Foreign exchange sensitivity

The Group operates in around 90 countries, generating the majority of its results in currencies other than the Swiss Franc. Only about 2 percent of net sales are generated in Swiss Francs.

Foreign-currency volatility has little effect on the Group’s operating profitability. As the Group produces a very high proportion of its products locally, most sales and costs are incurred in the respective local currencies. The effects of foreign exchange movements are therefore largely restricted to the translation of local financial statements for the consolidated statement of income. In the last financial year, these were negatively impacted by the lifting of the Swiss Franc Euro peg in early 2015 and the continued appreciation of the Swiss Franc against main currencies. As a large part of the foreign capital is financed with matching currencies in local currency, the effects of the foreign currency translation on local balance sheets for the consolidated statement of financial position have not, in general, resulted in significant distortions in the consolidated statement of financial position.

The following sensitivity analysis presents the effect of the main currencies on selected key figures of the consolidated financial statements. The sensitivity analysis only factors in effects that result from the conversion of local financial statements into Swiss Francs (translation effect). Currency effects from transactions conducted locally in foreign currencies are not included in the analysis. Given the local nature of business activities, this type of transaction is seldom individually hedged.

The following table shows the effects of a hypothetical 5 percent depreciation of the respective foreign currencies versus the Swiss Franc.

Sensitivity analysis

Million CHF

2015

EUR

GBP

USD

CAD

Latin American basket (MXN, BRL, ARS, COP)

INR

Asian basket (AUD, IDR, PHP)

Middle East African basket (NGN, DZD, EGP, MAD)

 

Actual figures

Assuming a 5% strenghtening of the Swiss Franc the impact would be as follows:

Net sales

29,483

(185)

(108)

(242)

(109)

(106)

(178)

(166)

(127)

Adjusted Operating EBITDA

5,751

(10)

(17)

(59)

(23)

(23)

(27)

(36)

(48)

Cash flow from operating activities

2,550

(26)

(10)

(31)

(17)

(14)

(30)

(27)

(42)

Net financial debt

17,266

(379)

(30)

(217)

36

(38)

44

(43)

(16)