PricewaterhouseCoopers' Trendsetter Barometer interviewed
CEOs of 340 privately-held product and service companies
identified in the media as the fastest-growing U.S. businesses
over the last five years.
The surveyed companies range in size from approximately
$5 million to $150 million in revenue/sales.
NEW YORK, Nov. 8, 2005 (PRIMEZONE) -- Hurricane Katrina dampened optimism about the domestic economy, but did not negatively impact goals and expectations of the nation's fastest-growing private companies. Surveyed CEOs continue to project more-robust revenue growth, hiring, and investments than a year ago.
Despite tumultuous business conditions, fast-growth CEOs are expecting solid results.
-- Challenges galore: Among third quarter "Trendsetter Barometer"
interviews completed prior to Katrina, 70 percent were optimistic
about the domestic economy's prospects over the coming 12 months
- comparable to 72 percent in the prior quarter. But, post-Katrina,
only 52 percent were optimistic - with the quarter averaging out
at 62 percent optimistic. Concurrently, concern increased
dramatically about two potential barriers to growth: escalating
energy prices, cited by 41 percent (up from 24 percent in the
prior quarter); and higher interest rates, 32 percent (up from
26 percent).
-- But, steady growth is expected to continue: Surveyed CEOs'
targeted revenue growth held firm at 23.6 percent for the next 12
months, comparable to their forecast of 23.4 percent in the
second quarter, and well ahead of their year-ago goal of 20.7
percent.
-- International markets continue to surge: In the third quarter,
48 percent of those selling abroad reported an increase in their
international sales, and only six percent a decrease.
International sales are expected to account for 19.9 percent of
these companies' total revenues over the next 12 months, up from
18.2 percent estimated in the prior quarter, and 18.3 percent a
year ago.
"Katrina appears to have negatively impacted optimism about the U.S. economy's prospects, but had no net influence on these companies' growth projections for the next 12 months," said Jay Mattie, assurance leader of PricewaterhouseCoopers' Private Company Services practice. "Despite higher energy costs and interest rates, these fast-growth CEOs believe there is still considerable underlying momentum in the marketplace that will help to sustain or boost their company's performance."
Robust hiring growth expected: The number of CEOs planning net new hiring over the next 12 months held steady at 79 percent (versus 78 percent last quarter), and increased slightly from 76 percent a year ago. Overall, a workforce increase of 11.2 percent is expected, up sharply from 8.7 percent in the prior quarter and 9.5 percent a year ago. CEOs planning net new hires are forecasting 27.7 percent revenue growth, while those expecting no additions foresee growth of only 7.9 percent.
Plans for new investments increase: 49 percent are planning major new investments in their business over the next 12 months, comparable to 47 percent in the preceding quarter, and up from 44 percent a year ago -- with spending expected to average 13.9 percent of revenues, up from 11.7 percent a year ago. Those planning new investments expect to increase their company's revenue growth by 28.6 percent over the next 12 months, compared to an 18.9 percent increase for those without investment plans. Leading areas designated for increased spending include information technology (cited by 41 percent), new product development (39 percent), sales promotion (34 percent), geographic expansion (32 percent), advertising (27 percent), and facilities expansion (26 percent).
"Business owners do not commit to substantial investments in new workers and capital investments until they see a sustained need," said Mattie. "The next quarter or two will provide further insight, as marketplace momentum is further tested by the speed bumps of rising energy costs and interest rates."
Stronger than a year ago: A comparison of key survey findings from 3Q05 and 3Q04 recaps reduced optimism, but stronger revenue growth prospects and improved plans for major new investments and new hiring over the next 12 months:
3Q04 3Q05
------ ------
- View U.S. economy as growing 79% 78%
- Optimistic about U.S. economy 70% 62%
- Optimistic about world economy 66% 54%
- Expected U.S. economy growth 3.0% 3.1%
- Expected industry sector growth 7.0% 7.6%
- Company revenue growth target 20.7% 23.6%
- Potential Barriers
------------------
- Weak market demand 63% 57%
- Lack of qualified workers 33% 42%
- Decreasing profitability 32% 30%
- Oil/energy prices NA 41%
- Higher interest rates NA 32%
- Plan major new investments 44% 49%
- Rate of new investments 11.7% 13.9%
- Expect new hiring 76% 79%
- Rate of new hiring 9.5% 11.2%
PricewaterhouseCoopers' Private Company Services practice is an integrated team of audit, tax, and advisory professionals who focus on the unique needs of private companies and their owners. Within the practice, dedicated professionals concentrate on the needs of manufacturing, retail, wholesale and distribution, construction, food and beverage, and private equity portfolio companies, as well as on the needs of law firms and other service organizations. Our Private Company Services professionals are committed to delivering cost-effective, practical solutions and responsive services with the quality clients expect from PricewaterhouseCoopers.
PricewaterhouseCoopers' "Trendsetter Barometer" is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
Unless otherwise indicated, "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership. PricewaterhouseCoopers LLP is a member firm of PricewaterhouseCoopers International Limited.
If you have a question about the "Trendsetter Barometer" survey, please contact Pete Collins, survey director and publisher, at 646-471-4496, or e-mail to: pete.collins@us.pwc.com
For more information about Barometer surveys, including recent economic trend data and topical issues, please visit our web site: www.barometersurveys.com