Corporate Distress on the Rise in Switzerland, Mirroring Broader European Trends
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Dynamics Group AG
/ Key word(s): Study
Media release
Corporate Distress on the Rise in Switzerland, Mirroring Broader European Trends Distress reaches highest level since the pandemic in Europe Over 8% of Swiss companies are assessed as financially distressed Chemicals, fashion retail and manufacturing see highest increase in distress
Zurich, 1 April 2025 – Global professional services firm Alvarez & Marsal (A&M) has published its bi-annual Alvarez & Marsal Distress Alert (ADA)1, which assesses the financial performance and balance sheet robustness of more than 22,000 companies across Europe and the Middle East. The report finds that that the percentage of companies in financial distress - a combination of a weak balance sheet and underperformance - rose by 22% with 11.5% of European corporates in distress, marking a return to levels last seen during the COVID-19 pandemic. Seven out of nine markets in the study, including major economies like the U.K. and France, saw distress levels rise over the past year. This reflects rising pressures on companies’ topline growth and profitability driven by slower economic growth, depressed consumer spending and heightened geopolitical tensions that have made corporate planning increasingly complex. Across EMEA the number of companies with weak balance sheets has reached a record 35.4%. This reflects the impact of rising debt costs and cash flow pressures in an elevated interest rate environment, which is significantly hindering companies’ ability to service their debt. The German market showed the highest proportion of distress in the region and the biggest year-on-year increase in Europe. Distress among German firms has risen most sharply, more than doubling from 8.1% in 2023 to 16.6% in 2024. This displays the mounting economic pressures on Europe’s largest economy as it struggles with faltering global demand, high energy costs, infrastructure issues and political instability both home and abroad. the sharp rise in distress among German corporates underlines the severity of the economic downturn, which after two years of contraction could be heading to its longest period of stagnation since World War II. Across Europe, Retail, Chemicals, Media & Entertainment, Manufacturing and Construction had the highest level of distress in 2024. Overall, 11 sectors experienced increased distress in 2024 versus the prior year. Gioele Balmelli, Director Restructuring Switzerland at Alvarez & Marsal says: "European companies are under pressure from all sides as demand falls and consumer uncertainty and financing costs rise. The weakness of corporate balance sheets is particularly alarming, and companies will need to quickly take action to assess the robustness of their positions, or face being at risk in the event of an unexpected shock." Distress in Switzerland on highest level since 2022 Switzerland saw one of the sharpest year-on-year increases in distress, with the proportion of companies in distress increasing 14% year-on-year and distress levels now approaching those seen in other major economies, including the UK, Spain, and Italy. The latest data shows that 8.2% of Swiss companies are in distress, compared to 6.6% the previous year. The increase signals heightened economic challenges, as companies grapple with rising interest rates, weakening profitability, and liquidity constraints. A growing number of companies report weak earnings, insufficient liquidity, and deteriorating balance sheets. Alessandro Farsaci, Managing Director and Head of Restructuring Switzerland at Alvarez & Marsal, says: "The increase in distress among Swiss businesses reflects broader European trends. Higher financing costs and economic uncertainty are pressuring corporate balance sheets, making it crucial for companies, while considering the long-term positioning and competitiveness, to take actions swiftly. Swiss companies with a large share of exports, including to USA, Germany and China, are particularly critical. In addition, companies in certain sectors are finding it increasingly difficult to pass on higher costs to their customers and the pressure on margins is expected to increase further over the course of the year, which may have a negative impact on earnings."
Methodology The A&M Distress Alert systematically assesses performance and balance sheet robustness of European businesses through a proprietary methodology developed by seasoned restructuring experts on the basis of extensive practical experience, aiming to identify those that are in financial distress or may soon be heading in that direction. The study is based on data from over 20,000 companies with over €20 million of annual revenues across 33 countries in Europe and the Middle East that consistently provided data for the full years between 2020 to 2023, and from approximately 3,700 companies that have reported financial results through November 2024. The ADA index analyses 18 KPIs to create two sub-scores: the performance score, which is based on the company’s own income statement as well as related KPIs measured against its industry peers, and the robustness score, based on detailed balance sheet data.
About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a leading global professional services firm. Renowned for its leadership, action and results. Alvarez & Marsal provides advisory, business performance improvement and turnaround management services, delivering practical solutions to address clients' unique challenges. With a world-wide network of experienced operators, world-class consultants, former regulators and industry authorities, Alvarez & Marsal helps corporates, boards, private equity firms, law firms and government agencies drive transformation, mitigate risk and unlock value at every stage of growth. To learn more, visit: AlvarezandMarsal.com.
CONTACT: Nicolas Weidmann Alessandro Farsaci
Additional features: File: ADA Swiss Media Release 2025 E File: A&M Distressed Alert Report March 2025
End of Media Release |
2109388 01.04.2025 CET/CEST
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