With one of the world’s highest per capital GDPs (gross domestic product), a highly skilled labour force and thriving industries, such as financial services, precision manufacturing, metals, pharmaceuticals, chemicals and electronics, for several years Switzerland’s strong and sturdy economy has been almost mythical. Yet, in 2020 the country faced an unprecedented economic downturn caused by the COVID-19 pandemic so much so that the Swiss economy suffered its worst slump in 45 years, shrinking 2.9% in 2020 - the worst annual contraction since the aftermath of the oil crisis in 1975.
Having said that, the country managed to weather the pandemic well and by the second quarter of 2021, the economy grew by 1.8% and 7.7% year-over-year according to data from the State Secretariat for Economic Affairs, partly due to strong household consumption following the easing of COVID-19 restrictions which helped reverse earlier declines.
As the economy is expected to remain on track for much of 2021 and eventually rebound, how have the country’s top companies fared?
Here is a rundown of these and their stock.
You’ve probably gotten your morning boost thanks to a steaming cup of Nescafe coffee, given your soups a zingy twist with a Maggi cube, relished a tab of Haagen-Dazs ice cream and served your pet the very best in cat and dog food by the name of Purina. With its motto of ‘Good food, Good life’, Nestle is universally known as one of the most iconic food and drink processing conglomerates, crowned one of the largest food companies in the world.
In February of this year, Nestle reported full-year results for 2020, marking a 3.6% organic growth, whereas underlying earnings per share increased by 3.5% in constant currency, which was particularly supported by strong momentum in its Americas, Purina PetCare and Nestle Health Science segments. As a result, the company’s 2021 outlook continued to be positive, with Nestle anticipating an increase in organic sales growth of a mid-single-digit, while underlying earnings per share is also expected to increase. In fact, rising prices, continued elevated demand at supermarkets, as well as a recovery in the out-of-home channel has helped the company boost organic growth by 7.6% in the first nine months of 2021.
Meanwhile, in addition to its positive financials, the company’s board proposed a dividend increase of 5 centimes to CHF75 per share, marking 26 consecutive years of dividend growth. In 2020, Nestle returned approximately CHF14.5 billion to shareholders, through a combination of dividends and share buybacks.
Boasting a vast product portfolio that contains more than 2,000 global and local brands, Nestle is continuing to progress with its portfolio management, with plans to transform its global water business by centrering on premium and mineral water brands, as well as healthy hydration products. On the other hand, its Health Science continues to focus on building a nutrition and health powerhouse.
For over 125 years, Swiss multinational healthcare company Roche has been at the forefront in celebrating life through its two primary divisions, pharmaceuticals and diagnostics, while its several blockbuster medications in oncology, immunology, infectious diseases, ophthalmology, as well as illnesses of the central nervous system have been highly praised by the pharmaceutical community. The development and commercialisation of its innovative diagnostic and therapeutic products and services has helped early detection and prevention of diseases, as well as their treatment and monitoring. Roche’s diagnostic segment alone accounted for 76.3% of total 2020 sales, whereas its diagnostics division which operates the Roche Professional Diagnostics, Roche Diabetes Care, Roche Molecular Diagnostics and the Roche Tissue Diagnostics, accounted for 23.6% of total sales in 2020.
Roche first quarter results of the year have been solid so far, as Group sales increased 3% at constant exchange rates (CER), while sales of pharmaceutical division saw strong growth particularly of new medicines, despite continued biosimilars competition and the ongoing COVID-19 pandemic. In contract, its diagnostics division sales saw a whopping 55% growth.
Positive developments in a range of its medications have also helped drive its stock higher. In June 2021, Rohe announced positive data from a phase three study of a Venclexta combination, showing benefits in blood cancers, while its drug Evrysdi improved motor function in babies and safety profile in spinal muscular atrophy. The company also obtained a CE mark for its antigen at-home test for COVID-19. As a result, the stock reached a high on August 18, trading at CHF372,55.
As Roche continues to search for better ways to prevent, diagnose and treat a range of diseases, the company has forged a strategic partnership with PathAI, a global leader in artificial intelligence (AI)-powered technology, particularly for pathology. The aim of this partnership is to distribute PathAI’s AI-powered technology through Roche’s uPath enterprise software, which will enable broad access to digital pathology diagnostics, which in turn will support clinical research and companion diagnostics (CDx) programmes globally. This means that Roche’s development on new drugs and companion diagnostic tests will be given a great boost.
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Celebrated pharmaceutical company Novartis has only been in existence since 1996, when in March of that year, former Swiss pharmaceutical company Ciba-Geiny merged with Sandoz so that the pharmaceutical and agrochemical divisions of both companies formed the current Novartis as an independent entity in what has been dubbed one of the country’s most successful pharma mergers. Together with its counterpart Roche, they have been the mainstays of Switzerland’s centuries-long contribution to new medicines.
In 2020, the pharmaceutical company’s total revenue amounted to $48.7 billion, an increase of some $1.3 billion compared to the year before. Bulk of the company’s revenue came in through its pharmaceutical and innovative medicines, which brought in $39 billion in 2020, whereas close to one fifth of its revenue came from its generic drug division. And Novartis did not only deliver sales growth and expanded its margin. It also continued to progress its next wave of medicines in 2020, particularly Kesimpta in the U.S., Leqvio and Zolgensma in the EU, while it progressed even further its pipeline of first in-class medication.
As the impact from the COVID-19 pandemic ebbed, Novartis maintained its 2021 guidance, while it continued to post quarter profit beats. For its second-quarter, the company generated $3.72 billion, while sales for the three months through June rose 14% to $12.96. On the other hand, net income in the third quarter climbed 43% to $2.76 billion from last year’s $1.93 billion, whereas earnings per share was $1.23, up 45% from $0.85 a year ago.
After 20 years, Novartis has decided to drop its stake in its rival Roche, which means that the company is about to gain a handsome return on its investment. Yet, the move has raised questions as to what the company is planning to do with the money. Novartis has stated that its top priorities currently include investing in its internal business, growing its dividend and share buybacks, as well as boosting its bolt-on acquisitions.
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For those unfamiliar with the name Chubb, the company is a global insurance conglomerate like no other, offering a wide range of insurance products covering property and casualty, accident and health, reinsurance and life insurance. Originally founded in Bermuda in 1985 before relocating to Zurich, Switzerland, today it is one of the largest publicly traded property and casualty companies in the world, managing over $175 billion assets across 54 countries. However, the company is also set apart from its peers for its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and both local and global operations.
A component of the S&P 500 index, in late October Chubb announced that its profit rose in the third quarter of the year, helped by strong premium revenue growth and underwriting results. Net income came in at $1.83 billion, up from $1.19 billion in the third quarter of 2020, whereas earnings per share rose to $4.18 from $2.63. Core operating income per share also increased to $2.64 from $2 a year ago.
A strong dividend payer, the company has been rewarding its shareholders for decades with consistent annual raises and the pandemic has not change this. In fact, Chubb raised its dividend last May from $0.75 to $0.78 per share. In addition, its return on equity (ROE) for the trailing 12 months is 8.7%, which accordingly to analysts compares favourably with the industry’s 5.7%.
As it continues to pivot to remain relevant, in the beginning of the year the company secured an insurance partnership with financial technology company Revolut. The partnership programme will see Chubb provide a wide range of coverage to Revolut’s customers, including purchase protection, refund protection and ticket cancellation. With one of the largest product portfolios in the global insurance industry, sturdy commercial property and casualty (P&G) businesses, together with positive rate increases across the majority of its lines and regions, the company should retain its momentum.
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Boasting a history of innovation that goes back more than 120 years, Swedish-Swiss multinational corporation ABB, operates mainly in robotics, power, heavy electrical equipment and automation technology. A pioneer right from its inception, along the years, the company has pushed the boundaries of technology, driving performance to new heights. And while in the past, electricity was a primary technology used to innovate, today, ABB’s technologies include automation and digitisation, with the aim to create a more productive, yet sustainable future.
A Fortune Global 500 company, ABB announced its quarterly earnings data on October 20, reporting $0.40 earnings per share for the quarter, beating the consensus estimate of $0.34 by $0.06. Revenue for the same period amounted to $7.03 billion, slightly lower compared to analysts’ estimates of $7.38 billion, however, its quarterly revenue was up 6.8% compared to the same quarter last year. Fiscal year 2020 has been particularly strong, with ABB generating a consolidated net income of around $5.2 billion, compared with the net income of some $1.5 billion which was generated in 2019. This represents an increase of approximately 240%.
As for its stock, ABB was trading at $18.83 on March 11, 2020 on the New York Stock Exchange (NYSE) when COVID reached pandemic status according to the World Health Organisation (WHO), whereas currently, it is trading at $35.01 on November 9. What’s more, despite the pandemic, ABB has continued to reward its shareholders through share buyback programmes and dividend payouts. In the first half of 2020, ABB paid out dividends worth $1,726 million, whilst in April 2021, it launched a share repurchase programme through which it intends to buy back shares worth up to $4.3 billion.
The company is set to benefit further thanks to the completion of certain acquisitions. ABB is in talks to acquire AST Mobile Robotics Group, a leader in high growth Autonomous Mobile Robot (AMR) market that has a broad portfolio of vehicles and software. The acquisition will add to ABB’s Robotics and Machine Automation solutions which will help it deliver a unique automation portfolio and expand even further into this new industry segment.
Zurich Insurance Group (ZURN)
Zurich Insurance Group is a leading multi-line insurer that serves both local and global markets. Indeed, as of 2021, the Group ranks in the 112th position as the largest public company according to Forbes’ Global 2000 list. With its 55,000 employees, the company provides a wide range of property and casualty, life insurance products and services to more than 215 countries and territories across the globe, while its client base is wide ranging and includes multinational corporations, mid-sized and large companies, small businesses, as well as individuals.
As the COVID-19 pandemic continues to have an impact on businesses and the wider economy across the globe, the insurance industry was not left unscathed. However, insurers have responded quickly to the crisis and so has Zurich Insurance Group. According to a study by Deloitte, the pandemic has taken a toll on new premium on certain lines of business, particularly travel and events, while other lines of business, namely motor and home have remained relatively stable.
In August of 2021, the Group reported what it called a historic performance, with a strong rebound in profit for the first half of the year. More specifically, profit jumped 60% to $2.7 billion in the first six months, which according to Chief Executive Mario Greco is comparable to 2019 levels - the best first half it has had in a decade. Its net income attributable to shareholders rose 86% to $2.19 billion thanks to the operating profit boost and higher levels of realised capital gains. Thanks to its strong earnings recovery, as well as its reduced investment-and-asset risks, Fitch Ratings upgraded Zurich Insurance’s financial strength rating from an ‘AA-’ to an ‘AA’.
As our lives have increasingly become digital, Zurich Insurance has turned its focus on innovation in digital technology with the aim to reshape the way it interacts with its customers. Like many others, with the onset of the pandemic, the Group shifted its operations online, a move that paid off as it won a coveted business innovation award for the virtual site inspections offered by Zurick Risk Advisor.
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An Anglo-Swiss diversified natural resource company, Glencore was established following a merger of the original Glencore company with Xstrata in May of 2013, becoming a multinational commodity trading and mining company. Mainly operating through three groups – Metal and Minerals, Energy Products, Agricultural Products – whereby it runs several facilities all around the world, such as mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities, while it supplies metals, minerals, crude oil, oil products, coal, natural gas and agricultural products to international customers in the automotive, power generation, steel production and food processing industries.
The year 2020 was a tumultuous year for the commodity market, as the oil meltdown back in March of 2020 altered the way in which risk is measured and gauged in the entire sector, so much so that demand for the company’s commodities and prices fell rapidly early in the year and as a result, Glencore’s revenue decreased considerably to some $142.3 billion. The company also reported a net loss of $1.9 billion, while it opted not to pay its dividend.
However, global commodity markets ended the year on a strong note, with recovering demand and widespread stimulus packages boosting prices after a roller coaster ride caused by the pandemic. Meanwhile, the rollout of vaccines and the trillions of dollars in fiscal support boosted investment and spending in 2021, spurring further demand for raw materials ranging from oil to copper. And this was reflected in the company’s revenue. Glencore returned to profit in the first quarter of 2021 on the back of higher commodity prices, with a net income topping $1.28 billion, a stark difference from its net loss of $2.60 billion a year ago. Revenue rose by 32% from $70 billion in the first quarter of 2020 to $93.8 billion in the first quarter of 2021. The company also reported record adjusted EBITDA of $8.7 billion in the first half, up 79% on a year-on-year basis. As a result of its record performance, the mining giant is planning to return $2.8 billion to shareholders in 2021.
And there is more room for growth. In August, the company bought a 9.99% stake in Chile-based copper miner Hot Chili for $10.5 million. Glencore is already a top copper producer, controlling a third of the global supply of cobalt a key ingredient in a number of products including electric vehicle batteries.
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A well-known investment bank and financial services company, UBS maintains a global presence across the world’s largest financial centres and is regarded as the largest Swiss banking institution and private bank. Indeed, thanks to its presence in the Americas, EMEA and Asia Pacific markets, the Financial Stability Board considers it a global systemically important bank.
The Group’s operational structure is made up of Global Wealth Management, which provides financial services to wealthy private clients, the Investment Bank segment which offers services, such as investment banking and capital markets amongst others, while Asset Management is a large-scale asset manager with businesses diversified across a number of regions, capabilities and distribution channels. Its Personal and Corporate Banking offers its services to retail, corporate and institutional clients in Switzerland, whereas its Group Functions consists of group services ranging from operations, finance and legal to risk control, research and analytics.
So far, UBS has had a smashing 2021, with impressive profits in both the second and third quarters. The company posted a 63% jump in second-quarter net profit, easily beating expectations as buoyant markets continued to help the world’s largest wealth manager generate higher earnings from managing money for the financially well-off. Its new profit of $2.01 billion also outpaced the expectation for $1.34 billion. Following news of these positive results, UBS shares traded 4.6% higher after the market’s open on July 20, 2021.
As for its third quarter, the performance of practically all its segments was impressive. While operating income increased 2% to reach $9.13 billion from the same period last year, operating expenses edge down 1% to $6.3 billion. On the other hand, as of September 30, 2021, UBS’s invested assets improved by 16% at $4.5 trillion, whereas total assets increased to $1.09 trillion from the previous quarter. What’s more, with money flowing in and both revenues and profit growing, it comes as no surprise that according to CNN, 22 polled investment analysts have given the UBS stock a ‘buy’ rating.
In an effort to embrace fintech even further, the Swiss giant is partnering with financial star-up Yokoy, which employs artificial intelligence (AI) to digitize and automate business spending and credit cards. In a statement by both companies, it was announced that UBS’ clients who hold corporate credit cards will now be able to gain access to a wide range of options for expense records, spending and administration of their cards, complementing UBS’ corporate card solutions offering. Meanwhile, the company is increasing its efforts to combat cybercrime by setting up a research centre in Israel.
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