Press release

11 Oct 2022

CEOs brace for perfect storm as they rewrite investment plans

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  • Aftermath of the COVID-19 pandemic, geopolitics and inflation compound outlook
  • Geopolitics see 95% of respondents reshaping their investment plans
  • 52% of respondents will use M&A to weather challenging times ahead

 

CEOs are actively looking for ways to get ahead of the triple threat of the aftermath of the COVID-19 pandemic, increasing geopolitical tensions and inflation, according to the EY CEO Outlook Pulse - October 2022.

The survey, which recorded the views of 760 CEOs across the globe on their prospects, challenges and opportunities, found that more than four in 10 (43%) CEOs identify a continuation or return of COVID-19 related disruption, including new lockdowns and supply chain pressures, as the greatest risk to their business.This risk is perceived to be higher in Asia-Pacific (48%) than in the Americas (43%) or Europe (41%). Adding to the perfect storm that CEOs are bracing for, 35% of respondents point to geopolitical tensions and 43% to inflation as critical risks to growth, with the majority (69%) predicting inflation will negatively impact their company’s performance and growth. A sizable minority (16%) identified inflation as the single-biggest threat to their company’s revenue and margins.

As a result of increased geopolitical tensions, 95% of respondents are reshaping their investment plans and operations. According to the EY survey, geopolitical risks mean CEOs are delaying planned investments until the situation improves (43%). Many respondents are reconfiguring their company’s supply chains (40%) and relocating operational assets (39%); while a third are exiting businesses in certain markets (30%) or stopping planned investments altogether (29%).

Without doubt, geopolitical tensions, the war in Ukraine and resulting inflation pressures mean we are facing an uncertain outlook. However, now is not the time to batten down the hatches to weather the storm but instead to identify opportunities to reshape operations and realise value. The majority of CEOs (72%) intend to radically transform operations in the next two years to compete effectively in their industry, with ESG high on their agenda. CEO’s will need to reassess business portfolios to navigate the economic turbulence; this will lead to transaction activity over the next 12 months, including divestments of non-core assets but also acquisitions of new capabilities in order to transform their organisations.
Peter Latos
Head of Strategy and Transactions for EY Romania
Strategic investments to mitigate risks with more than half of CEOs planning M&A

Building sustainability as a core aspect of all products and services to engage customers (39%) and using technology to boost customer loyalty (34%) are the top two actions responding CEOs are planning to pursue to weather a challenging six months ahead.

 

At the same time, a significant majority (64%) intend to increase capital investment versus just 14% who plan to reduce. More than half (52%) plan to make an acquisition in the next year, while almost half (40%) of respondents plan to be active on all fronts, looking to acquire, divest and enter new joint ventures  or strategic alliances. When it comes to their next transaction, 21% of respondents said that this will be driven by the need to invest in an early-stage business to enhance their existing portfolio and access new talent and 15% said that they will look to acquire a business in an adjacent sector to open new growth avenues. 

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EY30 for Romania

In order to mark the anniversary of 30 years of uninterrupted activity in Romania, EY Romania launched its EY: 30 for Romania campaign, which shall unfold throughout 2022. The campaign shall turn the spotlight on projects, figures and occasions that marked Romania’s progress over the last 30 years and shall include collaborative community engagement initiatives alongside EY partners and associates.

About EY Romania

EY is one of the world's leading professional services firms with 365,399 employees in more than 700 offices across 150 countries, and revenues of approx. $45,4 billion in the financial year that ended on 30 June 2022. Our network is the most integrated worldwide, and its resources help us provide our clients with services allowing them to take advantage of opportunities anywhere in the world.

With a presence in Romania ever since 1992, EY is the leading company on the market of professional services. Our more than 900 employees in Romania and Moldova provide integrated services in assurance, tax, strategy and transactions, and consulting to clients ranging from multinationals to local companies.

Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. In 2014, EY Romania joined the only global competition dedicated to entrepreneurship, EY Entrepreneur Of The Year. The winner of the national award represents Romania at the world final taking place every year in June, at Monte Carlo. The title of World Entrepreneur Of The Year is awarded in the world final. For more information, please visit: www.ey.com

 

About the EY 2022 CEO Outlook Pulse Survey

The EY 2022 CEO Outlook Pulse Survey aims to provide valuable insights on the main trends and developments impacting the world’s leading companies as well as business leaders’ expectations for future growth and long-term value creation.

It is a regular pulse survey of CEOs from large companies around the world, conducted by Longitude Research Limited, a Financial Times company.

In August 2022, Longitude surveyed on behalf of the global EY organization a panel of 760 CEOs in 10 countries and across six industries. Respondents represented the following industries: advanced manufacturing and mobility, consumer products and retail, energy and resources, financial services, health sciences and wellness, technology, media and telecoms.

Surveyed companies’ annual global revenues were as follows: less than US$500m (20%), US$500m– US$999.9m (20%), US$1b–US$4.9b (30%) and greater than US$5b (30%).

The CEO Imperative series provides critical answers and actions to help CEOs reframe their organization’s future. For more insights in this series visit ey.com/en_gl/ceo