Media Release: Restructuring Study | KPMG | CH

Confidence prevails in Switzerland following shock spike in the franc

Media Release: Restructuring Study

On the whole Swiss firms have adjusted well to life under a strong franc and are now looking to the future with renewed confidence. Nonetheless, they remain concerned by the lack of clarity over Switzerland’s relationship with the EU and by price pressures at home and abroad. These and more are the findings from KPMG Switzerland’s latest Restructuring Study.

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Respondents in the second KPMG Restructuring Study are much more positive about how competitive Switzerland is becoming as a location for business than they were just a year ago. Although around 25 percent of companies are seeing a downward trend, this group is nevertheless over 50 percent smaller than last year.

There has been little change year over year in how firms view the current state of their business, with the positive and negative camps split roughly down the middle. At the same time, breaking down the verdicts by company size reveals a clear shift: Whereas larger companies had a much gloomier view of how business was going in 2015, there seems to be no correlation this year between a firm’s commercial position and its size.
 

Restructuring on the rise

There has been a sharp increase in restructuring activities compared to the previous year. Whereas about half of companies were considering or implementing a restructure in 2015 – still an impressive figure – this had risen to around 70 percent in this year’s survey. Virtually all the restructuring measures relate to organizational structure, processes or business model. About half of companies are also scrutinizing their strategy, with a quarter busy reorganizing their finances.

Unsurprisingly, there is a clear link between a company’s restructuring activities and its commercial position, with 90 percent of those that feel business is poor undergoing a restructure and the remaining 10 percent planning to do so.
 

Price pressures and the EU issue a constant threat

Price pressures in Switzerland (61 percent) and abroad (75 percent) once again topped the list of challenges this year too. However, Swiss companies also remain concerned about their country’s relationship with the European Union. Of the firms surveyed, 65 percent (2015: 73 percent) still fear that canceling Switzerland’s bilateral agreements would have a negative impact or even jeopardize their very existence.

Cultivating new areas of business is still the most common form of strategic action, followed by adjusting the product range or value proposition, with boosting innovation, focusing on new client segments and expanding into new markets further down the list. Many companies are taking action to control and cut their costs. The scrapping of the exchange rate floor in January 2015 prompted nearly half of firms to take some temporary short-term steps affecting their staff, such as a 44-hour week, short-time working or smaller bonuses. However, most of these policies were scrapped as the year went on.

“The findings from this year’s survey suggest a certain cautious optimism that shows how adaptable Swiss companies are and how Switzerland remains just as competitive a location for business,” says Peter Dauwalder, Head of Restructuring at KPMG Switzerland, summing up the results. “Nevertheless, some firms and some sectors are still under major pressure.”
 

KPMG Restructuring Study 2016

A total of 81 companies took part in the second Restructuring Study:

Breakdown by sector:
Industry, manufacturing and technology: 35%
Services and trading: 32%
Energy: 19%
Consumer goods and retail: 14%


Breakdown by FTEs:
40 percent of the companies were small or medium-sized enterprises (SMEs) employing up to 249 full-time equivalents (FTEs). The remaining 60 percent were large companies employing 250 or more FTEs.


Breakdown by revenues:
In 2015, 26 percent of the companies generated revenues under CHF 25 million, 18 percent between CHF 25 and 50 million, 36 percent between CHF 50 and 250 million and 20 percent in excess of CHF 250 million.
 

© 2017 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

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