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Matthias, you read a lot in the media about the "strong Swiss franc", what does that mean?
A strong Swiss franc (CHF) means that the value of the currency is rising compared to other foreign currencies. The stronger the franc, the more expensive exported goods become for our foreign customers. On the other hand, this also makes imports cheaper for us Swiss companies, unless this effect is thwarted by inflation.
Why is the Swiss franc getting stronger?
In times of crisis, the Swiss currency is seen as a "safe haven". Many investors flee the euro (EUR) and US dollar (USD) and invest in the stable and reputable Swiss franc (CHF), for example after the 2008 banking crash, which led to economic stagnation and even recession in many countries. This refuge caused the Swiss franc to appreciate sharply.
The current economic situation is once again uncertain. This is why we are currently experiencing a further strengthening of the franc. It has now fallen well below parity (exchange rate of 1:1) with the euro.
Is the strong currency a problem for ABNOX AG?
ABNOX tries to keep the currency risk as low as possible through natural hedging. In this way, a small part of the costs can be compensated by cheaper imports of raw materials or semi-finished products. However, the majority of our value chain is located in Switzerland. It is therefore not possible to compensate in full, which is why currency adjustments have to be passed on to customers in the form of price increases. This makes us less competitive compared to our foreign competitors.
What is being done about this problem?
The Swiss National Bank (SNB) is busy printing Swiss francs in order to buy euros. This measure is intended to slow down the appreciation of the franc. Other monetary policy measures include government investment in research and innovation, adjustments to the key interest rate and export promotion.
We at ABNOX are constantly improving our own processes. For example, we are continuously minimizing our set-up and changeover times in production and constantly optimizing assembly processes. Reduced manufacturing costs enable us to compensate for some of the currency losses. New markets are also being opened up and products developed with the aim of helping our customers to improve their own business.
