2015 PNG 100 CEO SUR­VEY

Our an­nual sur­vey of PNG’S ma­jor com­pa­nies in­di­cates a change in mood af­ter a dis­ap­point­ing 2014, with profit and re­cruit­ment ex­pec­ta­tions up for the year ahead. T

Business Advantage Papua New Guinea - - Front Page -

his is the fourth year in a row Busi­ness Ad­van­tage PNG has run the PNG 100 CEO Sur­vey—our ex­clu­sive sur­vey of ex­ec­u­tives in PNG’S largest com­pa­nies. De­signed to gauge busi­ness con­fi­dence, the sur­vey seeks to un­cover profit, in­vest­ment and re­cruit­ment ex­pec­ta­tions for the com­ing year. It also en­cour­ages PNG’S lead­ing busi­nesses to iden­tify the key is­sues they are fac­ing.

Prof­its be­low ex­pec­ta­tions in 2014

Our sur­vey asked CEOS how their profit re­sults in 2014 had mea­sured up to their ex­pec­ta­tions.

Re­sponses sug­gest that the down­turn first recorded in our 2013 sur­vey con­tin­ued through­out 2014, with 44% of re­spon­dents re­port­ing prof­its were short of ex­pec­ta­tions, a sim­i­lar fig­ure to last year’s sur­vey.

More­over, 12% re­ported a ‘sub­stan­tial’ drop in prof­its, com­pared to last year’s 15.6%—a very slight im­prove­ment.

While some com­pa­nies saw an im­proved profit sit­u­a­tion in 2014, fewer CEOS re­ported prof­its ahead of ex­pec­ta­tions: just 20%, com­pared to 37.5% in 2013.

Per­haps com­pa­nies are get­ting used to a less heated econ­omy, or least are able to make more ac­cu­rate pre­dic­tions: some 36% of CEOS told us prof­its had met ex­pec­ta­tions dur­ing 2014, the high­est fig­ure since our sur­vey be­gan four years ago.

Higher con­fi­dence for 2015

While there were dis­ap­point­ments in 2014, there is a good deal of con­fi­dence that 2015 is go­ing to be an im­prove­ment on re­cent years.

Some 56% of re­spon­dents said they ex­pected prof­its to be higher in 2015, up from 43.7% last year.

This is a sim­i­lar level of busi­ness con­fi­dence to two years ago, be­fore the post-png LNG con­struc­tion slump hit PNG.

Mean­while, the num­ber of CEOS ex­pect­ing a drop in prof­its has not been lower since our sur­vey be­gan in 2012. Just 8% ex­pect prof­its to fall in 2015, com­pared to 22.1% for 2014.

Some 36% of CEOS sur­veyed ex­pect prof­its to be the same in 2015 as they were in 2014.

In­vest­ment and em­ploy­ment in­ten­tions

How much a busi­ness in­tends to in­vest and how many peo­ple it in­tends to em­ploy are two other use­ful in­di­ca­tors of their con­fi­dence in eco­nomic con­di­tions.

The PNG 100 CEO Sur­vey is de­signed to cap­ture in­vest­ment and em­ploy­ment in­ten­tions in PNG’S largest com­pa­nies over the com­ing year, and it is in th­ese two ar­eas where we see a marked dif­fer­ence be­tween this year’s sur­vey and last year’s.

Our sur­vey in­di­cates there will be more busi­ness in­vest­ment by PNG’S larger com­pa­nies in 2015 than there was in 2014.

Just over half of re­spon­dents—52%—said they were plan­ning to in­crease their in­vest­ment in plant, equip­ment and other as­sets dur­ing 2015, up from 40% last year.

How­ever, there rermains some bud­get trim­ming, with some 32% say­ing they planned to re­duce in­vest­ment (a sim­i­lar fig­ure to last year, when 28.2% said they were plan­ning cuts).

Only 16% told our sur­vey they in­tended to in­vest a sim­i­lar amount in 2015 as they did in 2014.

More jobs com­ing

We asked PNG’S lead­ing em­ploy­ers what level of re­cruit­ment they were plan­ning in 2015, and the an­swers sug­gest fur­ther op­ti­mism.

Last year, al­most 30% said they were plan­ning to cut their work­force. This year, just 12% said the same thing, sug­gest­ing the job-shed­ding that oc­curred in PNG dur­ing 2013/ 14 may be com­ing to an end.

In­deed, some 60% of CEOS told us they were plan­ning to in­crease their head­count in 2015—about dou­ble the num­ber in last year’s sur­vey and the big­gest num­ber across the four sur­veys we have con­ducted since 2012. If those plans be­come re­al­ity, that’s good news for PNG’S job seek­ers.

Is­sues af­fect­ing busi­ness

The is­sues fac­ing PNG’S largest com­pa­nies have changed lit­tle over the four years of the sur­vey, although the top is­sue has changed each year un­til now. In 2012, at the peak of the PNG LNG con­struc­tion boom, it was the skills short­age. In 2013, it was se­cu­rity and law and or­der. In 2014, with its greater fo­cus on pro­duc­tiv­ity, the top con­cern was un­re­li­able state util­i­ties.

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