Company finances Swiss companies remain financially robust

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 in a much worse position. 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 is also in 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 a further increase in financial distress in Europe.

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, are also weighing on the profits and balance sheets of Swiss companies and leading to significant restructuring activity," says Alessandro Farsaci, Managing Director Switzerland at A&M. 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 high investment requirements are weighing on hospitals.

A negative trend is also evident in construction companies. An increased stress level 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.

SDA