Basic business survival will remain a challenge in 2010: Ernst & Young   |  February 11, 2010  

New survey of global execs cites fragile optimism going into new year

TORONTO, Feb. 11 /CNW/ - An increasing number of global corporations are looking to pursue new opportunities in 2010, but 53% of respondents to a recent Ernst & Young survey still agree that simply surviving 2010 remains a challenge.

"Make no mistake: it's not business as usual out there. But a spirit of optimism is slowly invigorating many of the world's markets," explained Jeff Charriere, Canadian Markets Leader, Ernst & Young. "With 34% of survey respondents hoping to pursue new opportunities in the year ahead, the outlook is definitely more positive than in January 2009, when only 19% said the same."

As part of Ernst & Young's ongoing Lessons from change program, the Economist Intelligence Unit carried out a study of 876 C-suite and board level executives in November and December 2009.

Charriere isn't surprised the survey showed a pickup in confidence. "The massive global government stimulus is working its way through the economy, and the larger developing and emerging economies beginning to rebound. But what we're seeing is still a cautious optimism as companies tiptoe into 2010."

This most recent survey in the Lessons from change series also found the following:

    -   More than a third of companies surveyed report that earnings before
interest, depreciation and amortization had grown by over 5% in the
last 12 months.
-   Remarkably in the context of a global recession, 7% of all businesses
have seen a more than 20% increase in earnings. This indicates that
some have found opportunities despite the adversity seen in recent
months.
-   Approximately a third predict revenue growth returning within six
months; another third say by the start of 2011; a final third say not
for at least two years.
-   Only 1% are pessimistic enough to say revenue growth would never
return to pre-recession levels.
-   Three quarters of respondents believe there are still major cost
savings to be made in their organization through improved efficiency.
-   A high proportion of companies (72%) feel they needed to increase the
flexibility of their operations through reducing fixed costs,
particularly among support functions and improving productivity.
-   Half of all businesses agree that restricted access to capital will
continue to constrain their growth prospects over the next year, yet
a significant minority of respondents (30%) say they intend to take
an aggressive growth-oriented stance as the demand outlook in their
markets is improving.
-   A further 49% say they intend to pursue growth opportunistically, as
the prospects for recovery in their markets remain unclear.

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