Sweden: Increasing Optimism Despite Sovereign Unrest
Optimism continues to increase among Swedish financial officers, according to SEB’s Financial Officers survey. Swedish companies have been largely unaffected by recent sovereign unrest and financial market turbulence. In fact, Swedish CFOs have said that the business climate has improved significantly since the previous survey in February. Concerns regarding falling demand are decreasing and companies believe Asia will drive growth. More companies expect to increase staffing and profit expectations for 2010 remain high.
SEB’s survey, addressed to around 70 of Sweden’s largest companies, shows that respondents are becoming increasingly positive towards the current situation. SEB’s Financial Officers’ Index for May published today stands at 62, up from 60 in February.
“A majority of financial officers expect volume increases to support higher profitability this year, while cost cutting is declining in importance. Indeed, some 61% of respondents forecast improved profitability in 2010 compared to 2009,” said Ebba Lindahl, head of credit research at SEB and co-author of the report along with Disa Hammar, credit analyst at SEB merchant banking.
Improved Employment Outlook
“Following extensive lay-offs last year, many companies now expect to employ staff. One third of respondents believe they will recruit more personnel in Sweden, a significant improvement since February. Prospects for employment abroad are even more positive with 40% of respondents expecting to enlarge payrolls,” said Hammar.
Higher Raw Material Costs
“Financial officers are increasingly concerned about the rising cost of raw materials. While none of the financial officers expressed concerns regarding this in February, 14% now regard higher prices as potentially problematic. At the same time, companies are less worried about falling demand, even if it still remains the greatest perceived threat, with 58% of respondents declaring it to be their biggest concern compared to 89% a year ago,” said Lindahl.