CEOs globally forecast increase in revenues, profits and deal making in 2024

CEOs are optimistic about their ability to drive revenue growth and profitability in 2024 despite global economic headwinds, according to the latest EY CEO Outlook Pulse survey.

Commenting on the report, Ronald Attard, Country Managing in EY Cyprus, states that “the insights of the global survey coincide with our Cyprus forecasts. The Cypriot economy is exhibiting resilience despite the challenges it has been facing. The Outlook’s insights showcase global trends and priorities, useful for the strategic planning of Cypriot businesses. At EY Cyprus we have placed our efforts in embracing change and building a better working world; It’s our fundamental principle through everything we do, and our vision is a world that will drive transformation, inspire trust and confidence, and support talent and leadership.”

The EY quarterly survey of 1,200 global CEOs across 21 countries, on their prospects, challenges and opportunities, shows they are bullish on business performance even in a low growth environment. A significant majority of CEOs surveyed expect an increase in revenue growth (64%) and profitability (63%).

This optimism comes despite acknowledgement of a continued challenging macroeconomic environment with three-quarters (76%) of CEOs surveyed expecting the global economy to continue to endure low or no growth. While 78% are preparing for interest rates staying “higher for longer” due to ongoing inflationary pressures and over half (57%) are forecasting an increase in the cost of business.

Lift-off for deals market in 2024

CEOs are anticipating a deals market bounce-back with eight in 10 (79%) respondents predicting an uptick in mergers and acquisitions (M&A) megadeals above US$10bn. Thirty-six percent of respondents are also actively pursuing M&A transactions over the next 12 months and a further 29% are seeking divestments. The US maintained its position as the most attractive target region in terms of M&A activity followed by Japan, the United Kingdom, China and India. Manufacturing was identified as the top sector for M&A deals closely followed by ‘banking and capital markets’, ‘insurance’, ‘consumer products’ and ‘mobility’ rounding up the top five.

This quarter, the survey also captured the perspectives of 300 private equity (PE) leaders across more than 20 countries, regarding their investment and portfolio management outlook. Mirroring CEO sentiment, the majority of surveyed PE leaders (71%) also predict an uptick in megadeals. Seventy percent of surveyed PE leaders predict an increase in corporate divestment or carve out activity in 2024, signifying a more buoyant deals market than seen in the previous year.

Transformation plans speed up, with a focus on efficiencies

Underpinning the rise in CEO confidence is a rush toward strategic transformation, 58% of CEOs surveyed are accelerating their business transformation agendas – a significant leap, almost tripling from 21% in July 2023. In stark contrast, only 5% now report having no transformation plans, a fall from 37% in July 2023.

Nevertheless, despite the bullish sentiment, CEOs are demonstrating pragmatism in their approach to business transformation. Primary focus areas include efficiency enhancements and cost management strategies. Namely, 42% of CEOs and 45% of private equity leaders surveyed are prioritizing effectively managing their working capital. CEOs are also embracing technology as an efficient driver, with 41% looking to adopt artificial intelligence to drive efficiency and bolster business performance. Interestingly, while surveyed CEOs embrace AI to deliver efficiencies, three in four (76%) agree the technology will have little impact on revenue growth.

Geopolitical risks take center-stage in bumper year for elections

With over half of the world’s population going to the voting booth over the next 12 months, CEOs are acutely aware of geopolitical risks and the potential business impact. Over three-quarters of those surveyed (78%) are worried about the potential rise of populist movements to increase geopolitical uncertainty and create business challenges. Seventy-six percent of respondents were also concerned about the political misuse of AI in major 2024 elections.

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).

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