Metals CEOs are more worried about a host of risks. Overall, they’re less confident than any other sector. Metals companies are cutting costs and taking it slow on transactions, but many are already adapting supply chains to cope with emerging global trends.
Metals CEOs are wary about future revenue growth
Metals CEOs are much less optimistic about their prospects than their peers across the overall sample. Just 19% are very confident of revenue growth over the next 12 months, compared to 39% overall. That drops to 9% when CEOs look out over three years. Surprisingly, they’re slightly more upbeat about the prospects of the industry as a whole –possibly because 59% worry about the impact of new market entrants--but overall the sector is the least confident of any industry. Why so downbeat?
High and volatile energy costs and raw materials prices are worrying
High and volatile energy costs are one reason—78 % are concerned that that could slow down growth, and 56% of metal CEOs are extremely concerned, compared to 21% of CEOs overall. High and volatile raw materials prices are an issue too, with 69% of metals CEOs seeing them as a possible threat to growth, vs. 55% of CEOs overall. Indeed, metals CEOs are more concerned than their peers across the sample about a wide range of issues.
Exchange rates, taxes, and regulation could also threaten growth
Three-quarters of metals CEOs worry about exchange rate volatility, compared to a global total of 60%. And government actions may have a big impact too, with half of metals extremely concerned about an increasing tax burden, compared to a third of the overall sample, and more metals CEOS worried about protectionism. More than half of metals CEOs say that regulation has prevented them from pursuing a new market opportunity.
And metals companies have already been re-trenching
Compared to CEOs across the overall sample, far fewer metals CEOs say their company entered into a new strategic alliance or joint venture or completed a domestic M&A in the past 12 months. And far more cut costs – 91% vs 76% of CEOs overall. They’re keeping the pressure on too, with 81% planning to implement a cost reduction initiative in the coming 12 months. And unlike most other sectors, more metals CEOs plan to cut staff than will add headcount in the coming year.
Global trends are transforming the business environment
When it comes to trends that will transform their business over the next five years, metals CEOs rate technological advances highest. Shifts in global economic power are rated highly too, and compared to the overall sample, more metals CEOs are looking to resource scarcity and climate change to change their business environment.
And metals CEOs are adapting supply chains in response
More metals CEOs are concerned that supply chain disruption could threaten growth. That may partly be due to infrastructure concerns; two-thirds are concerned that it may not be adequate. Metals companies also see a greater need to change supply chains to adapt to transformational trends, and more have taken action – 38% have a change programme underway or completed, compared to 24% of CEOs overall.
Only 9%of metals CEOs are very confident of revenue growth over the next three years compared to 46% of the overall sample.
75%of metals CEOs are concerned that exchange rate volatility could slow down growth.