Falling sales and profits lower business expectations

Executives predict lower sales and falling profits despite the government stimulus package

Executives predict lower sales and falling profits despite the government stimulus package, according to the latest Dunn and Bradstreet (D&B) National Business Expectations survey.

April results reveal 57 percent of firms anticipate declining sales, while 64 percent expect a fall in profits.

The disappointing figures come off the back of a second wave of cash bonuses from the Rudd Government, in an attempt to inject revenue into the struggling economy.

D&B CEO Christine Christian says the government stimulus is critical for businesses, yet they are still waiting to witness the real benefits.

"The deteriorating outlook, particularly for employment, is a sign that no one expects the benefits to be realised immediately and that things are likely to get worse before they get better," she says.

Christian says it is a clear sign that executives are adopting a wait and see approach.

The negative outlook for capital investment and employment expectations are continuing to deteriorate.

Capital investment expectations have experienced a significant dip, with 12 percent of firms foreseeing a decrease, while the index fell four points to -7.

Employment expectations are continuing to bear the brunt of the unstable conditions, plummeting a further 10 points.

Movements in the Australian dollar, market conditions and petrol prices are also having a marked impact on business prospects.

A total of 67 percent say the dollar is a problem, 47 percent note credit market conditions and 43 percent say petrol is a positive factor, down 10 percent in two-months.

Interest rates are identified by a majority – 48 percent – of executives as the primary influence on their business in the June 2009 quarter.

Petrol and wage growth are noted as other concerns, at 20 percent and 16 percent respectively.

Statistics for the December 2008 quarter reveal 49 percent experienced lower sales and 63 percent had lower profits.

However, like a beacon of hope amongst the gloom, selling price expectations rose by 30 percent in the nine months from March quarter 2008 to December quarter 2008.

Currently, 74 percent of executives expect to raise prices in the June quarter.

Overall, the latest data shows that all key indices, excluding selling prices, remain deep in negative territory.

It appears that executives are not preparing for an upturn any time soon, as they wait to see the impact of the government’s latest round of hand-outs.

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