Almost all large listed companies are now making clear and measurable financial forecasts
Zurich, September 5, 2018 - Switzerland's 50 largest listed companies (SMI Expanded) recognize the strategic benefits of financial guidance and provide various future-oriented targets in their 2017 annual reporting. According to the annual study conducted by IRF Communications, a clear majority of companies analyzed provide guidance over a one-year horizon.
- 92% of the largest listed companies provide quantitatively measurable financial guidance, compared with only 64% two years ago
- Qualitative guidance is now given by 100% of the companies analyzed
- Qualitative explanations and reasons for sales and profit trends increased considerably
All major listed Swiss companies provided qualitative and quantitative guidance in their annual reports for the 2017 financial year, albeit in varying degrees of detail. The proportion of companies providing quantitative financial measures is 92% (2017: 83%, 2016: 64%). In terms of qualitative parameters, the ratio is now 100%.
Martin Meier-Pfister, Partner at IRF Communications, comments: "More and more Swiss companies are providing increasingly precise information on future developments. Investors appreciate and demand such guidance. In addition, the increase reflects the good state of the large-cap companies and their comparatively positive assessment of the general market development at the beginning of the year. If the current turbulence on world markets continues or increases, some companies will become more cautious in their financial guidance or even forego it altogether.”
And he continues: "Sometimes guidance is criticized as just "noise", implying that managers are no better at forecasting future results than investors and analysts, and they should therefore refrain from doing so. However, studies show the opposite, namely that managers clearly beat analysts regarding the correctness and accuracy of financial forecasts and that this competence is also recognized by the financial market. However, the accuracy of management forecasts varies greatly depending on the industry and a company’s situation.”