Today, more than ever, a transforming economic landscape has increased uncertainty and opportunities for many businesses in Switzerland.From a CFO’s perspective, how can organisations best address the resulting strategic challenges and be prepared for the future?
In our CFO talk CFOs from different sectors and company sizes across Switzerland provide answers to these questions.
Philipp Müller, CFO of Oerlikon
Philipp Müller was appointed Chief Financial Officer effective January 1, 2020. Mr. Müller has more than 15 years of financial and strategic experience across multiple industries. Most recently, he led the investor relations functions at Baker Hughes in Houston, Texas, U.S. Prior to that, he served as CFO of GE’s oil & gas drilling business from 2014 to 2016. Previously, Mr. Müller held various financial leadership positions in GE’s industrial businesses. Prior to that, he spent five years on GE’s corporate audit staff, where he advanced to executive audit manager at GE Healthcare. Mr. Müller has extensive international experience, having worked in over ten countries during his career. He holds a Master’s degree in Business from the University of Mannheim, Germany.
Deloitte: How do you see the role of CFOs during crises such as the COVID-19 pandemic? And how were you as CFO specifically able to help your company during the crisis?
Philipp Müller: In any crisis – but particularly one as sudden and unexpected as the COVID-19 pandemic – leadership is the priority for any company. A fast and robust assessment of the situation is critical, and CFOs have a key part to play in that, as they are the point where all the data comes together. Making decisions without a complete set of facts is one of the major challenges for a CFO in such a situation, so responding quickly is often more important than conducting a full and detailed analysis.
Deloitte: Manufacturing is one of the sectors that may benefit most from the economic recovery. What opportunities do you see for your company?
Philipp Müller: It’s something of a cliché, but Oerlikon has really “used the crisis”. We have acted quickly and decisively in some key areas, which were of concern to us. We are emerging as a stronger company from the crisis – and we can already see the signs that the economy is recovering. It matters less whether the recovery happens this quarter or next quarter; what is important is that we stay closely aligned with our customers and continue to focus on good cost and cash flow management.
Deloitte: What lasting changes do you think the pandemic will make to the future role of CFOs?
Philipp Müller: I see a number of parallels with the financial crisis of 2007/2008. I believe the best managers will learn crucial lessons from the pandemic, especially in relation to risk management and the way global networks evolve during a crisis.
Deloitte: The COVID-19 crisis has prompted many companies to push forward on digitalisation, and they will go on benefiting from these advances once the crisis has passed. Which digital advances do you see as particularly promising?
Philipp Müller: I think the need to digitalise is one of the most important and urgent changes facing companies, especially those in manufacturing, though that was the case even before the pandemic. The largest change, unsurprisingly, has been in relation to remote working. I see a quantum leap here, with much more scope for flexibility than previously existed.
Deloitte: And what are the limits on digitalisation, if any?
Philipp Müller: I firmly believe wholly remote working is not a recipe for success. There are clear limits, and being physically present in the office and working with colleagues will always be crucial to successful teamworking.
Dr. Luc Schultheiss, CFO Endress+Hauser
Dr. Luc Schultheiss has an undergraduate degree and a PhD from the University of St. Gallen (HSG). After a number of teaching posts at HSG and elsewhere, he moved in 1999 to Endress+Hauser, where he was Director Controlling and a member of the management team of Endress+Hauser Flowtec AG. Since 2012, he has been Chief Financial Officer and a member of the Executive Board of Endress+Hauser AG.
Deloitte: Industrial companies are particularly well placed to benefit from the expected economic recovery. What opportunities do you see for your company?
Dr. Luc Schultheiss: We are well positioned in a number of business areas with different business cycles and different degrees of impact from the pandemic. Last year, for example, our laboratory business was able partially to offset falls in business in other areas. This year, we are seeing stronger growth in cyclical areas, such as commodities.
Deloitte: What do you think will be the lasting impact of the pandemic on the future role of CFOs?
Dr. Luc Schultheiss: The pandemic was an extreme event, but we’ve faced a number of crises over recent years, including the financial crisis. It is crucial that companies remain agile and keep costs flexible. That is something for which the CFO ultimately takes responsibility, but he or she does not operate alone: I see tackling crises as a team responsibility. For some time now, we have prioritised decentralised structures and autonomy, and this proved an advantage during the pandemic. In general, ensuring liquidity during a crisis is one of a CFO’s major roles. However, it wasn’t a problem for us.
Deloitte: And do you think the crisis will have long-term effects on your supply chains and warehousing? Do you think industries are trying to make their supply chains more resilient?
Dr. Luc Schultheiss: We never had serious problems, though our supply chains did come under greater pressure. Our logistics are very solid, and that enabled us to plan effectively. However, supply chains around the world are now under considerable pressure. We’ve also been affected by other events, such as the temporary closure of the Suez Canal. Supply chains are undergoing change, but we are confident that we can manage that change. Nonetheless, risk management will be an ongoing focus for us, as it is for other businesses.
Deloitte: The crisis has prompted many companies to take major steps towards digitalisation, a move from which they stand to benefit once the crisis is over. Which aspects of greater digitalisation do you think offer particular promise?
Dr. Luc Schultheiss: That depends on the aspect in question. During the crisis, for example, demand in the IoT increased dramatically, and we intend to continue to expand substantially in this area. Virtual formats also made a breakthrough in the area of trade fairs and exhibitions. For example, we had a virtual trade fair stand last year, which was very successful.
Deloitte: So do you think there are limits to the rollout of digitalisation?
Dr. Luc Schultheiss: More employees will definitely be working from home than before the crisis, but a physical presence in the office will still be important. There are already signs that “home office” working, as many Swiss employees refer to it, is not quite as popular as it was a year ago. People need – and seek – social contact, so working from home long term will create more health problems. And these will be both mental and physical, where people lack the space and equipment to work ergonomically from home.
However, permanent remote working also has other long-term consequences. The way the research and development or marketing and sales functions operate is a good example. It’s perfectly possible to keep in touch with existing customers via online channels but harder to acquire new customers if your interaction with them is wholly virtual.
Martin Lorenz, CFO & CEO of the Competec Group
After an early career in the banking and fiduciary sector and training as a business economist at HWV, Martin Lorenz worked for eight years as group controller of at COS. After completing a master’s degree in corporate finance, in November he became head of Finance at the Competec Group and in December 2015, he was additionally appointed as head of the Operations Division. Martin has been CEO and CFO at the Competec Group since April 2018. The Competec Group includes the online retailer BRACK.CH, the wholesale companies Alltron and Jamei, logistics service provider Competec Logistik AG and Competec Service AG, which handles central services. The group has over 820 employees (as of mid-2020) and turnover in 2019 was over CHF 811 million.
Deloitte: How has your company coped with the coronavirus crisis?
Martin Lorenz: We are still in the middle of the pandemic. As an e-commerce company, we are in a business sector that has benefited from higher sales. However, we do not regard this as a sign of the superiority of our business model, but rather as a reason to be grateful. We are grateful to our staff, who do a great job, and to our customers for sticking with us in the spring, despite some disruption in our supply chain. In the last few weeks, we have approved several new job opportunities, so that we can start the Christmas business with even greater capacity. However, the limited logistics options currently available because of a long-standing objection to our logistics expansion plans have naturally hurt us. We would have liked to put the extension into operation this year. This was originally planned for 2019 and will now offer us significantly more capacity starting in summer 2021.
Deloitte: Customers’ shopping habits have changed since the outbreak of the coronavirus crisis. In particular, the lockdown in the spring encouraged many customers to do more shopping online or to try it for the first time, for example in your online shop, BRACK.CH. Which of the changes do you think will be lasting in nature?
Martin Lorenz: We believe that the current trend will continue. The crisis has simply accelerated an existing move to online shopping that had already been occurring over the previous few years. Of course, there have been one or two exception cases of higher demand, such as for disinfectants and protective masks, which we hope will drop off in future when the need is no longer so acute. However, we do not expect a reversal in the overall trend towards online commerce. Many of the advantages of the online channel are simply too obvious and we have certainly been able to convince customers of the benefits.
Deloitte: How were you able to cope with the sharp rise in demand in online trading and in your role as CFO, how did you keep costs under control?
Martin Lorenz: We were able to cope with the increase in demand only by recruiting additional staff and through the hard work of all our employees - even at weekends. The question of cost simply did not arise. Our aim was to keep our delivery promises and to maintain service to our customers to the best of our abilities. The question of rising costs was a secondary issue and remains so today. We were totally unprepared for such a big increase in demand, so we are facing new challenges every day, even though we have taken on additional staff.
Deloitte: Expanding and differentiating the product range are an important element in online trading. You have recently added food products to your range. Why have you decided to compete with the big grocery retailers and discounters?
Martin Lorenz: We do not regard this as competition. We believe that online grocery retailing has yet to take off. This is evident from online sales in other countries, and I am aware of it from personal experience. Why not enjoy the convenience of having food delivered to your home? Because our logistics operation is geared towards e-commerce, we are able to distribute food products with a long shelf life together with other types of product. As we stock all products in a single warehouse, customers receive all the products they buy in the same delivery. However, by adding the supermarket range, we also aimed to increase the frequency of contact with our customers.
Deloitte: You are both CEO and CFO at the Competec Group. Which role has been the greater challenge this year?
Martin Lorenz: It is hard to separate the two. In the final analysis, both roles carry a high degree of responsibility for the business as a whole. In these extraordinary times and given the diversity of the tasks handled, the role of CEO is probably more demanding. However, at the end of the day it is all about the efforts of all our 820-strong team. I am just a cog in the wheel, like everyone else, and I am proud that we have been able to develop the Competec Group together and are continuing to do so.
Stefan Kopp, CFO of Lidl Switzerland
Stefan Kopp has degrees in Business Studies from the University of Bayreuth in Germany and Western Illinois University in the US. After graduating, he worked in Argentina for five years, including as CFO for the lingerie company, Triumph. Since 2002, he has worked for the Lidl Group, including periods as CFO in Canada and Norway. In 2009, Stefan Kopp became CFO of Lidl Switzerland, where he heads the Finance, Accounting & Controlling, Legal Affairs & Compliance, IT and Audit & Customer Services areas. During this time, he has played a crucial part in developing Lidl’s Swiss market. Outside work, the father of two is a passionate racing cyclist.
Deloitte: How has your company fared during the COVID-19 crisis so far?
Stefan Kopp: As a food retailer, we were allowed to keep our branches open during lockdown. We had to draw up, implement and review effective arrangements to protect staff and customers while we were trading. Day in, day out, our staff have delivered top performance and demonstrated incredible team spirit.
Deloitte: What have been the most tangible impacts and challenges?
Stefan Kopp: Demand suddenly became very unpredictable and fluctuated wildly, and this had an impact on our logistics and on the way our branches operated. These exceptional circumstances brought our teams even closer together. We’re really grateful to our staff for their unstinting efforts and the solidarity they have showed.
Another challenge was the frequent changes in the statutory framework: we were constantly having to interpret new legislation at very short notice and put logistical and organisational changes in place immediately.
Deloitte: Customers’ patterns of behaviour changed during the crisis. There was increased demand for some product groups that shoppers considered to be essential. More customers were also paying by card and, where possible, shopping online. Do you think that these changes in consumer behaviour will persist even when the crisis has passed?
Stefan Kopp: Some long-term trends, such as a greater interest in organic, vegetarian/vegan and regional foods, are likely to become even more marked as a result of the current crisis. However, some of the changes we saw in shoppers’ behaviour during the crisis – the increase in demand for tinned food, for example – were a short-term phenomenon. Since the restrictions have been eased, that kind of demand has also eased.
However, we don’t think many consumers will be switching back to cash payments. We saw double-digit growth in the use of card payments, and consumers have come to appreciate the advantages of paying by card or by app, so we believe that they will go on using such payment methods even when the crisis has passed.
Deloitte: What impact has the crisis had on your supply chains? Have you relied more on local suppliers, for example?
Stefan Kopp: In some areas and for specific products, there was temporary disruption of the supply chain. This was usually caused by logistical bottlenecks, and in almost all cases customers were able to switch to an alternative product of the same quality. We worked closely with our suppliers, though, and were able to resolve most of these short-lived bottlenecks quickly.
We’ve relied on local suppliers since we entered the market in 2009 and we are constantly expanding our supplier network. Lidl Switzerland collaborates with over 300 Swiss suppliers, and 60 of them have been with us right from the early days, so these are long-term partnerships. And that means that we didn’t have to make short-term switches of supplier as a result of the crisis. More than 55% of our turnover is still of Swiss products.
Deloitte: What do you think has been the role of CFOs in this crisis? How were you as CFO able to help your company through the crisis?
Stefan Kopp: There are a lot of demands on CFOs. Along with the CEO and other senior executives, CFOs are part of the top management team. Among other things, their role is to bring clarity to the ever-changing statutory framework, to build relationships with key stakeholders, to get necessary measures up and running rapidly and pragmatically, and to ensure good crisis communications with the workforce. All this, of course, is in addition to their more traditional role in areas such as managing liquidity.
Deloitte: What has your experience of the crisis been as a CFO? (Are there any specific lessons to learn for a future pandemic?)
Stefan Kopp: We got our crisis team up and running very quickly. We were taken a little unawares by how quickly the crisis gained momentum. It is important to allocate all the internal resources needed really rapidly. The crisis team, for example, should always include one staff member with responsibility solely for monitoring the press and another who documents every internal decision and measure agreed on an ongoing basis, so that there is a ‘single point of truth’.
Ivo Wechsler, HUBER+SUHNER Group
Ivo Wechsler has a degree in Business Studies from the University of St Gallen in Switzerland. On graduating, he held posts in Corporate Finance at UBS and in various Controlling and Treasury roles with Sunrise and Ascom. He joined HUBER+SUHNER in 2008 as Head of Corporate Controlling. Since 2010, he has been CFO and member of the Executive Group Management with responsibility for Finance and Controlling, Legal, Investor Relations and Strategic Purchasing. In this role he has been crucial to the successful development of the HUBER+SUHNER Group. Since 2019, Ivo has also been a member of the Board of Directors at Zehnder Group AG.
Deloitte: How has your company fared during the COVID-19 crisis so far? What have been the most tangible impacts and challenges?
Ivo Wechsler: HUBER+SUHNER has more than a dozen production plants around the world and the first to be affected by COVID-19 was our Chinese plant. It had to close at short notice, with staff in back-office roles working from home. As the pandemic spread around the globe, this was repeated at other locations, although we were able to continue production in some countries. We also brought in some cost-saving measures to help us adapt to reduced demand.
Deloitte: What kind of measures did your company introduce for staff during the crisis? And how have they worked?
Ivo Wechsler: There are many different things I could mention but the most striking was probably the rapid move to working from home, which employees around the globe have really embraced. All internal meetings are now being held by videoconferencing. And I’d also single out the health and safety measures that we had to introduce and enforce right across the company, particularly in the production area.
Deloitte: What do you think has been the role of CFOs in this crisis? How were you as CFO able to help your company through the crisis?
Ivo Wechsler: For me, the most important thing is that the CFO does his or her homework before a crisis erupts – I’m thinking of transparent financial reporting, a solid basis for proactive cashflow generation in the company, a healthy balance sheet, and an effective core team on whom the CFO can depend on when times are tough. As a result my role as CFO didn’t actually change fundamentally during the crisis, though it probably shifted towards more (short-term) scenario planning, given the unpredictability and scale of the COVID-19 crisis.
Deloitte: Many processes have moved online during the crisis, such as video calls instead of face to face meetings and online shopping. Which areas has your company been moving online? And do you think this move to digitalisation will continue in the long term?
Ivo Wechsler: At HUBER+SUHNER, we were digitalising long before the crisis in areas including operational excellence in industrial processes, interaction with customers (e-commerce) and office automation. Working from home has been part of our employment models for some time, and once things are back to normal, it is likely to be extended further. What we have learned from digitalisation has been overwhelmingly positive, so we are assuming that we will not be turning the clock back on these digital projects. Despite that, I personally think it is still essential to see colleagues and associates face to face.
Deloitte: Assuming the restrictions put in place to stop the spread of COVID-19 continue to be eased, how quickly do you think your company can get back to the pre-crisis situation? And where do you see particularly significant opportunities for the company after the pandemic?
Ivo Wechsler: HUBER+SUHNER serves three main markets: communications, transport and manufacturing. What these three markets share is that in structural terms they remain among the most promising growth markets and make use of often system-critical applications where our innovation capacity is crucial, such as 5G technology, autonomous driving, data centres and security-related communications. So the relevant factor will be how rapidly the uncertainty that we are experiencing both as individuals and as a company can be alleviated.
*Since 2010, the CFO Forum Schweiz has recognised the achievements of Swiss CFOs with its CFO of the Year awards. The awards cover three categories:
- Swiss Market Index Expanded (SMIEXP)
- Swiss Performance Index Extra (SPIEX) excluding SMIEXP
- Member of CFO Forum Schweiz
Several factors are considered in judging the awards, including personality, specialist expertise, stand-out achievements, familiarity with the company’s business, and reputation among analysts and investors. A panel of judges ensures that the many facets of CFOs’ achievements and skills are reflected appropriately. Deloitte is represented on the judging panel, along with other leading Swiss companies and experts.