(BRIEF) According to the most recent EY CEO Outlook Pulse survey, CEOs around the world are positive about their ability to drive earnings expansion and their ability to generate profits in 2024, even as they acknowledge existing global economic challenges. The survey of 1,200 CEOs across 21 countries shows that a significant majority (64%) expect profit expansion to increase, while 63% expect the ability to generate profits to improve. CEOs are demonstrating new resilience and confidence, focusing on efficiency, price management, and technology adoption, particularly synthetic intelligence (AI). In addition, the survey highlights expectations of an increase in mega M&A deals (M
(PRESS RELEASE) LONDON, January 30, 2024 – /EuropaWire/ – CEOs are positive about their ability to drive earnings expansion and their ability to turn a profit in 2024 despite global economic headwinds, according to EY’s latest CEO survey, Outlook Pulse.
EY’s quarterly survey of 1,200 global CEOs in 21 countries about their prospects, challenging situations and opportunities shows that they are positive about their companies’ performance, even in a low-growth environment. A significant majority of CEOs surveyed expect earnings expansion (64%) and profitability (63%) to increase.
This optimism comes despite acknowledging that the macroeconomic environment remains challenging: three-quarters (76%) of CEOs surveyed expect the global economy to continue to show little or no growth. While rates will remain “higher for longer” due to constant and persistent inflationary pressures, more than a portion (57 percent) expect the cost of doing business to increase.
Andrea Guerzoni, Global Vice President of Strategy and Transactions at EY, said:
“While CEOs expect continued stagnation in the global economy, this has not slowed their quest for profitability. By demonstrating newfound resilience and confidence, CEOs are looking for opportunities to build on their power and grow their businesses. Anticipating a recovery in the M&A market that is now showing signs of recovery, many are now especially reviewing their business plans, looking for smart investments, and laying the groundwork for potential alliances.
Lift-off for deals market in 2024
CEOs expect an uptick in the deal market, with 8 in 10 respondents (79%) expecting a slight uptick in mega M&A deals (M
This quarter, the survey also collected the perspectives of three hundred personal equity (PE) leaders in more than 20 countries regarding their investment prospects and portfolio control. Reflecting CEO sentiment, the majority of PE executives surveyed (71%) also expect a slight uptick in mega deals. Seventy percent of PE executives surveyed expect an increase in corporate divestitures or spin-off activities in 2024, meaning a more dynamic deal market than last year.
Transformation plans accelerate, with increased efficiency
The increase in CEO confidence is due to a race to strategic transformation: 58% of CEOs surveyed are accelerating their business transformation systems, a significant jump, nearly tripling from 21% in July 2023. At the other end of the spectrum, 5% of now say they have no transformation plans, up from 37% in July 2023.
However, despite this bullish sentiment, CEOs are being pragmatic in their strategy to transform their businesses. Key concentration spaces come with power enhancement and load control strategies. That is, 42% of CEOs and 45% of personal equity executives surveyed prioritize effectiveness. control of its current capital. CEOs also see generation as a driving force for power, with 41% contemplating adopting synthetic intelligence to increase power and improve their company’s performance. Interestingly, while CEOs surveyed are embracing AI to increase power, 3 in four (76%) agree that generation will have little effect on earnings growth.
Guerzoni says, “If 2023 was the year of transition as organizations grappled with a ‘poly-crisis’, 2024 is shaping up to be the year of action. With an acceptance that the costs of doing business are unlikely to fall to pre-pandemic levels, we’re seeing a shift in how CEOs approach business transformation, balancing optimism with pragmatism and focusing on efficiency and cost management.”
Geopolitical dangers take center stage in this election year
With more than a portion of the world’s population set to go to the polls in the next 12 months, CEOs are acutely aware of the geopolitical dangers and their potential effects on businesses. More than three-quarters of respondents (78%) are concerned about the potential rise of populist movements that could create geopolitical uncertainty and create challenging situations for businesses. Seventy-six percent of respondents were also concerned about the political misuse of AI in the 2024 primary election.
While many CEOs feel confident about their organization’s ability to integrate geopolitical turbulence into their decision-making, nearly half (48%) of respondents believe there is room for improvement in their defined and active processes for managing geopolitical risks. In fact, 98% of CEOs and PE leaders surveyed are having to make alterations to their investment plans including exiting certain businesses (32% of CEO respondents and 38% of PE respondents) or delaying a planned investment (42% of CEO respondents and 32% of PE respondents).
Guerzoni says: “The influence of politics in the business world is more potent than ever, but this year we see a threat emerging: the rise of AI in political campaigns and the possibility of its misuse. CEOs are keenly aware of the need to incorporate turbulence geopolitical policies into their strategic plans. But as many are still unsure of their threat control processes, now is the time to review and refine their methods for navigating a volatile geopolitical landscape.
To view the full report, please visit: ey. com/CEOOutlook.
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About the EY CEO outlook for January 2024
On behalf of EY, in December 2023 and January 2024, FT Longitude, the marketing and content research department of the Financial Times Group, conducted a survey of 1200 CEOs of leading corporations around the world. This anonymous online survey aims to provide valuable insights into key trends and developments impacting the world’s largest corporations, as well as business leaders’ expectations for long-term expansion and price creation. Respondents represented 21 countries (Brazil, Canada, Mexico, United States, Belgium, Luxembourg, Netherlands, France, Germany). , Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore and South Korea) and five sectors (consumer and health, money services, industry and energy, infrastructure, technology, media and telecommunications). The annual global revenues of the corporations surveyed were less than $500 million (19%), between $500 million and $999. 9 million (19%), between $1 billion and $4. 9 billion (30%), and above $5 billion. billion (32%).
In addition, FT Longitude conducted a survey of 300 personal justice (PE) leaders in 21 countries (Brazil, Canada, Mexico, the United States, Belgium, Luxembourg, the Netherlands, France, Germany, Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore, and South Korea). Assets under control (AUM) of the surveyed institution: less than $1 billion (15%), $1 billion to $9. 99 billion (40%), $10 billion to $49. 99 billion (25%), and $50 billion or more (20%).
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
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