Optimism among the leaders of the UK’s largest companies has reached the highest level for 13 years, according to Deloitte’s latest survey of chief financial officers (CFOs).
While the coronavirus pandemic remains the biggest concern for business, these fears have eased on the back of the successful rollout of vaccines in the UK, the gradual reopening of the economy and a gathering US recovery.
Against this brighter backdrop, the report notes expectations for profit margins have also returned to the previous high seen in mid-2014 at the top of the economic cycle.
In addition, more companies appear to be tilting away from defensive strategies, such as cost control, towards more expansionary moves such as launching new products/services or entering new markets. As a result, the report notes expectations for hiring and investment have reached their highest level in nearly six years.
The increased optimism is most clearly demonstrated by the fact that two-thirds of CFOs expect the bulk of their workforce to return to working in the office by September.
Although 5% suggest workforces may never return, reflecting the trend by some companies such as Nationwide and Aviva to allow employees to work from anywhere.
Shares in Veolia and Suez, the world’s two largest water and waste groups, soared this week on news that the duo have ended their bitter takeover battle by agreeing a merger deal valued at around €13bn (£11.2bn).
The two French companies have been wrangling since Veolia purchased a 29.9% stake in Suez last year and said it intended to make a full bid for the company. Suez rejected the proposed bid, calling it hostile, and threw up numerous obstacles including ringfencing assets in a Netherlands foundation.
On Monday (12 Apr) the two companies announced a deal that valued shares in Suez at €20.50, an uplift from the previously rejected €18 per share offer. The combined entity is estimated to have revenues of €37bn, with the CEO of Veolia, Antoine Frérot claiming the deal would create a “world champion of ecological transformation”.
Canada’s largest airline, which has struggled with the impact of the coronavirus travel restrictions, has secured a federal government aid package valued at C$5.9bn (£3.4bn).
The company has been negotiating for coronavirus support for a number of months, having been forced into cutting 20,000 jobs as it reported a C$4.7bn net loss for 2020.
On Monday (12 Apr) it finally secured access to the funds, although as part of the deal Air Canada has agreed to ban share buybacks and dividends, cap annual pay for senior executives and safeguard existing jobs.
The deal will allow the airline to continue with its planned purchases of 33 Airbus SE 220 airliners and 40 Boeing Co 737 MAX airliners, that in turn could help support the hard-hit aviation industry. The combination of loans and investment in stock will also enable Air Canada to speed up customer refunds and return service to some routes that were shut down because of the pandemic.
