KUALA LUMPUR (May 12): With no end to the Covid-19 pandemic in sight, a vast majority of chief financial officers in Malaysia believe that their revenues this year will be dented by the outbreak, according to a survey by PwC.

“Ninety-one per cent of the Malaysian respondents are expecting a decrease in their company revenues as a result of Covid-19,” according to PwC’s Covid-19 CFO Pulse: Malaysia results released today.

Only 3% of the respondents are expecting an increase in revenue and/or profits, while 16% still find it difficult to assess their financial prospects at this point, which is nearly twice the global average of 9%.

The PwC findings also show that 10% of the respondents foresee their company earnings decreasing by more than 50% this year, while 52% foresee revenue dropping between 10% and 50%.

“Such expectations align with the overall global findings, whereby 85% expect a decrease in revenue, as well as recent economic indicators.

On April 1, the World Bank cut its 2020 gross domestic product (GDP) target for Malaysia to 0.1% due to the growing uncertainty over the duration and impact of the outbreak.

Although slightly more than half (58%) of Malaysian respondents believe their company could return to “business as usual” (BAU) within six months if the crisis were to end today, not all are optimistic.

Still, 23% estimate that it would take more than 12 months, almost three times more than the global average of 8%.

In addition, 19% anticipate them to make a comeback within six to 12 months, while a majority of the respondents (32%) see their company going back to BAU within three to six months if the crisis were to end now.

Meanwhile, slightly more than a quarter (26%) expect their companies to be able to resume operations as usual in less than three months.

As organisations turn to cost management to address their short-to-medium term challenges, they need to manage expenses thoughtfully without long-term damage to the organisations, said PwC.

Thus, it is not surprising that 94% of respondents rated cost containment as their highest priority.

This is followed by deferring or cancelling planned investments (68%). Only 3% are not considering any financial actions as a result of Covid-19.

Of the CFOs considering changes to their investment strategy, 95% plan to reduce facilities/general capital expenditure investments, said PwC.

“With many employees from offices and factories largely working from home, PwC pointed that companies may look to cut spending on facilities and other maintenance costs. Another area for potential reduction is in operations (71%).

“It’s encouraging that only 29% are looking to cut spending on workforce — this indicates that businesses are thinking beyond short-term cost cutting measures of furloughs and layoffs and are managing costs by optimising their business processes,” said PwC.

As Malaysia entered its first week under the Conditional Movement Control Order (CMCO) during the survey period, PwC noted that companies are focused on tactical measures in transitioning to on-site work, including changes in workplace safety measures (87%). 

“They are also confident that they will be able to meet customer safety expectations (74% are very confident),” said PwC.

Meanwhile, 52% of CFOs expect to see higher demand for employee protection, such as sick leave policies and more benefits and against discrimination, but only 6% anticipate redundancies.

Moving forward, as workplaces reopen, only 13% of CFOs are very confident about identifying new opportunities to remain competitive, and another 13% are unsure, while the vast majority (74%) remain moderately confident.

The findings are based on PwC’s latest wave of the survey (week of May 4, 2020), in which 867 CFOs from 24 countries or territories participated.

Of the total, 31 of these CFOs are from Malaysia, from industries including energy, utilities, resources (EUR); health (including pharma); financial services; industrial manufacturing and automotive (IM&A); technology, media and telecommunications (TMT); retail and consumer, and government/public services.