Pricing power – Swiss secondary stocks: These companies cope with rising wage costs better than any other

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Quarterly reporting for listed companies from Switzerland is well advanced, for the 20 large corporations from the Swiss Market Index (SMI) even already completed.

If one topic ran like a red thread through many of the subsequent analyst conferences, then it was about rising raw material and wage costs – and even more important: whether and how these can be passed on through price increases.

So it doesn’t surprise me, they do UBSEquity analysts around Jörn Iffert, Patrick Rafaisz and Sebastian Vogel the rising wage costs at the heart of an 18-page strategy paper. As they state in it, the banks’ own economists in Europe and Switzerland are only assuming moderate wage growth. However, the risks in this regard are clearly directed upwards. In addition, there are major differences from branch of industry to branch of industry, the authors also admit. In their opinion, many companies only have two options: Either they increase sales prices or they achieve improvements in productivity.

Looking at all of the small and medium-sized companies in Switzerland tracked by the big bank, wage costs are between 27 and 28 percent of annual sales. The hauliers have the highest share Kuehne + Nagel (around 60 percent), the goods testing company SGS (around 56 percent) and the hospital communications specialist Ascom (around 50 percent). The proportion of wage costs as a percentage of annual sales for the cloud specialist seems almost negligible SoftwareOne and at the development service provider DKSH (around 6 percent each) and at the consumer electronics manufacturer Logitech (around 7 percent).

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Despite the low dependency on wage costs, SoftwareOne’s shares have been under pressure for days (source:

In order to take account of these enormous differences, the stock analysts break down the personnel costs into the operating profit per employee and compare the sensitivity to changes in wage costs based on previous years.

The specialty chemicals manufacturer is best at cutting Ems-Chemie, the packaging machine specialist SIG Combibloc, the consumer electronics manufacturer Logitech, the chocolate producer Barry Callebaut, the real estate investment company Swiss Prime Site, the semiconductor supplier VAT Group as well as the sanitary technology group Geberit away. The shares of SIG Combibloc, Logitech and VAT Group will be at the UBS also officially recommended for purchase.

In contrast, the big bank sees rising wage costs as a particular risk for the Lausanne technology group Kudelski, the automotive supplier Autoneum as well as for the hospital communication specialist Ascom – Of course, only if these companies cannot enforce price increases. The values ​​of Ascom and Autoneum will be at the UBS classified as “neutral”, those of Kudelski even recommended for sale with “Sell”. In this respect, everything seems to be consistent.

Kudelski is only a shadow of himself on the stock exchange (source:

Not only wage costs, but also raw material and energy costs have risen sharply recently. In the United States, consumer prices in October were 6.2 percent above the previous year. On the other hand, producer prices are even 8.6 percent higher. Here in Switzerland it doesn’t look much different, we’re talking about a development that is spreading around the globe.

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You don’t need to have a degree in economics in your pocket to be able to imagine that those companies that cannot pass on rising manufacturing costs through price increases are threatened with margin pressure. The findings from the UBS strategy paper are all the more valuable – even if the authors only refer to the direct effects of wage costs and omit the indirect effects via the suppliers and raw material costs.

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