Administration September 10, 2001

Quarter of CFOs See No Direct Impact on Bottom Line From Attacks

October 9, 2001 (PLANSPONSOR.com) - Over half (57%) of chief financial officers (CFOs) surveyed expect the impact of the September 11th terrorist attacks to negatively impact their company's earnings over the coming year ? but a quarter expect no direct impact.
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Six percent expect the events to have a positive impact on their company’s earnings, and the rest aren’t certain.

Turnaround

Despite that impact, CFOs still predict moderate corporate earnings growth of 8.4% (median of 5%) on average during the next 12 months, though down from the 10% growth predicted in June, according to Financial Executives International (FEI) and Duke University’s Fuqua School of Business.

Eighty-eight percent of CFOs expect an economic rebound in 2002; 17% predict the first half and 71% the second half. Twelve percent expect the recovery will come in 2003. Large firms (those with sales of at least $5 billion annually) are less optimistic than smaller firms.

Individual Actions

Nearly half (49%) of the CFOs say that their firms initially postponed or canceled company-related travel in response to the terrorist attacks, but only 8% say that travel is curbed indefinitely. Large companies were most likely to take action, with over two-thirds (69%) temporarily curtailing travel.

Forty-five percent of firms report plans to increase security measures in response to the terrorists attacks, and firms in the northeast are most likely to implement stricter security measures, with 56% reporting plans to do so. Large firms were more likely to take additional measures (85%) than smaller firms (28%).

Slightly more than half (51%) say that worker productivity has decreased due to the terrorist attacks, with high-tech industries reporting a somewhat higher decline (66%).

Industrial Strength?

According to respondents, the banking and finance industry will be most affected, with 80% of those CFOs predicting a reduction in their industry’s outlook, while 71% of the retail/wholesale industry expect a drop in industry earnings as a result of the attacks.

The special CFO survey interviewed the CFOs of U.S. companies by an anonymous e-mail survey in the first week of October. Six hundred sixty-nine CFOs responded from companies representing a range of industries, geographic areas and revenues.

– Nevin Adams                                           editors@plansponsor.com

Detailed results of the survey are available at http://www.duke.edu/~jgraham/fei.html or http://www.duke.edu/%7ejgraham .

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