CFOs expect their companies’ borrowing needs to increase in 2013, down from 28 percent in 2012, while 17 percent expect those needs to decrease, up from 12 percent.
  • Regarding financing, 19 percent of executives expect the cost of capital to increase, down from 21 percent last year.
  • M&A activity could pick up slightly, with 22 percent of CFOs saying they expect to participate in a merger or acquisition in 2013, up from 18 percent a year ago.
  • CFOs increasingly expect labor costs to rise, with 72 percent predicting higher costs per employee, compared with 58 percent last year.
  • The top reasons CFOs cited for not hiring additional employees in 2013 were insufficient customer demand (56 percent), uncertainties about higher healthcare and insurance costs (32 percent), and worries about the sustainability of the economic recovery (29 percent).

Now in its 15 th year, the CFO Outlook is conducted by Granite Research Consulting and helps Bank of America Merrill Lynch better understand how financial executives view the economy. The results were compiled from interviews of 602 CFOs, finance directors and other executives selected randomly from U.S. companies with annual revenues between $25 million and $2 billion.

Interviews were conducted from mid-November 2012 to mid-January 2013. The margin of error is +/-4 percent. The full report will be available in March.

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