Swiss companies remain financially robust
Published: Monday, Jul 22nd 2024, 14:20
Updated At: Tuesday, Jul 23rd 2024, 01:59
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Compared to Europe, the financial situation of Swiss companies is stable. However, corporate restructuring activities have also increased in this country in recent months.
In 2023, the number of Swiss companies in financial distress fell from 6.1 percent to 5.2 percent, the auditing firm Alvarez & Marsal (A&M) announced in a study on Monday. This includes companies that are in financial difficulties that threaten their existence and require restructuring.
European companies are doing much worse. Almost one in ten companies there is in financial difficulties. In addition, the financial situation has deteriorated in ten out of 16 sectors in 2023.
Almost one in three companies also reported a weak financial position, which is a record figure. This development is due to increased financial debt and low turnover. In addition, declining consumer spending and inflation-induced additional expenditure are weighing on companies' ability to service their financial debts.
As interest rates and inflation are likely to fall only slowly, the experts at A&M 2024 expect the financial distress in Europe to increase further.
Increased need for restructuring in Switzerland
Despite the comparatively high level of resilience, there has also been a noticeable increase in restructuring activities at Swiss companies in recent months, the report continues. For example, the weak economy in Europe is having a negative impact on Swiss export companies. Weak domestic economic spending is also having a negative impact.
"For 2024, however, we note that the delayed negative effects of the pandemic, exacerbated by the rise in interest rates since 2022, will also weigh on the profits and balance sheets of Swiss companies and lead to significant restructuring activity," Alessandro Farsaci, Managing Director Switzerland at A&M, is quoted as saying. However, falling interest rates and stable inflation will ensure more favorable conditions in the future.
Hospitals particularly affected
Hospitals in particular are facing major challenges in Switzerland. Around one in ten hospitals in Switzerland have difficulties refinancing themselves, which is the highest percentage of all sectors. In particular, the old tariffs, inflation, energy costs and the high investment requirements are weighing on hospitals.
A negative trend can also be seen in construction companies. An increased level of stress can also be observed in the chemical sector. Structural challenges such as high energy prices, growing competition from China and the need for decarbonization are weighing on the industry.
In the study, more than 8200 companies in Europe and the Middle East were examined for their earnings and financial situation. Among them were 212 companies from Switzerland. Companies with a turnover of more than 20 million euros were included. The consulting firm defines financial distress as a combination of a weak balance sheet and inadequate company performance.
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