COVID-19 CFO Pulse Check

Conducted April 8–30, 2020

68% 85% 81%

91%Nearly all CFOs step on the brakes 91%

89%

83% 78% 75%

Overview of CFOs’ Perspectives on the COVID- Crisis

Source: BCG’s COVID- CFO Pulse Survey.

of CFOs see demand shock as the biggest challenge

expect sales to decrease

expect profits to decline by >%

U shape

L shape

have significant cash constraints

Many CFOs see severe financial impacts Recovery

of CFOs see opportunities arising

of CFOs have implemented a COVID-task force as a short-term reaction

in CFOs plan for cost reductions in their function

Working capital optimization

Company-wide cost reduction

Capex reduction

Process optimization New ways of working Digitization

87% 51%

25%44%

15%

COVID-19

CFOs’ Perspectives on theCOVID- Situation

CFOs’ Short-Term Response

CFOs’ Midterm Response

1

2

3

Biggest immediate impacts of the COVID- crisisRespondents (%)

Expected impact on total salesRespondents (%)

68

40

37

32

Reduction in demand

Supply chain issues

Operationalissues

Client credit defaults orcredit quality deterioration

Increase by >%

Increase by %–%

Decrease by %–%

Decrease by %–%

Decrease by >%

33

62%

89

22

29

A Serious Reduction in Demand Is the Biggest Immediate Impact

Source: BCG’s COVID- CFO Pulse Survey.Note: Respondents were able to choose multiple answers.

PERSPECTIVES ON THE COVID- SITUATION

PERSPECTIVES ON THE COVID- SITUATION

Expected impact on total salesRespondents (%)

Increase by >%

Increase by %–%

Decrease by %–%

Decrease by %–%

Decrease by >%

33

62%

17%89

22

29

Current cash situationRespondents (%)

Significant constraints

Small constraints

No constraints

33

59%

41%

45

41

14

15%

64%

Expected impact on total profitsRespondents (%)

Increase by >%

Increase by %–%

Decrease by %–%

Decrease by %–%

Decrease by >%

20

312

21

44

Many Companies Have Been Hit Hard, Creating a Sizable Gap Between the Haves and the Have Nots

Source: BCG’s COVID- CFO Pulse Survey.

COVID-19Decrease

Increase

Increase

Average expectedsales impact

Average expected profit impact

Decrease

PERSPECTIVES ON THE COVID- SITUATIONRetail, Automotive, and Transportation Companies Have Been

Hit the Hardest

Source: BCG’s COVID- CFO Pulse Survey.Note: Industries with three or fewer respondents were excluded.

Automotive

RetailTransportation

Professional servicesCapital goods

Consumer durables

BanksMaterials

Insurance

Health care

Food, beverage, and tobacco

Telecommunications

Food and staples retailing

Technology hardware SoftwarePharmaceuticals

Diversified financialsEnergy

Media and entertainment

PERSPECTIVES ON THE COVID- SITUATION

Expectations for new opportunitiesRespondents (%)

Significant

Mostly top-line growth

Mostly cost reduction

Some

No

ObservationsExpectations for new opportunitiesRespondents (%)

Despite the Adversity, % of CFOs See Opportunities

16

68

16

51

49

Expectations show only a small variation among industries, regions, and company size:

CFOs in health care, financial services, and insurance are the most optimistic

CFOs of Asian companies are the most pessimistic

CFOs of midsize companies see opportunities mostly to reduce costs

•

•

•

Source: BCG’s COVID- CFO Pulse Survey.

PERSPECTIVES ON THE COVID- SITUATION

Expected shape of the global economic recoveryRespondents (%)

V shapeA return to the preshock economiclevel and growth rate

W shapeMultiple, repeated V shapes

U shapeA longer dip before returning to the preshock economic level and growth rate

L shapeThe economic level and growth remain at sustained lower rates

Observations

Most CFOs Expect a Long Downturn, Showing Great Pessimism

Source: BCG’s COVID- CFO Pulse Survey.

8

16

51

25

The expectations of European and US CFOs align with the overall findings of a U-shaped recovery as the base case

Asian CFOs are more skeptical

CFOs’ Perspectives on theCOVID- Situation

CFOs’ Short-Term Response

CFOs’ Midterm Response

1

2

3

Immediate actions already taken or consideredRespondents (%)

Immediate liquidity protection taken or consideredRespondents (%)

Adaptation of short-term planning and forecasting

Provision of liquidity support to supply chain partners

Setup of COVID- task force

Liquidity protection

Client credit management

Adaptation of reporting

Stopped or delayed investments

Setting up a dedicated cash office

Suspending dividends orbuybacks

Taking advantage of emerging government aid

Drawing on lines of creditor revolving loans

Stopped or delayed payments

Preparing to raise new debt or equity

CFOs Have Responded to the Crisis with the Right Short-Term Moves

Source: BCG’s COVID- CFO Pulse Survey.

SHORT-TERM RESPONSE

88

81

78

58

58

22

66

43

37

37

25

22

24

77%

SHORT-TERM RESPONSE

Immediate actions in investor communicationsRespondents (%)

Increased communication about corporate actions and initiatives

of CFOs have increased investor communication or revised guidance

Increased transparency on crisisimpact and risks

Provided revised guidance

No change

Delayed or reduced investor communication for now

CFOs Recognize the Value of Communicating More with Investors During the Crisis

Source: BCG’s COVID- CFO Pulse Survey.

3

34

27

16

20

CFOs’ Perspectives on theCOVID- Situation

CFOs’ Short-Term Response

CFOs’ Midterm Response

1

2

3

Expected type of actions to prepare for the midtermRespondents (%)

Working capital optimization

Some Significant

M&A

Company-wide cost reduction

Capex reduction

Tightened performance management

Rework of risk management

Cost reduction in the finance function

Systematic transformationof the finance function

M&A levers

Proceeding with ongoing transaction

Divesting to generate cash

Search for acquisition opportunities

CFOs Have Responded to the Crisis with the Right Short-Term Moves

Source: BCG’s COVID- CFO Pulse Survey.Note: Because of rounding, not all percentages add up to . Excludes “None” and “Don't know” answers.

MIDTERM RESPONSE

40

40

48 40

45 42

55

58

42 16

834

13

25

52

51

37

21

42

Expected type of cost-reduction levers to be employed in the finance functionRespondents (%)

Process optimization

Some Significant

Examples

Outsourcing

New ways of working

Digitization

IT infrastructure optimization

Organizational optimization

Simplification

Service level reduction

To Take Costs Out of the Finance Function, CFOs Are Focusing on Process Optimization, New Ways of Working, and Digital

Source: BCG’s COVID- CFO Pulse Survey.Note: Because of rounding, not all percentages add up to . Excludes “None” and “Don't know” answers. AI=artificial intelligence; ERP=enterprise resource planning; RPA=robotic process automation.

MIDTERM RESPONSE

42 16

50

51

43 32

52 20

48

42

824

27

148

22

33

27

Process redesign, standardization

Lean, agile, daily routines

Next-level automation, RPA, AI, self-service

ERP standardization, data storage, cloud

Functional rightsizing, delayering, reorganization

Reduce number of profit and cost centers, simplify data dimensions

Bundling, relocation, low-cost providers

Reducing level of reporting or planning