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Swiss small and mid-size companies stable
According to the latest UBS survey, small and medium-sized Swiss enterprises succeeded in stabilizing their overall revenues in the first quarter at last year's levels. As expected, prices remained under pressure during the quarter, while profits fell slightly. Small and medium-sized enterprises reduced their personnel slightly. Although survey participants expect a further drop in sales prices in the second quarter, they also expect to be able to maintain profits and employment at last year's level.
Small and medium-sized enterprises (SMEs) in Switzerland are reporting an improvement in business. Although profits and employment decreased modestly in the first quarter, they are expected to stabilize at last year's level in the second. Overall sales had already leveled off in the first quarter, and the survey participants nevertheless expect turnover to increase moderately in the second quarter. While SMEs in the industrial, service and retail sectors expect turnover to increase in the second quarter, and the building sector anticipates sales leveling off at last year's level, tourism SMEs continue to fear declining revenue. The UBS survey queries some 470 small and medium-sized and 150 large companies. It was conducted most recently in March.
Drastic turnaround in the industrial sector
Although sales posted by Swiss industrial SMEs slid drastically during the recession, a turnaround is becoming apparent. The SMEs halted their decline in revenues in the first quarter and expect overall sales to increase briskly in the second quarter. While staff cutbacks are continuing – albeit at a diminished rate – and prices remain slightly under pressure, profits and cash flow stabilized at last year's level during the first quarter, and the survey participants are hoping for a slight gain during the second quarter. The business climate indicator for the industrial SMEs – based on survey findings on output, sales and new orders – improved by nearly 30 index points in the first quarter. This increase was even more pronounced for large industrials. Both SMEs and large companies expect the business climate to improve further in the second quarter.
Revenue stabilization in sight for the building sector
As anticipated in the previous survey, the business environment for the Swiss building sector deteriorated in the first quarter. Overall, sales fell year-on-year, profits dropped and pricing pressure increased once again. The number of new orders fell – more so in the civil engineering segment than in building construction. However, staffing levels remained stable. The outlook for the second quarter is slightly more positive as pricing pressure and the profit squeeze look likely to abate somewhat, leading survey participants to expect overall sales to level off at last year's level.
Service providers buck the downtrend
SMEs in the service sector were able to stop the trend in the first quarter. Employment, profits and prices stabilized at last year's levels. Sales increased moderately. Further improvement is expected in the second quarter, since sales are likely to pick up and result in modest earnings growth.
Slight improvement in tourism, but no turnaround in sight
Tourism is taking longer to recover from the recession than other sectors. In the first quarter the survey participants – both SMEs and large companies – reported another drop in sales and profits. SMEs posted a further decline in guest numbers. While the tourist services in demand by Swiss guests last quarter remained similar year-on-year, the business with foreign guests continues to suffer. In sum, there is still no sign of a turnaround in the tourism sector. The SMEs do not expect either rising sales or earnings growth for the second quarter, and the guest numbers they have forecast tend to be even more negative compared with the first quarter.
Sluggish SME profit recovery in retail
While large retail companies again reported stable profits in the first quarter, SMEs endured a continued drop in earnings. However, SMEs reported a somewhat stronger development in sales than large companies. In the second quarter, SMEs in the retail sector anticipate a modest increase in sales with a further dip in profits and moderate staff cutbacks compared to the large retailers.
Access to loans unchanged
According to the survey, SMEs have not observed any restricted access to loans over the past 12 months. These findings were similar for large companies as well.
The business climate is calculated on the basis of the survey results for output, incoming orders and revenue in the manufacturing sector. Data on cash flow and on an industry-specific level have been collected since the first quarter of 2009.
Notes: Previous quarter trends are extrapolated actual results (grey bars). Current quarter trends are companies' expectations (shaded bar). The respondents were asked about the change compared to the same quarter in the previous year. The collected data is evaluated using a diffusion index. The results can range between -100 and +100, with results at or around zero [-5;5] representing stagnation, results up to -50 (+50) representing a deterioration (improvement) and results below -50 (above +50) representing a major deterioration (improvement). The data do not represent a percentage change in the parameter.
Carla Duss, WMR Economic Research Switzerland
Tel. +41-44-234 21 19
Caesar Lack, Head WMR Macroeconomic Research Switzerland
Tel. +41-44-234 44 13
Schweizerischer Gewerbeverband (sgv)
Dr. Rudolf Horber, Chief Economist sgv
Tel. +41-31-380 14 34
+41-78-813 65 85
Hans-Ulrich Bigler, Director sgv
Tel. +41-79-285 47 09
The Schweizerische Gewerbeverband sgv (sgv – Swiss Industry and Trade Association) is the umbrella organization for small and medium-sized enterprises. It was founded in 1879 and is now the largest business association in Switzerland. The sgv represents the interests of some 300,000 small and medium-sized enterprises. Most of these companies are members of approximately 250 industry and professional associations and of cantonal industry and trade associations, which are organized on a multi-sector basis.