Basic business survival will remain a challenge in 2010: Ernst & Young

(Toronto – 11 February 2010) An increasing number of global corporations are looking to pursue new opportunities in 2010, but 53% of respondents to a recent Ernst & Young survey still agree that simply surviving 2010 remains a challenge.

"Make no mistake: it’s not business as usual out there. But a spirit of optimism is slowly invigorating many of the world’s markets," explained Jeff Charriere, Canadian Markets Leader, Ernst & Young. "With 34% of survey respondents hoping to pursue new opportunities in the year ahead, the outlook is definitely more positive than in January 2009, when only 19% said the same."

As part of Ernst & Young’s ongoing Lessons from change program, the Economist Intelligence Unit carried out a study of 876 C-suite and board level executives in November and December 2009.

Charriere isn’t surprised the survey showed a pickup in confidence. "The massive global government stimulus is working its way through the economy, and the larger developing and emerging economies beginning to rebound. But what we’re seeing is still a cautious optimism as companies tiptoe into 2010."

This most recent survey in the Lessons from change series also found the following:

• More than a third of companies surveyed report that earnings before interest, depreciation and amortization had grown by over 5% in the last 12 months.
  
• Remarkably in the context of a global recession, 7% of all businesses have seen a more than 20% increase in earnings. This indicates that some have found opportunities despite the adversity seen in recent months. 
  
• Approximately a third predict revenue growth returning within six months; another third say by the start of 2011; a final third say not for at least two years. 
  
• Only 1% are pessimistic enough to say revenue growth would never return to pre-recession levels.
  
• Three quarters of respondents believe there are still major cost savings to be made in their organization through improved efficiency. 
  
• A high proportion of companies (72%) feel they needed to increase the flexibility of their operations through reducing fixed costs, particularly among support functions and improving productivity. 
  
• Half of all businesses agree that restricted access to capital will continue to constrain their growth prospects over the next year, yet a significant minority of respondents (30%) say they intend to take an aggressive growth-oriented stance as the demand outlook in their markets is improving. 
  
• A further 49% say they intend to pursue growth opportunistically, as the prospects for recovery in their markets remain unclear.

About Ernst & Young 

Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities to achieve their potential. For more information, please visit ey.com/ca.