SNB Introduces Stealth Negative Rate to Keep Money Markets Going
Swiss banks can hold up to an unchanged 18 times their minimum reserve requirement in sight deposits at the SNB for free. For anything over that they will be charged interest of -0.25% as the discount from the policy rate remains unchanged at 25 basis points, the institution said in a statement on Thursday.
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Organic Growth: 2.9% in the first half of 2025. UTOP Margin: 16.5%, down 90 basis points. Gross Margin: Decreased by 60 basis points. Pricing: 2.7% increase, with significant increases in confectionery and coffee. RIG (Real Internal Growth): 0.2% in the first half. Advertising and Promotion (A&P): 8.6% of sales in the first half. Fuel for Growth Savings: CHF150 million recognized in H1, targeting CHF700 million for the full year. Net Financing Costs: Slightly higher due to increased average net debt. Underlying Tax Rate: Slightly lower at 22%. Free Cash Flow: Seasonally weaker in H1, impacted by lower EBITDA and higher inventory costs. Net Debt: Increased due to dividend payment, partially offset by CHF2.5 billion from Swiss franc strengthening. Guidance: Full-year UTOP margin expected to be at or above 16%. Warning! GuruFocus has detected 4 Warning Sign with NSRGF. 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Negative Points Margins are expected to be significantly lower in the second half due to increased input costs and tariff impacts. Sales were negatively impacted by foreign exchange movements, particularly due to the strengthening of the Swiss franc. The Greater China market experienced a negative impact on RIG due to a reversal of previous sell-in growth, and the company anticipates a headwind for up to a year as it shifts its model. The VMS business faced challenges due to the discontinuation of some private label business and weaker performance in mainstream brands. Free cash flow was lower in the first half, impacted by higher working capital requirements and FX headwinds, raising concerns about its ability to cover dividends. Q & A Highlights Q: What is your guidance for COGS inflation for this year, and how does it impact pricing strategies, particularly in categories like Coffee and Confectionery? 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