Ernst & Young - A Vision For Growth

A vision for growth
Business outlook survey Mid-year edition Romania 2013
What is A vision for growth?
A vision for growth explores perceptions of top executives from major companies operating in Romania regarding the business outlook for 2013. This is the mid-year edition.
This Ernst & Young report is based on a survey of 103 C-suite level executives from companies in various sectors, who provided a perspective on how the domestic business environment is perceived at the middle of 2013. The questionnaire was open during the period 1-14 June 2013. This slide deck shows comparative data between January and June 2013 findings.
The perspective of turnover growth has declined during the last 6 months, however the numbers stay strong, with 69% of respondents thinking that their turnover will grow during 2013. The percentage of companies that expect a growth of 5-10% has decreased by 5 pps, while the percentage of companies anticipating a negative growth of -5-10% has increased by 5 pps.
5 main
findings
4
Companies expectations regarding profit growth remain largely the same in June compared to January. If in January 68% or respondent companies were expecting an increase in profits, in June the percentage decreased by only 2 pps.
More than half of the companies (53% in June) predict a growth in salary level of 510%, while many of them continue to not anticipate any change (45% in June) in salaries during this year. Regarding the industry sector that respondent companies are active in, the trust in its potential has decreased significantly between January and June, the proportion of the companies not at all confident going up by 17 pps, while the percentage of somewhat confident companies decreased by 12 pps.
In June, new products, cost reduction and talent acquisition are trending as reaction to the business environment during the last year, while improving productivity and restructuring saw a declining importance.
A Vision for Growth 2013
Page 2
A vision for growth

Business outlook survey Romania 2013 - Mid-year edition
Although 2013 is a challenging year in many respects, companies keep positive on their expectations to grow.
Bogdan Ion, Country Managing Partner
Page 3 A Vision for Growth 2013
Please indicate the main three elements that you use to define success. (multiple answers)
Question 1
Financial results Market share Customer satisfaction Brand awareness Number of years on the market Number of employees Going public (IPO) 0%
Total Respondents: 103
93% 94% 64% 72% 77% January June 8%
61% 38% 50%
6%
3% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The importance of the financial results has remained constant. The interest regarding market share and brand awareness has increased by 8 pps and 12 pps, respectively, while customer satisfaction as an indicator of success has decreased by 16 pps.
How much do you expect your turnover to grow in 2013?

(one answer)
Question 2
Exceeding 31% +20 to 30% +10 to 20% +5 to 10% 0% -5 to -10%
3% 9% 12%
13% 11% 46% 17% 16% 4% 3% 2% 9% 51% January June
-10 to -20%
-20 to -30% Exceeding -31% 0%
Total Respondents: 98 (Skipped this question: 5)
1%
2% 10% 20% 30% 40% 50% 60%
The perspective of turnover growth has slightly declined during the last 6 months. The percentage of companies that expect a growth in turnover of 5% to 10% has decreased by 5 pps, while the percentage of companies anticipating a negative growth of -5% to -10% has increased by 5 pps.

(one answer)
Question 2(a) By industry

Exceeding 31% +20 to +30% +10 to +20% 11% 9% 18% 22% 13% 33% 13% 33% 56% 18% 11% 7% 19% 11% 9% 27% 13% 7% 34% 11% 9% 13% 33% 11% 11% 18% 4%2% 4% Chemicals
Construction / Real Estate

Food & Beverages / Agriculture Industry / Manufacturing IT
+5 to +10% 4% 2% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing
6%
6% 6% 6% 6% 11% 100% 100% 22%
25% 22%
Retail and Wholesale trade Services
Telecom / Media
Tourism 50% 40% 50% 60% 70% 80% 90% 100% Transportation Other 0% 10% 20% 30%
50%
It seems that companies in Manufacturing, Pharmaceuticals/Healthcare, and Retail are more positive and expect their turnover to grow during 2013.
Page 6

(one answer)
Question 2(b) By company revenues

Exceeding 31% +20 to +30% +10 to +20% +5 to +10% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%
33% 11% 18% 9% 20% 11% 45% 31% 56%
67% 22% 9% 16% 27% 24% Less than 1 M EUR 1-10 M EUR
6%
31%
33% 50%
13%
6%
33%
44%
33% 50%
10-50 M EUR 50-100 M EUR 100 M EUR +
100%
50%
0% 10% 20% 30% 40% 50% 60%
50%
70% 80% 90% 100%
67% of respondents that expect to have a turnover growth of more than 31% are from companies with revenues exceeding EUR 100M, the other 33% being from companies with turnover of less than EUR 1M.
How much do you expect your profit to grow in 2013?

(one answer)
Question 3
Exceeding 31% +20 to 30% +10 to 20% +5 to 10% 0% -5 to -10% -10 to -20% -20 to -30% Exceeding -31% 0%
11% 5% 9% 16% 22% 34% 23% 22% 6% 5% 2% 1% 3% 3% 5% 10% 15% 20% 25% 30% 35% 40% 37% January June
Companies expectations regarding profit growth largely stayed the same in June compared to January. If in January 68% or respondent companies were expecting an increase in profits, in June the percentage decreased by 2 pps. However, in June 11% of respondents say expect their profit to grow by more than 31% in 2013.

(one
answer)

Exceeding 31% +20 to +30% +10 to +20% 13% 6% 12% 9% 27% 60% 19% 18% 13% 9% 6% 9% 27% 9% 20% 19% 6% 15% 13% 6% 9% 18% 20% 6% 6% 12%
Chemicals
Construction / Real Estate Food & Beverages / Agriculture Industry / Manufacturing IT
+5 to +10% 3% 9% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing
9%
20%
18%
20% 50%
27%
20%
14%
9% 5% 9% 5% 5%
20% 50% 20%
Retail and Wholesale trade Services Telecom / Media
100%
Tourism
33%
0% 10% 20% 30% 40%
33%
50% 60% 70%
33%
80% 90% 100%
Transportation Other
In terms of profit growth, a good mix of companies by industry sector appear positioned in the 5-10%, as well as in the 10-20% range.
Page 9

(one
answer)
Exceeding 31% +20 to +30% +10 to +20% 20% 13%
45% 20% 19% 30% 18% 40% 50% 100% 33% 33% 25% 27% 36% 20%
27% 40% 6% 9% 5% 20% 50%
27%
38% 30% 27% 20% Less than 1 M EUR 1-10 M EUR
+5 to +10% 3% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

14% 20%
10-50 M EUR 50-100 M EUR 100 M EUR +
33%
0%
20%
40%
60%
80%
100%
In terms of revenue segmentation, companies with less than EUR 1M revenue do not expect a decrease in profits during 2013. However, only companies with revenues exceeding EUR 10M expect to register high growth profit rates, of over 31%.
How much do you expect your number of employees to grow in 2013? (one answer)
Question 4
Exceeding 31% +20 to 30% +10 to 20% +5 to 10% 0 -5 to -10% -10 to -20% -20 to -30% Exceeding -31% 0%
2% 3% 2% 2% 5% 17%
21%
56% 55% January June
14% 13%
4% 3%
2% 10% 20% 30% 40% 50% 60%
Companies expectations with regards to the evolution of employees number are similar in June compared to January 2013: in both editions, 26% of respondents expect a growth in number of employees, while 55% in June, versus 56% in January, will not hire new staff during 2013.
Exceeding 31% +20 to +30% +10 to +20% 80% 6% 6% 12% 19% 23% 18% 6% 19% 15% 67% 50% 0%
50% 100%
50%
Chemicals Construction / Real Estate Food & Beverages / Agriculture 20% Industry / Manufacturing IT
+5 to +10%
18%
6%
12% 7%
6%
12%
Pharmaceuticals / Healthcare
Power / Energy / Mining Publishing & Printing Retail and Wholesale trade Services Telecom / Media Tourism Transportation Other
0% 4% 9% -5% to -10% -10% to -20% Exceeding -31% 10% 8%
4% 6% 6% 7% 2% 15% 15%
9% 2% 6% 2% 15% 33% 8%
50% 40% 50% 60% 70% 80% 90% 100%
20%
30%
Staff growth of more than 10% is envisaged to happen mostly in the manufacturing industry.
Page 12
Exceeding 31% +20 to +30% +10 to +20% +5 to +10% 0% -5% to -10% -10% to -20% Exceeding -31%
50% 50% 40% 18% 6% 8% 24% 15% 23% 67% 100% 0% 10% 20% 30% 40% 50% 60% 24% 31% 15% 20% 35% 11%
50% 50% 40% Less than 1 M EUR 12% 28% 38% 33% 12% 1-10 M EUR 10-50 M EUR 50-100 M EUR 100 M EUR +
70%
80%
90%
100%
Again, the higher growth rates, of more than 20% in terms of number of employees, will be seen at large companies, with revenues exceeding EUR 10M.
Page 13
How much do you expect the salary level in your company to grow in 2013? (one answer)
Question 5
+10 to 20%
2% 1% 55% 53% 42% 45%
+5 to 10%
0%
January June
-5 to -10%
1% 1%
-10 to -20% 0
0.1
0.2
0.3
0.4
0.5
0.6
More than half of the companies (53% in June) predict a growth in salary level of 5-10%, while many of them continue to not anticipate any change (45% in June) in salaries during this year.
Page 14
How confident do you feel regarding the growth of your industry for the next 6 months? (one answer)
Question 6
Very confident
4% 4%
Somewhat confident
Slightly confident
45% 40%
Not at all confident
16% 33% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
The level of trust in the industry sector that respondent companies are active in has decreased significantly between January and June, the proportion of the companies not at all confident going up by 17 pps, while the percentage of somewhat confident companies decreased by 12 pps.
How confident do you feel regarding the growth of your company for the next 6 months? (one answer)
Question 7
Very confident
25% 15%
Somewhat confident
Slightly confident
32% 31%
Not at all confident
3%
15% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
If in January only 3% of respondents were not at all confident about the growth of their company, in June this percentage has gone up to 15%, while the proportion of very confident companies has gone down to 15%, from 25% in January.
Please describe the main strength of your competitors in the local market, Romania. (one answer)
Question 8
45% 40% 40% 40% 39%
35%
30% 25% 20% 15% 10%
31%
June 14% 12% 5% 14% January
5% 0% Low cost
3%
2%
Strong brand awareness (trust)
Distribution channels
Partnerships
R&D
The importance of low cost as competitive advantage has increased, while the one of partnerships has decreased by 9 pps. Strong brand awareness continues to be perceived as the main strength of competitors.
To what extent do you expect your customers' demands to change in the next 6 months? (one answer)
Question 10
70% 60% 51% 50% 40% 47% 66%
32%
30%
June January
20%
10% 2% 0% Stay the same
2%
Somewhat change
Change dramatically
In June, more companies compared to January do not expect any change in customer demand, while 51% assume that it would somewhat change.
Page 18
What impact will the change in customers' demand have on your company in the next 6 months? (one answer for each option)
Question 11 (a)
Operations
January 18% 63% 19%
No impact Moderate impact High impact June 30% 51% 19%
0%
Total number of responses:
20%
40%
60%
80%
100%
In June, more companies believe that the change in customers demand will have no impact on their operations. The percentage grew by 12 pps.
Page 19
Question 11 (b)
Marketing
January 21% 60% 19%
No impact
Moderate impact High impact June 29% 57% 14%
0%
Total number of responses: 576
20%
40%
60%
80%
100%
In June, more companies believe that the change in customers demand will have no impact on their marketing efforts.
Page 20
Question 11 (c)
Brand positioning
January 33% 47% 20%
No impact Moderate impact High impact
June
40%
41%
19%
0%
20%
40%
60%
80%
100%
In June, the percentage of companies that say change in customers demand will have no impact on their brand positioning increased by 7 pps.
Page 21
Question 11 (e)
Organizational structure
January 36% 54% 10%
0%
20%
40%
60%
80%
100%
In June, more companies believe that the change in customers demand will have no impact on their organizational structure, with a correspondent decrease in the respondents that believe this change will have a moderate impact on their organizational structure.
Question 11 (f)
Innovation strategy
January 23% 53% 24%
0%
20%
40%
60%
80%
100%
In June, same as in January, a little over 20% of the companies believe that change in customers demand will have a high impact on their innovation strategy.
Page 23
Which of the following best describes the primary strategy considered by your company for financing its investments in the past year? (one answer)
Question 20
Other (intercompany loans, own resources, reinvested profit)
31% 28% 47% 46% 18% 19% 4% 4%
Our company used bank loans to finance its investments

Our company attracted share capital increase to finance its investments Our company used venture capital to finance its investments Our company issued stocks to finance its investment
January June
3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
In the June edition, companies expressed an increased consideration for issuing stocks for financing investments during the last year, but the main financing resource remains the bank loans.
Page 24
Which of the following best describes your company's preferred strategy for financing its investments in the following 6 months? (one answer)
Question 21
50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Bank loans Share capital increase Venture capital Stocks Other (intercompany loans, own resources, reinvested profit) 6% 8% 2% 20% 20% June January 27% 27%
45% 45%
The most preferred strategy for financing future investments is through bank loans, embraced by 45% of companies, in both January and June. 2% of the responding companies plan to issue stocks.
Page 25
Which of the following best describes the reaction of your company to the business environment in the past year?
(one answer)
Question 22
Cost reduction Productivity increase New products 16% 8% 4% 5% 2% 2% 2% 1% 1% 1% 5% 3% 0% 5% 10% 15% 20% 25% 30% 35% 13% 23% 22% 30% 28% 33%
Restructure of the organization

Talent acquisition Reduced market coverage Attraction of EU funds Reduce capital investment Merger and Acquisitions Other
January June
In June, new products, cost reduction and talent acquisition are trending as reaction to the business environment during the last year, while improving productivity and restructuring saw a declining importance.
Which of the following actions will your company take to increase sales? (one answer)
Question 23
Introducing new products and/or services for existing client and to attract new clients Opening new distribution channels/reorganizing distribution to use multiple channels Enter new geographic markets for existing products/services 31% 33% 33% 28% 26% 24% 13% 10% 8% 9% 5% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 20% 75% 72%
Increase investment in marketing and sales

Adapting existing product/service for new geographic markets Cutting prices Increase prices Merging with and/or acquiring competitors to increase market share
January June
18%
In order to increase sales, most companies chose, both in January and June, to introduce new products and/or services for existing clients and new distribution channels. Also, more companies think about M&A as action to be taken in order to increase sales. Regarding price cutting, we can see a decline of 8 pps between January and June as an action to increase sales.
Page 27
In case of stagnation/decline in your current markets what will be the step/s your company will pursue in the next 6 months?
(all that apply)
Question 24
80% 70% 60% 50% 40% 30% 20% 10% 0% Stay on the market until it is stable again in order to secure it and increase the trust level
76% 67%
46% 39%
June 14% 15% 10% 7% January 2% 2%
Transform the market trough innovative approaches
Grow on the market through Mergers and Acquisitions
Seek external Leave the market funding to secure and seek new ones our position on the market
In case of stagnation/decline of markets, more companies consider seeking external funding in June compared to the January edition. All the other options are less taken into consideration in June.
Page 28
Demographics
The results of this survey reflect the responses received to our questionnaire in the period between 1 Jun. and 14 Jun. 2013, from 103 top executives of major companies operating in Romania.
Page 29
Demographics
Romanian company (yes/no)
80%
69% Bussiness to Bussiness 74% 60% 57% 67%
Business type
70%
50% 43% 40% 31% 30% June January Bussiness to Consumers 29% January 22% June
20% Bussiness to Government 4% 4%
10%
0% No Yes 0% 20% 40% 60% 80%
Page 30
Demographics
Industry sector
Industry/Manufacturing Food & Construction/Real Pharmaceuticals/Heal Power/Energy/Mining Services Retail & Wholesale Telecom/Media Other IT Chemicals Publishing & Printing 7% 15% 24% 23% 100 M EUR +
Company revenue level
29% 27%
7% 10% 12% 9% 10% 8% 9% 7% 8% 7% 4% 6% 13% 5% 2% 5% 2% 4% 1% 4% 1% 1%
50-100 M EUR
12% 12%
January June
10-50 M EUR
38% 33%
January June
1-10 M EUR
14% 21%
Tourism
Transportation 0%
Less than 1 M EUR
7% 7% 0% 10% 20% 30% 40%
10%
20%
30%
Page 31
Demographics
Entity type Job title of respondent
CFO/Treasurer/Controll er CEO/President/Managi ng director Manager 22% Publicly listed 20% January June Private Equity Portofolio Company 10% 8% SVP/VP/Director Head of department Other 0 0.2 0.4 0.6 0.8 Other C-level executive Head of business unit Board member 8% 11% 4% 5% 7% 5% 3% 3% 5% 2% 4% 1% 3% 1% 0% 10% 20% 30% 40% 50% January June 34% 40% 32% 32%
67% Privately owned 72%
Government/Stateowned enterprise
1%
Page 32
Next edition will be issued in January 2014. Thank you!


Ernst & Young - A Vision For Growth

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Ernst & Young - A Vision For Growth

Încărcat de

Drepturi de autor:

Formate disponibile

A vision for growth

Business outlook survey Mid-year edition Romania 2013

What is A vision for growth?

A vision for growth

93% 94% 64% 72% 77% January June 8%

61% 38% 50%

How much do you expect your turnover to grow in 2013?

Exceeding 31% +20 to 30% +10 to 20% +5 to 10% 0% -5 to -10%

13% 11% 46% 17% 16% 4% 3% 2% 9% 51% January June

How much do you expect your turnover to grow in 2013?

Question 2(a) By industry

Construction / Real Estate

+5 to +10% 4% 2% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing

6% 6% 6% 6% 11% 100% 100% 22%

Retail and Wholesale trade Services

A Vision for Growth 2013

How much do you expect your turnover to grow in 2013?

Question 2(b) By company revenues

33% 11% 18% 9% 20% 11% 45% 31% 56%

10-50 M EUR 50-100 M EUR 100 M EUR +

How much do you expect your profit to grow in 2013?

How much do you expect your profit to grow in 2013?

Question 3(a) By industry

+5 to +10% 3% 9% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

Pharmaceuticals / Healthcare Power / Energy / Mining Publishing & Printing

Retail and Wholesale trade Services Telecom / Media

A Vision for Growth 2013

How much do you expect your profit to grow in 2013?

Question 3(b) By company revenues

Exceeding 31% +20 to +30% +10 to +20% 20% 13%

27% 40% 6% 9% 5% 20% 50%

38% 30% 27% 20% Less than 1 M EUR 1-10 M EUR

+5 to +10% 3% 0% -5% to -10% -10% to -20% -20% to -30% Exceeding -31%

10-50 M EUR 50-100 M EUR 100 M EUR +

2% 10% 20% 30% 40% 50% 60%

0% 4% 9% -5% to -10% -10% to -20% Exceeding -31% 10% 8%

50% 40% 50% 60% 70% 80% 90% 100%

A Vision for Growth 2013

A Vision for Growth 2013

2% 1% 55% 53% 42% 45%

A Vision for Growth 2013

35% 23% January June

Not at all confident

Total Respondents: 93 (Skipped this question: 10)

40% 39% January June

Not at all confident

Total Respondents: 93 (Skipped this question: 10)

June 14% 12% 5% 14% January

Strong brand awareness (trust)

A Vision for Growth 2013

No impact Moderate impact High impact June 30% 51% 19%

A Vision for Growth 2013

A Vision for Growth 2013

No impact Moderate impact High impact

A Vision for Growth 2013

No impact Moderate impact High impact June 41% 49% 10%

No impact Moderate impact High impact June 35% 44% 22%

A Vision for Growth 2013

Other (intercompany loans, own resources, reinvested profit)

31% 28% 47% 46% 18% 19% 4% 4%

Our company used bank loans to finance its investments

3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%