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

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.