Companies in the industrial and chemical industries are preparing to manage higher energy costs this winter, with some already shifting from gas to oil, according to a survey by the Zurich Cantonal Bank.This content was published on October 14, 2022 - 14:02
The survey of ten companies in the industrial sector and three in the chemical sector found that the sharp rise in energy prices was already having a negative impact on the operating margins of all companies.
Among the companies surveyed, Autoneum, Clariant, Bobst and Rieter have been hit hardest by the energy crisis in Europe. Energy typically accounts for 1-3% of operating costs in these companies.
Autoneum expects energy costs as a share of operating costs to increase by one percentage point year-on-year to 5%. As the company mainly produces on demand at short notice, it is difficult to predict energy requirements, and relocate production.
Bobst and Rieter expect only single-digit percentage increases. The energy crisis had a somewhat lesser impact on Oerlikon, Dätwyler, SFS and Georg Fischer.
Among the three chemical companies surveyed, Clariant is the most affected. Clariant's energy costs account for almost 5% of revenue and nearly 7% of cost of goods sold. Its German production sites have a high dependence on Russian natural gas, according to the analysis.
To reduce its dependence, Clariant has already switched from natural gas to oil at various European plants. In addition, the company is working on scenarios to allow it to continue operating in the short-term with reduced natural gas consumption.
There is less concern at Givaudan and Lonza. The latter mainly manufactures in Switzerland. Both companies were also able to partially replace natural gas with crude oil.
There are often clauses in contracts that companies can automatically pass on increased raw material prices to customers, said the Zurich Cantonal Bank analysis. However, this isn’t the case for energy cost increases.
This means companies have to pass on the higher energy costs to their customers primarily in ad-hoc price renegotiations.
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