Once a year, the whole country is united: National Day on 1 August. This was introduced in 1891, 600 years after the founding of the Swiss Confederation, and is marked by numerous ceremonies. Similarly strong together are the three Swiss global enterprises Nestlé, Novartis and Roche, whose roots likewise extend back over 100 years. Few other companies leave a bigger mark on the country than this trio. These giants of the SMI weigh in collectively at an incredible CHF 750 billion. As a result, they represent over half the market capitalisation for this leading index. Three “musketeers” are jointly responsible for this massive total: the still relatively young managers Mark Schneider (53), Vasant Narasimhan (43) and Severin Schwan (51). The qualification as “young”, in the case of the first two, relates not only to their respective age, but also to their time with the company. That’s because both the head of Nestlé and the Novartis CEO have only recently come on board. With resounding success: the duo has restored full fitness to these somewhat jaded companies.
When Mark Schneider took over at the helm at Nestlé around two years ago, growth had stagnated at the food giant. However, the manager – who had previously successfully headed up the healthcare group Fresenius – had a formula for getting Nestlé back on track. This included faster recognition of trends, a greater role for healthier products, and boosting its coffee business. The evidence that this group restructuring is paying off has now been there for several quarters. The first half-year of 2019 now also slots seamlessly into this positive trend. In this half-year, the group – now over 150 years old – increased sales by 3.5% to CHF 45.5 billion. The most important ratio for the experts, operating sales adjusted for extraordinary items, rose by 3.6%. The fact that this corporate dynamic is being sustained is revealed by a closer look at Q2, where the growth rate is 3.9%. Nestlé is also returning to profit: at the half-year stage, the operating margin had improved by a full percentage point to 17.1%. The figures presented see Nestlé meeting market expectations for revenue growth and exceeding them in terms of margin. View more information on investment solutions on the topic “The big 3: achieving success together”.
Rather like Mark Schneider at Nestlé, Vasant Narasimhan also had his own clear plan for Novartis. The CEO only took over the reins at the pharmaceuticals giant in February 2018, but has already made a definite mark on the company. Around two-thirds of the company’s global management has been replaced since then, with numerous factories being closed and the eye care subsidiary Alcon being floated on the stock exchange. His measures are bearing fruit, with sales growing by just over 4% in the recently concluded Q2, boosted in part by the strong demand for the psoriasis drug Cosentyx and the heart medicine Entresto. Novartis performed even better when it comes to profits, delivering an 11.6% improvement in the operating result. “Strong sales and high productivity ensured a double-digit rise in the core operating result and higher margins,” said a delighted Narasimham.
Amongst the three SMI heavyweights, it is Roche CEO Severin Schwan who has been in charge the longest. The Austrian-German manager has led the pharmaceuticals company through many highs and lows since 2008, with the highs very much in the ascendant at present. In the past year alone, its ten blockbusters (products with annual sales over USD 1 billion) earned just over CHF 34 billion, accounting for over half the group’s revenues, which grew by seven per cent to CHF 56.8 billion. New drugs such as Ocrevus, for treating multiple sclerosis, and Perjeta for breast cancer were the growth drivers in the first half of 2019. With currency adjustments stripped out, sales grew by 9% to CHF 30.5 billion, while the adjusted profit improved by a disproportionate 13%. Below the line, profits were up 19 per cent at CHF 8.9 billion. As a result, declining revenues on the older cancer blockbusters such as MabThera and Herceptin, whose patent protection has now expired, were more than offset.