Dark day for Swiss business

Credit Suisse reported its worst result in its 150-year history Keystone

The Swiss economy was battered from all sides on Tuesday, with the stock market dropping to its lowest level in six years, and many top firms reporting dismal results.

Thousands of employees are facing the axe under cost cutting plans announced by Credit Suisse, the national airline, Swiss, and Clariant, the specialty chemicals group.

A raft of poor company results hammered the Swiss Market Index of leading shares, which closed just 94 points above the psychologically important 4,000 mark. It is now at its lowest level since January 1997.

Adding to the gloom were dismal export figures showing a trade deficit of SFr446.3 billion ($330 million) for January. It was the biggest deficit in 20 months brought on by faltering exports – suffering from the high value of the franc – and increased imports.

The country’s already hefty unemployment tally was pushed further by the announcement of some 3,650 job cuts.

Many will not be in Switzerland, but the axing of 1,250 jobs by country’s second largest bank, Credit Suisse, and a further 1,700 by specialty chemicals group, Clariant, come on top of thousands already announced in the service sector.

Losses

The job cuts were justified by abysmal figures at Credit Suisse – its 2002 loss of SFr3.3 billion was the worst result in the bank’s 150-year history. At Clariant, the loss of SFr648 million in 2002 – the second red year in a row – prompted an announcement of a massive restructuring.

The day closed with more bad news from the national airline, Swiss, which confirmed that it was cutting 700 jobs and scaling back its fleet by 20 aircraft.

The airline, created from the collapsed Swissair and the regional carrier Crossair, is struggling to keep afloat in the face of high costs and weak demand.

The infant carrier, which took to the skies last April, started off selling itself as premium service airline, but has lately been trying to maintain market share by offering low-cost flights.

Analysts have been saying since Swiss’s launch that it remains far too big for its home market – particularly given the problems facing the airline industry – and that more action is needed if it is to avoid suffering the same fate as Swissair.

The former national carrier collapsed in 2001 under a pile of debt and a cash crunch brought on by a disastrous expansion strategy.

Depressing

As if Tuesday wasn’t depressing enough, a queue of firms have still to report their figures this week.

More bad news is expected from the battered electrical engineering firm, ABB, and pharmaceutical group, Roche. Both are expected to post sizeable losses.

The reporting week ends on Thursday with 2002 figures from Nestlé. The world’s largest food company, a veritable pillar of stability, is likely to show a healthy profit, but even it has already hinted that growth is below the company’s self-imposed target of four per cent.

swissinfo, Jonas Hughes

In brief

Poor company results hammered the stock market, with the index of leading shares closing at its lowest level since January 1997.

Adding to the gloom were dismal export figures showing the biggest trade deficit in 20 months.

The day closed with more bad news from the national airline, Swiss, which confirmed that it was cutting 700 jobs and scaling back its fleet by 20 aircraft.

More bad news is expected from the battered electrical engineering firm, ABB, and pharmaceutical group, Roche, which are expected to post sizeable losses.