Posted 23. 05. 2022
Almost two hundred CFOs discussed how to deal with situations they had not faced before in finance management at the eleventh CFO Congress held on May 18, 2022 at the Czech National Bank.
Inflation out of control
David Marek, Chief Economist of Deloitte, opened the program with dates regarding inflation. Interest rates have been rising in recent months due to high domestic demand and inflation expectations. The higher the inflation expectations are, the higher the interest rates must be. The last time this situation occurred in the 1980s in the USA. “Dramatic responses are needed to a dramatic situation, otherwise the costs of reducing inflation will be significantly higher. It is better to be strong in the short term than to burden the economy in the long term,” David Marek directed his appeal to the Board of National Czech Bank.
Tomáš Ervín Dombrovský from LMC followed presenting the data from labour market. Higher wages are the main motivator for job change. After a sudden increase in 2022, the employee fluctuation has returned to normal. The willingness to change the jobs is now the lowest in the survey period, with only 8% of people actively looking for work. However, even satisfied people change jobs: “The reasons are better financial rewards and job description. They also decide based on the stability of work, from which they expect security.” Other important issues that employers should focus on are bullying at workplace, which mainly affects people with lower incomes, and the great potential for retraining the aging population.
Future bases on green projects
Jan Fousek from the Association for Energy Accumulation described the current situation in the energy sector. He drew attention to the threat of lawsuits filed by the European Commission against the Czech Republic due to exceeding the transposition deadlines of European legislation by one to two years. “The update of Czech energy legislation cannot be delayed any longer,” he appealed. As part of reducing energy dependence on Russia through the use of renewable energy sources, he pointed out new technologies and opportunities for energy sharing and storage within energy communities, such as the location of solar panels in block of flats or within the municipality.
Eva Bučová and Radim Ćmiel from ING Bank Czech Republic followed with the topic of sustainable financing. Banks support companies with green projects that are in line with EU taxonomy, as well as the transformational projects. The latter motivate companies to improve their sustainability profile to gain better ESG rating.“ The ESG rating will be increasingly important for the evaluation of the tenders you will participate in in Western Europe. The more the company improves, the lower its margin," Eva Bučová said.
Examples of specific green projects were presented by Martin Kozák from Kaufland. He focused mainly on energy savings and quantifying their returns. Within CSR projects, Kaufland also supports those projects that do not have an immediate financial effect, but it is possible to use its potential from a marketing point of view. An example is equipping all stores with defibrillators, which have saved six lives so far. “Good communication of these activities will improve the company's image and gain new customers.”
The first part of the conference was closed by an interview of a moderator Daniel Stach with David Vencl, a record holder in underwater swimming and a freediver. He explained how ice water and concentration training can help overcome stressful situations. “Ice water helps people calm down because it lowers their heart rate.”
Searching for efficiency
The next part of the conference focused on digital tools for finance and cybersecurity. Kateřina Dudková from Deloitte, together with Slovarm representatives Martin Jelínek and Martin Stöhr, presented a project for the implementation of ERP in the cloud. “We needed a solution that could be connected from anywhere at any time, and that would be intuitive for employees above all,” Martin Stöhr explained the motivators for the ERP exchange. Kateřina Dudková emphasized the importance of grasping the exchange of ERP as an opportunity for business to transform the whole company.
Radek Šichtanc from O2 addressed the risks in the area of cybersecurity. “Email is still one of the most popular ways hackers distribute malware to their potential victims, accounting for 91% of all cyber attacks,” he said. The impact of such an attack on the company can easily climb to millions and is related not only to the burn-in but also to the management of the crisis team, forensic investigation or work on data recovery. A hacker attack can also bring personnel changes in management and a decrease of the company's share price. Therefore, Radek Šichtanc's recommendation is to devote at least 10% of the company's expenses to risk prevention.
Vladislav Hanák from Sophia Solutions spoke about reporting tools, including ESG. He introduced a tool that fundamentally saves the time and energy of people who process reports. “By working with a single base, the system ensures the freshness, accuracy and completeness of all the data in the reports,” he said, emphasizing one of the product's biggest benefits.
“A few years ago, we decided to introduce the sale to end customers. We started with Excel, but we spent too much time processing the data and we couldn't be the right support to business. We wanted to have one place of truth,” Milan Duba from MND shared his motivation for the change. They found a solution in cooperation with BizzTreat, represented by Patrik Samko on stage. The first results came after eight weeks.
Construction under the stress test
In the final part of the program, financial directors representing various sectors met as part of a panel discussion. Increasing price of inputs and outages in the supply chain fundamentally affect the construction sector. Martina Vítková from NWT described the stalemate in which she often finds herself as a result of rising material prices: “Currently, we are calculating whether it is worthwhile for us to complete the project or end it and pay penalties. At the same time, companies are approaching us to complete projects of someone else.“ In general, according to Martina Vítková, all investments have been suspended, with the exception of the energy sector, where the company is experiencing strong demand for photovoltaics.
“The more to the West, the less understanding about rising product prices there is, inflation is not so high there and raw materials come from other sources," added Luděk Látal from egoé kovo. At the same time, he fears what 2023 will bring for large infrastructure projects: “Companies may experience a big downfall next year if there is not enough pressure from small and medium-sized companies to apply a system of valorisation and other clauses in transport infrastructure, not only towards large companies."
E-commerce declines, food processing on the rise
In the area of the food industry, the customer is not saving yet. On the contrary, according to Josef Šuber, Orkla records a large increase, which causes high demands on production. In this regard, the employment of refugees from Ukraine helps to the company to fulfil the demands. On the other hand, Orkla postponed the planned automation of production because of the increase in the prices of the necessary technologies: “Financially, it does not make a sense now. We have fully automated factories in Norway, where labor costs are much higher.”
Rossmann also experiences an increase: “We are growing faster than the market. Some time ago, we started investing in the interior of stores. More intensive cooperation between all departments also paid off,” Karol Jakubek explained. In the context of future developments, he is particularly concerned about the effects of rising energy prices on the end customer.
On the other hand, e-commerce has been declining for a long time, as stated by Jakub Krejčíř: “We can see that customers have been saving since last October. The year 2022 and 2023 will be about making the processes more efficient and about making the same things more profitable.” This was also acknowledged by Tomáš Kouřil from O2, who feels that suppliers can start to run into financial difficulties. Factoring can be the solution. He urged colleagues in the audience: „Keep your minds open, this is the only way to solve problems we have never encountered before.“ For example, O2 is currently working on how to approach prepaid platforms such as Netflix in the business model.
Congress was organized by Blue Events in cooperation with an expert guarantor Deloitte company and with a support of partners as O2.
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