3.2 Financial Guidance in Switzerlandⁱ

The majority of large companies issue financial guidance as part of their annual reporting (study by IRFⁱ on SMI Expanded companies). Nine in ten companies use quantitative target values, while somewhat fewer present qualitative information. It can be assumed that the smaller companies represented in the SPI are generally less and less likely to practice detailed guidance.

Key Performance Indicators in Quantitative Guidance

Of the 87 percent of companies that provide quantitative guidance, 85 percent provide a forecast for revenues and 78 percent for the operating result (EBIT/EBITA/EBITDA). Dividend amounts and cash flow are also popular target metrics, as are earnings and earnings per share, with around a third of companies providing guidance on these items. The equity ratio and return on equity are far less popular parameters. In addition, the majority of the firms that provide guidance also use sector-specific performance indicators, such as the cost-to-earnings ratio or net new money for banks, the combined ratio for insurance companies, capital expenditure (CapEx) for industrial firms or the occupancy rate for real estate companies.

In terms of internal performance parameters, the development of individual business units and product groups is becoming increasingly important. Almost 40 percent of the companies surveyed provide guidance on this item. There has also been a strong focus on cost-cutting programs and operational efficiency (35%) this year. Geographic coverage is also being increasingly incorporated into guidance, but only by 22 percent of companies.

The IRF survey shows that the companies surveyed have shifted from short-term forecasts over the next twelve months (83%) to medium-term forecasts (76%). Far fewer companies release long-term targets over five years when announcing their results (22%).

Forecasts and targets relating to environmental factors have become standard in reporting (100%), due to the introduction of mandatory regulations. The percentage of companies publishing social indicators is only slightly lower (96%).