MAJORITY of Philippine chief executive officers (CEOs) are still confident about their revenue growth prospects in the next 12 months despite threats from elevated inflation and economic uncertainty, a survey showed.
Results of the survey conducted by PwC Philippines in partnership with Management Association of the Philippines (MAP) showed that 79% of 157 CEOs are optimistic that their companies will post revenue growth in the next 12 months.
However, this is slightly lower than last year’s survey which showed a peak in optimism among CEOs. Last year, 87% of the 119 CEO respondents said that they are confident of topline growth in the next 12 months.
This year’s survey showed 39% of CEOs are “very confident” of revenue growth, compared to 43% last year.
Meanwhile, 88% of the CEOs said that they are confident that their company will see revenue growth in the next three years. This is slightly lower than the 89% seen in the previous survey.
“We were expecting everything to normalize but it didn’t happen… Inflation actually peaked in the second half of last year and that was after we ran the survey. So, it contributed to some of the losses this year,” Trissy M. Rogacion, deals and corporate partner of PwC, said at a briefing.
Mary Jade T. Roxas-Divinagracia, PwC deals & corporate finance managing partner, said the survey results might have been affected by base effect.
“Last year, we were coming from 2021 where they might have lower revenues. So, therefore, one could only expect that from a very low base there is no way to go but up,” she said.
The survey also showed 83% of the CEOs said that they are confident about their industry’s prospects for the next 12 months.
“However, businesses face threats from inflation, macroeconomic instability, cyber risks, and supply chain constraints. To address these challenges, CEOs are reducing operating costs, diversifying product/service offerings, investing in upskilling their workforce, and deploying technology in their operations,” PwC said in a statement.
The survey showed 39% of CEOs believe their companies will be “highly exposed” to inflation in the next 12 months, and 51% said they are “slightly exposed.”
Inflation is expected to remain elevated this year, amid rising prices of food and fuel.
Meanwhile, Ms. Rogacion said the government’s performance may have contributed to the CEOs’ high level of optimism.
According to the CEOs, the government is currently “performing well” in forging relationships with other nations (64%), pushing for infrastructure development (62%) and promoting foreign investments (46%).
However, only 3% of the CEOs said that the government is currently performing well in fighting corruption. Last year’s survey showed that 67% of the 119 CEOs said that they see corruption to delay the economy’s recovery.
“The government’s support is crucial in ensuring that businesses continue to thrive amid the challenges,” said Roderick M. Danao, chairman and senior partner of Isla Lipana & Co. and PwC, adding that the government’s performance could still be improved.
Of the 157 CEOs, 89% said that improving the ease of doing business could boost collaborations with other countries.
Around 83% of the CEOs surveyed said their companies have recovered from the impact of the coronavirus disease 2019 (COVID-19) pandemic.
“Last year, our report was also optimistic, but the CEOs back then said that there are still uncertainties. In fact, 52% of the respondents last year said that the Philippines will need around two years to recover from the pandemic,” Ms. Rogacion said.
This year, 62% of CEOs expect revenue growth from pre-pandemic levels, versus only 42% in the 2022 survey. This is mainly due to the full reopening of the economy, lifting of travel restrictions and normalizing consumer demand.
“According to the CEOs, factors that helped drive growth include full reopening of the economy during the year, lifting of all travel restrictions, improved supply chain conditions and normalizing consumer demand,” said Ms. Rogacion.
Although most of the CEOs showed optimism and are expecting growth, Ms. Rogacion said 17% of the CEOs said that they have yet to recover from the impact of the pandemic.
The survey also showed 22% of the CEOs said that they are expecting this year’s revenues to be lower than pre-pandemic levels.
According to the survey, 41% of the CEOs expect their company to only be economically viable for up to six years if they continue running on their current path.
“One of the initiatives that these companies identified that can help them remain viable is diversification,” said Ms. Rogacion.
The survey showed that top initiatives that they are planning to revisit in the next 12 months are: entering a new territory outside the Philippines (28%), entering a new industry (26%), and completing a domestic merger or acquisition (20%).
“To help support these initiatives, most CEOs said that they are looking to invest in relocating their company operations in response to climate risks, deploying technology and automating processes and systems,” said Ms. Rogacion.
Asked what they consider as a priority investment in the next twelve months, 75% of the CEOs said that they are looking to invest in upskilling the company’s workforce in priority areas. — Justine Irish D. Tabile