54% of the CFOs in companies with "trapped profits" are not interested in realizing them, despite promised tax benefits, according to a joint survey by the Deloitte Brightman Almagor Zohar accounting firm and the Chief Financial Officers Forum of the Manufacturers Association of Israel. The state is promising the companies reduced tax payments if they choose to realize the profits and transfer overseas capital that they have accumulated in Israel. The survey findings indicate that, despite the legislative initiative on the matter by the Ministry of Finance and the Tax Authority, companies holding trapped capital are not tempted to share it with the state.
The survey sought to examine the perceptions of CFOs of industrial companies in Israel as 2013 approaches. It covered 110 respondents.
60% of the respondents said that leverage in industrial companies in Israel was too high. In the survey carried out a year ago, only 34% gave this assessment. Sharon Shtevy-Cohen, a partner and head of the Manufacturing Industry Group at Deloitte Brightman Almagor Zohar, commented on this figure that "it can be assumed that the level of leverage among industrial companies has not changed dramatically over the past two years, but in the wake of the prolonged slowdown and the various debt arrangements, a leverage level that in the past was thought reasonable is perceived as risky in the current business environment."
The CFOs see tighter credit policy on the part of the banks, among other things because of the difficulty in seeing a clear trend of improvement in the economic environment. 46% stated that the cost of raising capital for companies was high. 69% described the capital market as "an external source of finance that is not attractive for industrial companies."
63% said that next month's Knesset elections would not have a significant effect on the manufacturing sector in Israel, although 21% said that the political situation could have a negative effect.
The CFOs expressed concern at the rising trend in manufacturing costs, accompanied by a decline in sales. 71% expect higher energy costs; 64% expect higher labor costs, and 49% are concerned about higher costs of raw materials.
Published by Globes [online], Israel business news - www.globes-online.com - on December 17, 2012
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