Revenue forecasts

A large number of the more than 430 international board members we interviewed in person for our CxO Priorities Study do not expect any real growth this year – on average they forecast meager revenue growth between zero and five percent. Taking inflation rates into account, it becomes clear that this is not real growth, but nominal growth. Across industries, only about half of CxOs expect revenue growth above five percent. One in ten companies even expects revenues to fall.

A closer look at individual industrial sectors shows that there are definitely differences. The energy sector is the most optimistic, with 82% of respondents expecting relevant revenue growth. Insurance companies are also anticipating a positive revenue trend. Premium increases of around four percent are expected on average. Banks and other financial institutions are even forecasting an increase of just over seven percent. The Travel & Transport sector is experiencing an upswing due to catch-up effects, with two-thirds planning revenues to increase. Managers in the telecommunications and mechanical engineering sectors, including electrical engineering, are similarly optimistic, with a positive outlook for the future due to high order backlogs. In the automotive sector, 60 percent of companies are planning to increase revenues. They expect to gain + 7,5 percent on average.

But there are also less optimistic sectors. Oil and chemical companies as well as the metal industry and retail are being hit hard. Depending on the sector, 40 to 50 percent of top managers expect declines – the raw materials industry is even more pessimistic than the retail sector.

Another exciting finding from our study: Among the companies that expect growth, a small majority – about 60 percent – will generate real growth through larger volume sales. Industries that generate higher revenues primarily through price increases include, for example, the metal industry, consumer goods, insurance and energy.

The forecast EBIT margins show a similarly bipolar picture: As with revenues, only half of the companies across all sectors expect EBIT margins to increase.

The responses of the surveyed top executives also make it clear that many of them do not expect a crisis scenario – yet there is also no talk of “business as usual”. This is because the pressure on margins has increased dramatically.

The fact that companies are once again more defensive also plays a role here. The reason is that the need to optimize working capital and liquidity has increased enormously compared with last year. In 2022, liquidity was of great relevance for just one in four companies – today that applies to over 40 percent. This fact is not only explained by the challenging interest rate situation. Indeed, many companies have increasingly relied on stockpiling and warehousing in times of crisis. In the meantime, however, materials are once again available, supply chain disruptions have been largely resolved, and logistics costs are affordable. Yet capital is still tied to rising interest rates – and the timing could not be worse.

For this reason, top management is currently focusing more strongly on safeguarding earnings. In this year's ranking of current management priorities, cost optimization has landed in fourth place – ahead of sustainability. Around half of those surveyed now attach great importance to this topic, compared with only around one-third a year ago. In the manufacturing industry, this topic is even more important than digital transformation.

Across industries, CxOs overwhelmingly expect to get costs back under control. However, significant growth is not expected in 2024 either. This makes active safeguarding of results inevitable.