More executives now say that a "culture of cash" is embedded in their company than they did in April.
Preserving capital
Most executives believe that their enterprises are fundamentally healthy. Only 20% now see restructuring a core business as a "great or greatest" restructuring need.
At the same time, 28% classify restructuring a subsidiary or non-core business in order to spruce it up for disposal as their greatest need, while 33% say they still need to restructure a business they have already acquired.
Finally, the goal of restructuring remains the same as in the first three surveys: 33% would like to see performance improvement, a greater number than those that want to see operational restructuring (22%) and liquidity and capital management improvements (17%).
To what extent do you anticipate the need to restructure the following?
Great or greatest need to restructure a core business
Great or greatest need to restructure a subsidiary/non-core business before disposal
Great or greatest need to restructure an acquired business
Optimizing capital
Companies continue to look hard at their operational fitness. The top five areas of focus for Brazilian organizations for the next 12 months are:
- Cash flow/liquidity
- Operational efficiencies/cost reduction
- Customer segmentation and profitability
- Balance between fixed and variable costs
- Capital structure and effectiveness/performance monitoring of subsidiary business (tie)
Perhaps in keeping with the generally cautious mood of the market, the emphasis on cash flow/liquidity has grown since April, rising from 66% to 75%. At the same time, concern about operational efficiency and cost reduction has stayed high (52% in October compared to 54% in April).
More executives now say that a "culture of cash" is embedded in their company than they did in April.
At the same time, executives are much more concerned now about drawing in more cash as well. Interest in customer segmentation and profitability has surged, rising as a noted focus from 17% in April to 34% in October.
There are several possible reasons for the Brazilian focus on cash:
- The Brazilian Real is now under considerable pressure as the dollar continues to sink on world markets, leading to pressure on some exports.
- The volatility of commodity prices in the past few years, particularly for agricultural, petrochemical and mining businesses, could lead to unexpected cash pressures.
- The lack of interest in debt and equity as capital-raising tools makes cash a much more important alternative for investment.
- Balance between fixed and variable costs
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