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KPMG Survey: Executives in Technology, Banking & Financial, Retail, Food & Beverage Voice Strong Optimism for Improved Revenue, Profitability in 2010

Posted on: Thursday, 20 August 2009, 07:30 CDT

NEW YORK, Aug. 20 /PRNewswire/ -- The vast majority of senior executives across a broad range of industries say they expect business conditions to improve over the next year -- and more than half of them expect the U.S. economy to substantially recover by the end of 2010 according to a national survey conducted by KPMG LLP, the audit, tax and advisory firm.

The KPMG survey canvassed nearly 400 CEOs and C-Suite level executives across the Finance, Technology, Retail and Food and Beverage industries. Voicing strong optimism about the future, 76 percent of them expect business conditions in their sector to be better one year from now.

When asked if they thought the U.S. economic recovery would be substantially completed by the end of 2010, or continue into 2011, half of the financial services executives chose the end of 2010, as did a majority of executives in technology (57 percent), food and beverage (56 percent) and retail (52 percent).

Optimistic Business Outlook; Job Picture More Mixed

Strong majorities -- ranging from two-thirds to three-quarters -- anticipate improved revenue and profitability in their industries next year. The executives were not as optimistic about the employment picture -- about half of technology executives surveyed expect the job situation in their industry to be better while only about one-third of executives in the other industries thought so.

However, only a very small percentage of the respondents say they are considering or planning further headcount reductions.

"The results of this survey track with some of the most recent polls and data indicating that the worst of the economic downturn is behind us and businesses are beginning to think about how they will gear up for a recovery," said Phil Rohrbaugh, Vice Chair of Industries & Marketing for KPMG LLP. "Business and consumer confidence equates to a greater willingness to invest and to spend money. However, on the job front it is clear that companies will move cautiously in restoring the ranks of employees toward previous levels until they see more evidence of a sustained recovery."

"As companies change the way they operate, manage costs and evaluate growth opportunities emerging from the recession, industry knowledge and insights into the issues affecting their businesses are vital for firms like ours as we seek to meet their needs," Rohrbaugh added.

Triggers to Recovery

The business leaders in the survey were consistent across sectors with respect to the most important triggers to a U.S. economic recovery -- with consumer confidence being the key.

• In Finance, the most important recovery triggers reported by sector business leaders include a stabilized Real Estate Market, More jobs/employment, and Improved Consumer Confidence.
  

• In Technology, the most important recovery triggers reported by sector business leaders include: Improved Business Confidence, Improved Consumer Confidence, and Improved Business Spending.
  

• In Retail and Food and Beverage, the most important recovery triggers reported by sector business leaders include: Improved Consumer Spending, Improved Consumer Confidence, and More jobs/employment.
  

Technology: Leading the Recovery

Two-thirds of technology executives in the survey believe their industry will recover more quickly than the national economy. Silicon Valley-based executives were even more bullish, with 77 percent of them saying their recovery would outpace the U.S. one.

Eight out of ten executives in technology expect business conditions in technology to improve next year, with 78 percent expecting stronger revenue and 72 percent expecting improved profitability.

"These results are in line with recent earnings reports in the technology sector," said Gary Matuszak, partner, global chair and U.S. leader for KPMG's Information, Communications and Entertainment practice. "While it's far from blue skies in the industry, the worst seems to be behind us."

Financial Services: Lagging the National Recovery

Only one-third of executives in financial services and banking expect their industry will recover ahead of the national economic rebound although 78 percent of them expect business conditions to improve in their sector in 2010 -- with 72 percent expecting stronger revenue and 68 percent expecting improved profitability.

Additionally, 70 percent of the respondents thought employment in their sector would be stable or worse in 2010.

"The downturn impacted the banking and financial services sector to a greater degree than most industries and therefore it will take longer to recover," said Tony Anzevino, partner in charge of KPMG LLP's Banking and Finance practice. "And although the results of the survey suggest the industry has hit the bottom of the downturn, clearly there will be major challenges ahead."

Food & Beverage: Better Revenue, Profitability in 2010

Almost three-quarters (72 percent) of executives in the food and beverage industry expect business conditions to improve next year. An equal percentage expects improved revenue and 65 percent anticipate better profitability. Six in ten thought their industry would recover ahead of the U.S. economy.

Overall, 86 percent of respondents see an improving jobs picture in 2010, with 54 percent saying the employment picture in the industry would be stabile and 32 percent saying it would be better than 2009.

"These results show a cautiously optimistic outlook from industry execs, even as the underlying volatility in the food and beverage sector continues to develop based on companies wrestling with the sting of higher costs, shrinking consumer spending and working capital constraints," said Pat Dolan, KPMG LLP's national line of business leader -- Consumer Markets and U.S. Sector leader -- Food Drink and Consumer Goods.

Retail: Guarded Optimism

Seven in ten retail executives in the KPMG survey said they expected business conditions to be better in 2010, with 68 percent and 66 percent expecting improved revenue and profitability respectively. About half (49 percent) expect their industry to recover ahead of the U.S. economy.

Overall, 84 percent of respondents expect to see an improving jobs picture in their sector next year, with 52 percent believing it will be stable and 43 percent saying it will be better than 2009.

"The outlook for the year ahead should be heartening since the importance of the U.S. retail industry to overall economic health cannot be overstated," said Mark Larson, KPMG global retail sector leader. "The KPMG survey findings reflected an expression of guarded optimism among retail executives given the industry's challenges and the latest report from the Commerce Department's that retail sales dropped in July."

Headcount Reduction/Cost Cutting: Major Response to the Downturn

When asked about their efforts to adjust to the economic downturn, the most frequently cited activity among virtually all of these C-class executives was Reducing Employee Headcount. On average 65 percent of those surveyed reported that they had made staff cuts.

Study Methodology

The KPMG study was conducted from May through July of 2009 and reflects the response of 390 CEOs and C-Suite level executives -- 130 each from technology and financial services and 65 each from retail and food and beverage.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International. KPMG International's member firms have 137,000 professionals, including more than 7,600 partners, in 144 countries.

The views and opinions expressed in the survey results are based on the responses of the survey participants and do not necessarily represent the views and opinions of KPMG LLP.

Contact: Ray Zardetto KPMG LLP 201-307-8494 rzardetto@kpmg.com George Ledwith KPMG LLP 201-307-8498 gledwith@kpmg.com

SOURCE KPMG LLP

Source: PR Newswire

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