To be sure, cost-cutting is still important to CFOs; in fact, controlling fixed and variable costs ranked #2 and #3, respectively, but neither gathered even 15 percent of first-choice votes. Other options that could be chosen included divestitures, mergers and acquisitions, balance-sheet improvements, significant restructuring and “other.”

The survey found that the highest priorities for enhancing revenue in 2008 were improving product profitability and pricing improvements. Bettering product profitability garnered 37 percent first-choice votes alone, while the latter received 31 percent. Meantime, in terms of what to do with that revenue, the top two funding needs for this year, well ahead of any others, were internal process improvements (manufacturing, etc.), with 37 percent of respondents saying that’s the number-one need, and balance-sheet improvement, at 34 percent.

In terms of balance-sheet management, the need to improve cash and working capital far out-weighed other possible balance-sheet actions, such as debt restructuring or asset sales. Forty-six percent of those polled said improving working capital is their highest priority right now, and 43 percent said improving cash is. Less than 1 percent said an asset sale is their highest priority, and none of the CFOs cited debt reduction.

When asked priority areas for cost cutting, 29 percent of respondents said process improvement is their highest priority for 2008. Information technology also showed up in the survey as an area of growing concern. No less than 29 percent of the senior executives polled rated recent major IT projects in their companies as ineffective. Further, 26 percent rated their entire IT organization, including their CIO, the same way.

“As the market environment becomes tougher, CFOs are recognising that cost cutting alone if not enough to weather the storm. A focus has to stay on maintaining top-line growth even as the economy slows. But CFOs also understand the need for self-help initiatives, with a strong emphasis on the importance of improving working capital, cash and their IT payback.” said David Hutchinson, a managing director with AlixPartners.

Sixty-three percent of those polled said their companies expect good to strong growth in 2008, and 37 percent said they expect the credit outlook in Europe to be somewhat better in the latter half of the year, while 31 percent expect it to be worse.

The survey polled financial leaders from 12 different European countries, and from at least 20 industries, including manufacturing, construction, energy, materials, paper, utilities, telecom, chemicals, dairy, financial services and retail.

About AlixPartners
AlixPartners is a leading global business-advisory firm offering services across four main disciplines – operational performance improvement, financial restructuring and bankruptcy reorganization, litigation consulting and financial advisory services. The firm’s expertise is in helping clients anticipate, evaluate and successfully resolve urgent, high-impact business challenges in an increasingly complex legal, regulatory and economic landscape. Drawing on the experience of more than 700 employees from 13 offices across North America, Europe and Asia, the firm commits small teams of seasoned professionals to deliver results when it really matters. For more information, visit www.alixpartners.com.