*Companies To Cut Capital Expenditure By 82% As Revenue Decline By 10%
As the novel Coronavirus continues to take its toll on global economies, a new report by PricewaterhouseCoopers, a global network of firms with specialty in accounting, taxation, assurance, auditing and consulting services has revealed that revenue of top African companies will decline by as much as ten percent this year.
According to the report entitled “PwC’s COVID-19 CFO Pulse Survey“, the firm maintained that in it survey of businesses across Africa, Chief Financial Officers (CFOs) of top African companies indicated that the COVID-19 crisis has drastically impacted on their businesses.
PwC reveals in its survey findings that about 89% of the respondents believe that their companies’ revenues and profits would decline by 10% and 9%, respectively. This development has correspondingly forced them to explore cutting down on capital expenditure by 82% and operational costs by 36% , respectively.
A part of the report revealed : “As they manage their process, business leaders — including the CFOs we’ve interviewed — will be faced with a series of decisions that will have a wide-reaching impact: on their own financial future; on the well-being of their employees, customers and other stakeholders; and on the well-being of the society at large.”
According to the report, African CFOs who responded to the survey believe that their companies would eventually get back to normal.
In precise terms, 38% of the respondents said their companies would bounce back within three months of the post-COVID-19 era.
Unfortunately, the reports said nobody knows with certainty when the pandemic would end. This is because there is no cure/vaccine in the meantime, even as the virus continues to spread in parts of Africa.
The PwC report went further to indicate that the CFOs, who typically favor cost containment strategies, disclosed that their companies are now focusing on slashing most of their costs on capital expenditure (82%). Similarly, they are also cutting costs by reducing their workforce (52%) and operations (36%).
“CFOs clearly favor a strategy of cost containment and of the 33 African respondents who said their company is pursuing this course of action, the majority are focusing on facilities and general capital expenditure (82%) followed by investment in the workforce (52%) and operations (36%)” the report stated.
