Blue chip results likely to be overshadowed by Swissair trauma

Swissair's problems will dominate the headlines again in the coming week Keystone Archive

Investors will be keenly watching how top Swiss firms are coping with the economic downturn this week with a clutch of blue chip companies due to release third-quarter results. But attention will also remain firmly focused on the fortunes of the Swissair Group.

Switzerland’s biggest corporate collapse will continue to grab the headlines as the government, banks, trade unions and the regional carrier Crossair, work on a salvage plan for the collapsed airline.

The Swissair Group was brought to its knees by the combined effects of heavy debts, because of an over-ambitious and failed foreign expansion drive, and a drop in air travel after the September 11 attacks in the United States.

Evidence mounted last week that an ambitious rescue plan for Swissair would have to be scaled down, raising fears by unions that more job losses were in store on top of 9,000 already announced. Unions warned that up to 17,000 Swissair jobs could be at risk in Switzerland alone.

The SFr1.4 billion rescue plan, put together by UBS and Credit Suisse Group, envisaged that two-thirds of Swissair’s fleet – 52 planes – would be taken over by Crossair, which would become the country’s flag carrier.

However, last week Crossair raised doubts that it could secure sufficient capital to take over 52 of Swissair’s planes or operate long-haul flights. The carrier was due to absorb the planes and routes as of October 28.

Roche prospects better

Prospects for the Basel-based healthcare group Roche, are looking up, with most analysts upbeat about the company’s performance ahead of its third-quarter sales, which are due for release on Tuesday.

Roche has been hit hard over the past 18 months by patent expiries and product setbacks. But brokerage Merrill Lynch said in a recent report that there were now signs that the company was “on the mend”, with plans to raise pharmaceutical margins from 18.4 per cent in 2000 to 20-25 per cent over the medium term.

Roche launched a massive shakeout back in May, when it announced some 3,000 job cuts.

Also reporting third quarter sales will be specialty chemicals group, Clariant. Its third quarter results are scheduled for release on Wednesday and will be closely examined for any indication of how the remainder of the year is shaping up.

The company said after the September 11 attacks in the United States that it was sticking to its forecast, released with first half results in August.

“Currently we fully stick to the guidance we gave at the half-year results release. Immediate trading conditions are not good, which is logical. The operating margin in the second half is not likely to exceed that in the first half, and will probably be lower,” company spokesman Philipp Hamel said on September 20.

The world’s biggest food group, Nestlé, ends the business week with its third quarter sales results. The canton Vaud-based multinational has been attracting a lot of positive attention on the markets lately as dealers rush to invest in what they consider to be safe haven stocks.

In August the company said it was expecting record results for the year as a whole despite the global economic slowdown. Net profit at Nestlé rose 12.7 per cent in the first six months of the year to SFr3.15 billion.

by Michael Hollingdale