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New Year Predictions

Forecasting remains more art than science.
Janet Kersnar, CFO Europe Magazine
December 8, 2008

Profit warnings are nothing unusual these days. But in November Axa's had a surprising twist — the French insurer used the warning to also announce to investors that it was abandoning its longer-term strategy. Set four years ago, the targets for doubling revenue and tripling operating earnings by 2012 were looking, in the words of chairman Henri de Castries, "increasingly obsolete." The news cost the French insurer dearly, with its share price tumbling nearly 20% on the day of the announcement.

Axa isn't the only company losing confidence in its forecasts. A recent survey by our sister magazine in the US found a surprisingly large number of CFOs stating that they were struggling to see more than two or three months ahead. And according to preliminary results from our quarterly Business Outlook Survey, their counterparts in Europe share their frustration, with their ability to forecast cited as one of the top concerns.

It's a topic that we explore further in "Future Tense." As difficult as planning and forecasting has become, quitting the predictions game altogether is clearly not an option. Many CFOs are redoubling efforts with ever greater urgency to provide their companies — and investors — the best possible insight into future performance.

While predicting with certainty how much inventory to hold or staff to hire may still feel like art rather than science, there is one thing that CFOs can be sure of — cash will be more important than ever in 2009. With that in mind, "Cashing In" presents a new ranking of corporate Europe's most efficient cash managers.

In this credit-starved economy, markets are rewarding companies that keep a tight grip on cash, which often means keeping a lid on dealmaking. As "Freeze!" details, the effort required to get deals off the ground in 2008 left many CFOs in the cold, as tasks that were once routine — from bond issues to buybacks to budgeting — became remarkably hard. CFOs can expect more of the same in the year ahead.




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