TORONTO --

Almost three-quarters of Canada's corporate titans expect their bottom lines to improve this year, a poll of chief executive officers indicates.

However, the KPMG/Ipsos-Reid Canada's Most Respected Corporations Survey of 314 CEOs also suggests hiring and business spending, although still healthy, may not be as strong as in past readings.

The survey, conducted between Aug. 6 and Nov. 30, 2002, shows that 71 per cent of CEOs "are confident" their companies will do better financially in 2003 than last year. That is up from the previous reading of 64 per cent, which looked ahead to 2002.

Although the figure rose from the last poll -- which was conducted before the Sept. 11 terrorist attacks -- it was still weaker than the 2000 and 1999 readings of 85 per cent and 75 per cent, respectively, that forecast beefed-up profits. "I just hope they're [this year's forecasts] right," said Bill Dillabough, a managing partner, marketing, with KPMG in Toronto.

"I'm not surprised to hear that from Canadian CEOs," said Chuck Hill, director of research with Thomson Financial/First Call in Boston, pointing to the stronger performance of the Canadian economy compared with that of the United States.

According to the tracking firm, analysts expect profits among the companies within the S&P/TSX 60 index to soar an average of 67.2 per cent in 2003 -- blowing away the 13.9 per cent seen for Wall Street's benchmark Standard & Poor's 500 gauge by year's end. But while profits are expected to rise, other key components won't be growing as aggressively throughout the year, the poll suggests.

Less than half of the CEOs -- 46 per cent -- said they'll be increasing their spending budgets in 2003, down from last year's 52 per cent. About 37 per cent said spending will remain the same, up from 29 per cent last year.

Corporate spending has slowed markedly in the past two years as firms struggled with an uncertain economy, the shock of Sept. 11, turmoil in the Middle East and the possibility of a U.S.-led war against Iraq.

What's more, the pace of work force expansion also could slow over the next two years, the study shows. Fifty per cent of the CEOs said they are likely to boost their employee base during the next two years, down from 57 per cent last year. About 35 per cent said they plan to keep staffing levels unchanged.

"This represents a continued and steady decline in expectations since 1999 when 62 per cent indicated workplace expansion plans, followed by 63 per cent in 2000 and 57 per cent in 2001," the study says. Fourteen per cent of corporate leaders said they expect to downsize, unchanged from the previous four years of polls.

Alongside those data, 68 per cent said it's difficult to find people who have the skills they need, down from 70 per cent in 2001 but well above 55 per cent in 1999.

The poll results reflect "the continued hangover from the heady heights of the boom which ended in 2000," said Guy Holburn, a professor at the University of Western Ontario's Richard Ivey School of Business in London. "And it really reflects the fact that consumers and businesses built up enormous levels of debt during this period, and now they're having to pay down those debts."

He added that both consumption and investment are suffering as a result of the debt repayment.

John Wright, a senior vice-president at Ipsos-Reid who has worked on the study since its inception, saw strength in the numbers.

"With 85 per cent of companies either growing or maintaining their growth level, it's going to be a robust year," he said.

"We're not looking anything like we were in [the early 1990s] when there was a recession under way," he added. "There were warning signs well before that that many CEOs felt we were heading toward a recession or economic downturn. There is none of that here."

However, Mr. Wright said he does see a softening of demand on the hiring front and signs that the employment market is starting to cool. "What we're seeing is that some companies have probably gulped in an awful lot in the last 18 to 24 months, and it's time they want to swallow something," he added, referring to the possibility of corporations holding on to profits instead of increasing their spending.

Mr. Dillabough said the comments from the poll mirror those given by corporate leaders he's been dealing with recently.

"They are quite bullish, for the most part, but have plans in place" to react quickly to any dramatic change in the business environment, he said.

"I think the change in direction [of business spending], given everything that's happening in the world, would be anticipated. If I had to put a guess in, I thought those numbers would be lower than that," he added.

Gordon Nixon, Royal Bank of Canada's CEO, said he's part of the camp calling for both higher profits and more hiring this year after record 2002 earnings of $2.9-billion.

"If we're able to achieve the objectives that we've set for ourselves for 2003, our performance will be better than it was in 2002," Mr. Nixon said during an interview.

"We've gone through tremendous change in our work force and our workplace over the past number of years. . . . On a net-net basis, we've added employees in virtually every geography and virtually every business, and we'll continue to do so, whether it's through acquisitions, whether it's through expansion in new areas and new products. But there will be other areas where we'll continue to look for efficiency improvements and reductions."

Other results of the broad survey, reported earlier this week in The Globe and Mail, pegged RBC as the country's most-respected firm, edging out last year's winner, Bombardier Inc.

Canada's corporate leaders selected Paul Tellier -- former CEO of Canadian National Railway Co. and now the head of Bombardier -- as the most respected business chief.

These are the findings of the 8th Annual Canada's Most Respected Corporations Survey, sponsored by KPMG, conducted by Ipsos-Reid and provided exclusively to The Globe and Mail. Conducted between Aug. 6 and Nov. 30, 2002, the survey involved a randomly selected sample of 314 of Canada's leading CEOs. It identifies the most respected company and CEO from among their peers, and provides an outlook on economic and business conditions in Corporate Canada. Results are considered accurate to within +/- 4.7 percentage points, 19 times out of 20. A full breakdown of the ratings can be found at http://www.ipsos-reid.com and http://www.mostrespected.ca. The series, as it rolls out this week, will also be available at http://www.globeandmail.com/business.

TOMORROW: 2003 ECONOMIC OUTLOOK

CANADA'S MOST RESPECTED CORPORATIONS

Corporate confidence

Chief executive officers give their take on their companies' prospects in annual poll.

Q. How do you expect your company to do financially during 2003?

Better than last year....71%

The same as last year....21%

worse than last year......8%

Don't know/refused........1%

Q. In terms of your Canadian work force over the next two years, do you expect it will be expanded, downsized or unchanged?

Expanded.................50%

Downsized................14%

Unchanged................35%

Don't know/refused........2%

Q. Thinking about your business spending during 2003, do you think it will increase, decrease or stay the same?

Increase.................46%

Stay about the same......37%

Decrease.................16%

Don't know/refused........1%

SOURCE: IPSOS-REID