Business%20Confidence%20Monitor%201st%20Qtr%202012

IMAGE HERE INTO GREY AREA.

By Elaine Sloan & John Clarke

J.3156

Behaviour & Attitudes

Business Confidence Monitor

1st Quarter 2012

2

Introduction

Given the state of the economy, and the uncharted waters businesses find

themselves in, Behaviour & Attitudes conduct a Business Confidence survey on a

quarterly basis in tandem with its Consumer Confidence survey.

A questionnaire has been developed for the business monitor which covers issues

such as recent business results, projected employment levels, profit margins and

expectations for the forthcoming year.

The quarterly survey is conducted via telephone amongst a sample of 350 Business

owners/Managers countrywide.

The sample is drawn from a ‘deduped’ mix of reputable business listings including

Bill Moss, Data Ireland, the Irish Times and Business & Finance Top 500 companies in

Ireland

3

Sampling Approach

The chart below sets out the profile of business company size in Ireland (Source:

CSO and Bill Moss) compared with the achieved Behaviour & Attitudes Business

Confidence Monitor sample:-

No of employees % % %

1-3 42 43 42

4-9 28 28 28

10-19 14 14 14

20-50 11 11 11

50-250 6 5 6

250+ 1 1 1

The survey data is subsequently weighted to reflect the known universe profile.

A sample size of 350 yields a dataset which can be deemed to be accurate to

within plus or minus five percentage points.

Known

Profile

(Bill Moss)

B & A

Business

Monitor

Sample

B & A

Weighted

Results

4

Sampling Approach

Interviewing was conducted through Behaviour & Attitudes Computer Aided Telephone

Interviewing Unit (CATI) at Milltown House in Dublin.

Interviews were conducted with the owner/Chief Executive of each selected company.

Fieldwork on the project was conducted between the 8th – 22nd March 2012.

All interviewing was centrally supervised and quality control verification was conducted

on 15% of interviews undertaken.

5

Detailed Survey Results

6

Higher

The Same

Lower

Business Activity Looking back – short term analysis

compared with equivalent period last year

2331

23

26

53

43

1st

Qtr 2011

Vs

1st

Qtr 2010

(353)

%

Gap (Pos vs Neg) -30 -12

Q.1 Business activity may be measured by gross income, chargeable hours worked or any equivalent measure of volume of activity appropriate in

your business. How has your business performed in the first quarter of this year – from Jan to March. Were your results higher, lower or the

same compared to the same period last year?

Is this the first sign of a shift in direction? Here we can see while business is still operating in negative territory, it is improving.

1st

Qtr 2012

Vs

1st

Qtr 2011

(353)

%

7

Higher

The Same

Lower

Business Activity – Looking back - 1st quarters comparedBase: n = 353

31

20 19 17

38 3540

26

2127

19

27 30 23

43

5953

64

35 35 37

All Business

(353)

%

Gap (Pos vs Neg) -12 -39 -34 -47 +3 = +3

The data suggests that smaller companies are continuing to find it a tougher challenge

to turn their business around.

1 – 3

(148) (128)

%

Number of Employees

2011 2012 2011 2012 2011 20122012

4 – 9

(91) (87)

%

10+

(114) (138)

%

8

Higher

The Same

Lower

Business Activity – Looking back - 1st quarters comparedBase: n = 353

2227 28

39

24

27 23

20

5445 48

41

Gap (Pos vs Neg) -32 -18 -20 -2

As we hear in the media, those in the exporting world are faring considerably better and while it is

not plain sailing have turned things around much faster than their indigenous only counterparts.

Notwithstanding that, it is encouraging to see some improvements across the board.

Indigenous

Only(247) (248)

%

Any Export(97) (95)

%2011 2012 2011 2012

9

2833

3432

38 35

Higher

The Same

Lower

Business Activity Looking Forward to 2nd qtr

Looking ahead

to 2nd

Qtr 2011

vs

2nd

Qtr 2010

(353)

%

Q.4 And thinking ahead to the second quarter – April to June – do you think your performance will be higher, lower or the same as the second

quarter of 2011?

Gap (Pos vs Neg) -10 +2

As business looks forward, expected progress is more muted. Still it finally seem to

have reached the bottom!

Looking ahead

to 2nd

Qtr 2012

vs

2nd

Qtr 2011

(353)

%Expect business levels to be ..

10

Higher

The Same

Lower


2327 26

34 3640

35 26 32

4334

32

4246

42

2330 28

Gap (Pos vs Neg) -19 -19 -16 +11 +6 +12

Very small businesses are clearly struggling most to regain confidence levels and

business.

1st

Qtr 2011

(148)

%

Number of Employees 1-3

1st

Qtr 2011

(91)

%

4-91

stQtr 2011

(114)

%

10+1

stQtr 2012

(128)

%

1st

Qtr 2012

(87)

%

1st

Qtr 2012

(138)

%Expect business

levels to be ..

11

2630

3638

3632

29

25

38 38 3627

Higher

The Same

Lower


1st

Qtr 2011

(97)

%

Any Export

1st

Qtr 2011

(247)

%

Indigenous Only

Gap (Pos vs Neg) -12 -8 = +11

1st

Qtr 2012

(248)

%

1st

Qtr 2012

(97)

%

Those with Exports in the mix have begun to turn the corner

Expect business

levels to be ..

12

Optimism?

13

Business Environment – Optimism for 2011/2012 as a

whole?

1521

59 45

2634

Average 2011

(1026)

%

Very optimistic

(8-10)

Neutral/Not sure

(4-7)

Very worried (1-3)

Q.5 And looking forward to the remainder of 2012, how optimistic are you for a favourable business environment by end December

2012. Lets use a scale of 1-10 where 10 means you are very positive about prospects and 1 means that you are very

concerned or worried. On this scale, how optimistic are you?

March 2012

(353)

%

Gap (Opt vs worried) -11 -13

For 2012 as a whole, there

continue to be more worried

business owners than optimistic

ones. This may change if their

more positive expectations

about the next quarter are

realised.

14

Employment

levels

15

Employment Levels Compared to Last Year

010 12

5962

3126

Higher

The same

Lower


Net employment is still negative, albeit it continues to ease.

Q. 7 Could you indicate whether your employments levels are higher, lower or the same compared with the first quarter of last year?

1st

Qtr 2011

Vs

1st

Qtr 2010

(353)

%

1st

Qtr 2012

Vs

1st

Qtr 2011

(353)

%

16

Prices and profits

17

Operational Profit – Year on Year

19 22

2527

5652

Higher

The same

Lower

Over 50% of companies report lower levels of profit than last year – so many have been on a

negative trajectory for at least two years. Still there appears to be some minor improvement

– or at least a sign of a shift in direction suggesting we may be reaching the bottom.


Q.8 Could you tell us whether operational profit is higher, lower or the same compared with the first quarter of last year?

1st

Qtr 2011

Vs

1st

Qtr 2010

(353)

%

1st

Qtr 2012

Vs

1st

Qtr 2011

(353)

%

18

Prices Charged – All Businesses

9 13

4650

4543

Higher

The same

Lower

Evidence of some minor shift in direction. It does appear as if there is a long way to go

on the pricing front.


Q.9 Could you tell us whether prices charged are higher, lower or the same compared with the first quarter of last year?

1st

Qtr 2011

Vs

1st

Qtr 2010

(353)

%

1st

Qtr 2012

Vs

1st

Qtr 2011

(353)

%

19

51

29

19

19

17

14

13

12

13

8

6

48

26

11

20

15

13

14

8

10

13

5

11

That we keep sales/business coming in

That we keep costs to a minimum

Survive/stay in busness

That we have sufficient working capital

Retain/take on more staff

Maintain/increase profit margins

Attract new customers

Improve/maintain quality of products/service

Manage to get the finance we need to grow the business

Develop new areas of business/growth/expansion

Increased/better marketing

Better customer service

2011

2012

Business Priorities for 2011/2012 - 1st quarters

compared – Spontaneous ResponsesBase: n = 353

%

Q. As you face the remainder of 2012, what are your key priorities? DO NOT PROMPT

(All other answers less than 5%)

Much the same issues as last year

although businesses may be moving

towards finding new types of customers

and encouragingly fewer are solely

concerned about survival.

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Summary of key findings

21

Behaviour & Attitudes Business MonitorSummary of Main Findings

Business Confidence:

The current business confidence monitor reveals that the distinctly tough business

environment that has endured during 2011 has eased slightly in the first quarter of

2012.

Given that Ireland is arguably in its fifth year of recession, this slight upward swing

for businesses in Ireland and their prospects for short/medium term growth will be

welcomed.

Still, the majority (43%) of all companies have seen lower levels of business activity

in the first quarter by comparison with the same period in 2011. This trend of lower

activity persisted across 2011. In the final quarter of 2011, one anticipated that the

‘floor’ had been reached. The current tracking period suggests that it has.

Only 31% of companies have seen an improvement in their activity compared with

this time last year. 26% indicate that their activity level has remained the same

against the benchmark period (Q1 2011) while the balance are performing less well.

Taking everything into consideration, while businesses remain in negative equity (so

to speak), at least the outlook is less negative than it was for the same period last

year.

22


Business Confidence:

Looking ahead to the second quarter, two thirds of Irish businesses believe that their

company performance in Q2 of 2012 will be at a similar level (32%) or worse (35%)

than for the same period of 2011.

Among companies that are exporting (exclusively and in combination), first and

projected second quarter business levels show a definite improvement compared

with last year.

This is good news as an export driven growth is a key cornerstone of current

economic policy.

Perceptions of the prospects of the Irish business environment as we closed the year

out, as a whole, are cautious. 45% of all companies are unsure of how to gauge the

business environment. 34% are concerned while only 21% are optimistic.

As such, while there is evidence of a reason to be more positive about the business

environment, confidence in the year as whole remains cautious.

23


Employment

Employment has marginally increased for companies this quarter in comparison to Q1

2011. Still the net impact remains negative, with more companies having less staff

when compared with the equivalent period for 2011.

While the overall impact is continued shrinkage of employees at a macro level, at

least it would appear as if the rate of decline is slowing down.

Pricing

Pricing structures remain under significant pressure among Irish companies, with 43%

of companies now selling at lower prices than for the same period last year and a

further 50% of companies working to the same price level.

Essentially we can see that margin reduction (a key element of employment

reduction) had remained a constant into the fifth year of a recession.

24


Profits:

The only positive, and a narrow positive at that, is that the negative trend in

reduced operational profit is lower than for Qtr 1 2011

Still over half of companies (52%) are recording lower operating profit in Q1 2012

than in Q1 2011. These declines are on the back of similar levels of decline in 2011.

25

Thank you

Business%20Confidence%20Monitor%201st%20Qtr%202012

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