The Swiss franc's iron strength is set to have a greater adverse impact than expected on the 2011 results of companies reporting in the currency, with some bears predicting earnings growth will be half that forecast.
Although Switzerland's export-oriented machinery and luxury goods makers have benefited from a general global recovery and drug groups and food giant Nestle have made it through the financial crisis, Swiss companies may now become victims of their currency's success.
It is Switzerland's safe haven status which has driven the Swiss franc to record highs against the dollar and the euro, threatening companies with overseas profits.
The "Swissie" ended last year some 12 percent in real terms above its 2009 average when measured against a basket of Switzerland's 40 most important trading partners. And it was more than 20 percent above its pre-crisis low of 2007. There is no real sign of this run reversing as the eurozone debt crisis and uncertainty about the US recovery boost the currency's appeal as a safe port during uncertain times.
So while investors and analysts are factoring in strong performances from dependable Swiss companies, some seem to be underestimating the franc's potential damage to earnings.
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