Analysts want more euro planning from companies

Equity analysts are bullish about the effect of the euro on Britishe as on the continent. FDs have to reassure the markets they can cope. business, claims a new report from Deloitte Consulting. But companies are cautioned that this merely increases the pressure on CEOs and FDs to explain their strategic planning for trading in Euroland.

Three-quarters of European analysts who responded to the survey think the euro will create a more stable trading environment and nearly two-thirds that it will reduce the cost of capital; 81% also said it will create opportunities to compete more effectively, and 72% that it will create larger, pan-European markets.

Analysts fear that the companies they assess will be unable to explain the impact of the euro on their businesses. Over 40% of respondents say most companies in their sector do not have a clear view of strategy in light of the euro – and 65% of UK-based analysts claim that most companies they examine have failed to make them aware of their euro strategies.

“This survey sends a clear message to UK FDs,” says Deloitte Consulting partner Hans Christian Iversen. “Analysts are already actively factoring in the impact of the euro when they assess companies. The communication from companies is not as good as it should be.”

Over a third of UK analysts also say that they are uncomfortable with the ability of most companies in their sector to deal with the euro, and 85% feel their companies are unlikely to be able to deal with euro pricing policies. But the bleakest message for companies which haven’t yet considered their euro stance is that 91% of UK analysts believe they will be left behind the leading pack.

Three-quarters also agreed that the importance of the euro to UK companies can only increase over the next three years. “Analysts are clear that the medium- and long-term benefits of being ‘in’ are substantial,” adds Iverson.