* Franc down 4 pct since Jan. 10, trades at 20-month low
* EPS estimates to rise 1-2 pct pts in Swiss market-analyst
* Weaker franc could trigger asset disposals
By Caroline Copley and Martin de Sa'Pinto
ZURICH, Jan 18 Swiss companies exporting to the
euro zone have received a boost from the recent sharp drop in
the Swiss franc, yet the currency's decline needs to be bigger
and more sustained to have a significant impact.
So far the currency's fall to a 20-month low of 1.2568
against the euro will boost Swiss corporate earnings
by just a couple of percentage points on average, some analysts
But at least the currency is heading in the right direction
for hard-pressed exporters.
"It's refreshing to have some currency tailwind for a
change," said Mark Hill, spokesman for dental implant maker
Straumann Holding Ltd, which has a 40 percent exposure
to the euro zone. "For every cent change that there is, it
affects about 3 million francs ($3.2 million) on our top line."
Having been pegged at around 1.20 for much of last year by
the Swiss National Bank, the franc was sent sharply lower last
week after European Central Bank chief Mario Draghi said
conditions in the euro area had improved and dashed expectations
of an interest rate cut in the near term.
The Swiss currency's safe-haven appeal was further
undermined by encouraging economic data from the United States
and China, which gave a further boost to risk appetite and
lifted the euro.
The fall below the psychologically important 1.25 mark is
welcome news for Swiss companies that have long complained the
strong franc was pressuring margins and wiping out profits.
Kepler Capital Markets analyst Jon Cox said Swiss companies
on average make about a third of their sales in the euro zone.
Those with a share greater than 50 percent - such as insurer
Baloise Holding AG, clothing retailer Charles Voegele
Holding AG and logistics group Kuehne & Nagel
International AG - will see the biggest benefit, he
Cox said a 5 percent fall in the franc against the euro
could increase earnings per share estimates in the Swiss market
as a whole by between 1 and 2 percentage points.
Geberit AG spokesman Roman Sidler said it was too
early for the currency move to have a significant effect, but
saw some positive impact.
The maker of toilets and piping systems, which has roughly
70 percent of its sales in the euro zone, said the strong franc
had lopped roughly 55 million francs ($59 million) off its 2011
BOOST FOR BANKS
Even large groups like Nestle SA - which makes
around a third of its sales in euros - as well as banks like UBS
AG and Credit Suisse Group AG will see some
"The weaker franc is positive for the banks. A large part of
their costs are in francs, while most of their revenues are in
foreign currencies," said Andreas Venditti, bank analyst at ZKB.
Credit Suisse said in its 2011 full-year results
presentation that a 10 percent move in the franc against the
euro would hit full-year pretax income by 258 million francs.
Firms that report in dollars, however, such as engineering
group ABB Ltd and drugmaker Novartis AG,
will see no benefit, because the franc is roughly the same
against the dollar as it was a year ago, despite recent
A weaker franc could also be good news for firms that are
looking to dispose of some of their assets, said one
Zurich-based mergers and acquisitions banker.
"Some companies have used the buying power of the strong
franc in cross-border transactions, but those looking to sell
assets waited because offer prices couldn't match expectations,"
said the banker, who didn't want to be named.
"But I don't think a weaker franc will have an impact on
those looking to make strategic acquisitions. After all, we're
talking about a 4 percent fall in buying power, not a 20 percent
Ursina Kubli, analyst at bank Sarasin, also cautioned it was
too soon for firms to start popping the champagne corks. She
estimates the franc is still more than 8 percent too expensive,
putting its fair value at 1.32.
"According to our estimates ... the euro would be trading
around 1.10 today without the SNB's euro intervention," she said
in a research paper. "Hence the Swiss franc is likely to take a
little longer to normalise."
($1 = 0.9328 Swiss francs)
(Additional reporting by Albert Schmieder; Editing by David