* Geopolitical situation: 30% of domestic CEOs expect their own business to deteriorate in the next six months
* Energy crisis: Almost half of the companies surveyed
have already reduced energy consumption in production – 60% are thinking of switching to other energy sources
* Raw materials supply: Austrian companies rely on
increased stock range and (regional) diversification of their suppliers – short-time work due to raw material shortages is not an option for 90%
* Inflation-related wage increases: 47% of domestic CEOs do not plan to implement a general adjustment of salaries above the rate of inflation
The war in Ukraine, a growing global raw material and energy crisis or steadily rising inflation: the effects of the current geopolitical and economic situation also have a decisive impact on Austrian companies. For the next six months, 30 percent of domestic CEOs expect the business situation to deteriorate. They identify high or highly volatile raw material (90%) and energy prices (87%), as well as rising inflation (86%) and problems in the supply chain (80%) as major threats to business development. These are the core findings of the new PwC Austria study “Austrian CEO Spotlight”, which examines the impact of current global developments on leading domestic companies.
“In addition to the laws of supply and demand, the economic success of Austrian companies is currently more dependent than ever on global, uncontrollable and in part unpredictable external influences. As our study shows, this also has a strong impact on the optimism of domestic CEOs. Price developments are already affecting all the companies surveyed, be it commodity and energy prices, or inflation in general. A weak supply chain and labor shortages are high on the agenda as additional problems,” explains Rudolf Krickl, CEO and Territory Senior Partner at PwC Austria.
Reduced energy consumption in production and alternative energy sources
Rising raw material and energy prices are driving up costs not only in production, but already in the supply chain. In addition to direct energy costs and scarce raw materials, working materials with strong energy components also continue to turn the price spiral. Many companies are currently looking intensively for potential savings in order to delay passing on the additional costs to their customers wherever possible.
To this end, almost half of the domestic companies surveyed have already reduced energy consumption in production. As a precaution against excessive energy costs, 60 percent are considering switching from gas to other energy sources and fuels. Fifty-seven percent are also considering a switch to alternative energy sources.
Commodity supply: Increased stock range and search for
new suppliers
“Domestic companies are facing a challenging autumn. There is a threat of further unexpected shortages, which they did not expect just a few months ago. The current situation should be a wake-up call for politicians and industry not to become dependent on individual countries or governments when it comes to raw material and energy supplies. Appropriate diversification in the selection of suppliers is of crucial importance,” says expert Krickl. “In this context, decision-makers must also rely on the strengths in their own country. This counter-trend to globalization can in turn be a real opportunity for companies to reduce their own carbon footprint through regional supply chains, to review their own business model in terms of all ESG dimensions and to position themselves more sustainably overall.”
To secure raw material supplies and transportation routes, 62 percent of the companies surveyed have already increased their warehouse reach. In terms of their suppliers, 6 out of 10 domestic CEOs surveyed plan to broaden their focus in the future – 34 percent said they already rely more heavily on regional suppliers. Restricted production due to a shortage of raw materials in the form of short-time working is not an option for 90 percent of those surveyed.
Rising inflation: domestic CEOs cautious about salary adjustments
The companies surveyed share the concern about sharply rising energy prices and the associated increase in production costs. Surprisingly, however, domestic CEOs rate access to financing in the near future as only a minor threat (38%) or no threat (59%). Changing the interest rate from variable to fixed is most likely to be considered (40%) or already implemented (20%). Not paying out dividends in order to use them as internal financing power is being considered by 30% of companies in the future.
In view of the rising costs for end consumers, Austrian companies are showing restraint with regard to the remuneration of their employees: just under half of the CEOs surveyed (47%) are not planning any general adjustment of salaries above the rate of inflation. This is a surprisingly high figure, which in practice is tantamount to a real wage cut. On the other hand, 54 percent of the companies are considering or have already implemented additional social benefits for employees. Another 67 percent also rely on one-off payments or bonuses.
“We live in a time of labor shortage. Employees are in demand and have high expectations of their employers. In terms of financial compensation, the system of purely adjusting salaries for inflation will have to be rethought. Employee profit sharing will also become increasingly important and significant. In addition, ‘work-life’ issues such as flexible working models, personal development opportunities and meaningful work are requirements of the working world of the future to which companies will have to think of strategic answers. A well-designed package of measures is essential for the recruitment of new employees as well as for retention, if employees are to be kept in the company,” recommends Rudolf Krickl.
Further information on the study can be found [here] (http://info.pwc.at/ceospotlight)
About the study
The study “Austrian CEO Spotlight” was conducted by the market research institute MARKET on behalf of PwC Austria. In the period from May to June 2022, 30 qualitative in-depth interviews were conducted with CEOs of large Austrian companies (>250 employees) from various industries.
About PwC
Building trust in society and solving important problems – that’s what we at PwC see as our mission. We are a network of member firms in 156 countries. More than 295,000 people worldwide provide high-quality audit, tax, legal and advisory services. Tell us what’s of value to you. And learn more at www.pwc.at
“PwC” refers to the PwC network and/or one or more of its member firms. Each member of this network is an independent legal entity. For more information, visit www.pwc.com/structure
PwC Austria
Anna-Maria Oberpriller
Corporate Communications
Tel.: +43 1 501 88 5115
[email protected]
OTS-ORIGINALTEXT PRESS RELEASE UNDER EXCLUSIVE CONTENT RESPONSIBILITY OF THE SENDER. www.ots.at
© Copyright APA-OTS Originaltext-Service GmbH and the respective sender
The post PwC Study: Austrian Companies Struggling with Energy & Commodity Crisis and Rising Inflation appeared first on TOP News Austria – News from Austria and around the world.
