CFO Frontline Report 2023: the profession looks up.
This year the study is entitled “The CFO in the face of uncertainty” (El CFO ante la incertidumbre). And this was the hot topic of conversation at the report's presentation, held at Bankinter's head office. In the current context, the Finance area has had to split up, or even multiply itself: as a guarantor of financial management and as the CEO's right hand in leading the organisation's strategy and showing solvency before investors.
Two roundtables moderated by Emma Montserrat, head of Corporate Banking and deputy general director at Bankinter, featured the CFOs of AERTEC, Avangreen, CIE Automotive, Domingo Alonso Group, IFC (Cantabria Labs), Sprinter and Teknia. If we were to summarise the day in a word cloud, there would be three concepts in large print:
uncertainty, optimism and prudence.
CFOs today, in 5 headlines
- Information from other departments and details are the main source of concern for CFOs in Spain. Last year, this ranking was led by financial and accounting legislation, which now moves to fourth position, after treasury and the relationship with the CEO.
- 64% of CFOs see themselves as number 2 in the company, behind the CEO. 31% believe that they are in third position. Only 5% of the CFOs surveyed see themselves in fourth or fifth place of relevance within their organisation.
- A higher, more versatile finance function that absorbs other areas. CFOs view their roles as strategy-oriented. It happens in all sectors, but especially in industry. Almost 70% of respondents regard themselves as a strategist, 8% more than one year ago.
- The half-full bottle: 69% of CFOs see a moderate growth scenario and 16% even describe it as high. Only 15% see stagnation or recession on the horizon.
- The CFO's recipe for the current storm and for consolidating the path of profit involves rising prices (this is recognised by 72% of respondents), transferring them to the end customer, as well as reducing costs (67%). As phrased by Javier Hernández Bermejo, Bankinter's head of Medium-sized Businesses, most of them have gone into “protection mode”.
Uncertainty becomes business as usual
“There is increasing uncertainty. Uncertainty has become business as usual. There is no choice. It is what it is”, said Jacobo Díaz, CFO of Bankinter, during the report's presentation.
The results are good. Are we doing something right?
This session was marked by the great paradox of our economic environment. War, geopolitical crisis, pandemic, inflation, interest rates, shortage of raw materials. A storm that cannot deny an apparently contradictory empirical fact:
“What are CFOs doing to enable us to — in this perfect storm, in one of the worst years in history, 2020 — achieve a positive net profit?”, asked Iratxe Pardo, CFO and head of treasury at CIE Automotive. “First”, she answered her own question, they “stay ahead, try to smell the trends. And above all diversify. A key element is geographic, technological and commercial diversification”.
And a more transversal model in companies for more efficient management. It is as if this tsunami has accelerated processes, such as digitalisation, and triggered a level of transparency and communication never before seen in organisations.
A thesis supported by Julio Antoranz, CFO of Domingo Alonso Group: “The figures are better than forecast. We have had a perfect storm for 3 years, continuous crisis, but it has made us better. It has kept always on guard and ready for everything”.
“The reality in this first quarter is still growth; prices are stabilising; energy is giving us some breathing room; and sales have grown. We're still sailing the storm pretty well”, explained José Pérez-Mila, CFO of Sprinter, for whom dark clouds, for a commercial firm, begin to form due to some stagnation in employment and lower household savings.
A CFO's concerns are currently internal, according to Manuel Gómez Gutiérrez-Torrenova, CEO and CFO of Avangreen. “There are a number of radically different variables: the cost of capital and the cost and shortage of raw materials”, said the energy company's CEO. In the technology sectors, the funnel created with microchips and that is affecting project execution has not yet been overcome.
Julio Antoranz also talked about internal concerns. “The focus is not so much on business, since there is a growth in sales; the challenge is internal, in structure. Now the market pulls, but you have to work harder to have the same sales. And you will earn less. I don't think it's bad. The wrong thing to do would be to keep the mindset of a few years ago. We must accept that interest rates are here to stay, just like the volatility of inflation. It's a new economic environment”, said the CFO of Domingo Alonso.