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 Media Release     Trade tariff set to drive European corporate distress higher Swiss corporates lead Europe in financial stability and resilience Swiss exporters to face headwinds from strong franc and tariff risks   Zurich, 17 July 2025 – Global professional services firm Alvarez & Marsal (A&M) has today published its bi-annual Alvarez & Marsal Distress Alert (ADA)[1], which assesses the financial performance and balance sheet robustness of 7,900 companies across Europe and the Middle East. The latest edition, which looks at the most recent financial reporting for full-year 2024, finds that corporate distress levels in Europe have stabilised to 8.8% of companies, broadly in line with 9.0% the year before. However, this unchanged distress level masks additional underlying stress, with 32% of European companies (more than 2,500 corporates) displaying fragile balance sheets, the highest level since 2021. This has been driven by persistently high interest rates and the challenge of generating sufficient operating cashflow to service debt. A growing proportion of companies are also experiencing weakening performance, with 13.6% of companies in this report shown to be lacking performance, equivalent to over 1,000 companies. Germany continues to be the most distressed market, at 11.5%, the highest level since the pandemic. While debt markets are currently open for the majority of borrowers, the pressure from tariffs and broader geopolitical instability is expected to intensify operational and financial challenges for corporates going forward, giving rise to greater distress in Europe. Across Europe, the media and entertainment sector experienced the highest level of distress, with 13.7% of these companies facing distress. The retail sector also remains under pressure, with 13.2% of fashion retail businesses in distress in 2024. The latest data also shows a marked increase in distress among Automotive, Business Services, Commodities and Manufacturing companies. In the Automotive sector, the number of companies in distress has nearly doubled from 13 in 2023 to 22 in 2024, driven by global competitive pressures, the transition to electromobility, as well as tariff-driven supply chain disruptions and cost increases. In this sector, balance sheet issues are a major concern, with four in ten businesses burdened by weakened capital structures, which are set to come under further pressure as a result of tariffs. Chris Johnston, Managing Director, European Restructuring at Alvarez & Marsal said: “Distress levels have plateaued, but this reflects a flatlining of many European economies more than corporate resilience. The state of many balance sheets and performance levels suggests that it would not take much by way of external shock to generate a spike in distress. The first and second order impacts of trade tariffs could tip many companies over the edge, especially those that need to refinance in the next 12 months. Companies looking to protect earnings and balance sheets against these market challenges must act proactively, including planning for volatility and assessing their liquidity positions before it’s too late” Switzerland Leads Europe in Corporate Stability but Lags in Performance Switzerland continues to demonstrate notable financial resilience compared to its European peers, despite a challenging global economic environment. According to the data, only 5.1% of Swiss companies are currently classified as distressed – the lowest level among all countries in the study and significantly below the European average of 8.8%. The increase in the number of Swiss companies lacking operating performance, increased from 9.1% to 14.6%. This represents the second highest figure in Europe, surpassed only by Germany with 17.9%. Meanwhile, 22.7% of Swiss corporates were found to lack balance sheet robustness, compared to 31.9% across Europe. Key sectors facing pressure include Specialised Retail (14.3%), Construction (8.3%), and Consumer Food & Beverage (7.7%), which reported the highest distress levels within Switzerland. These industries are grappling with rising input costs, strained consumer budgets, and administrative delays. Swiss exporters, particularly in pharmaceuticals, luxury goods, tourism, and manufacturing, are also encountering increasing risks. The strong appreciation of the Swiss franc is putting pressure on profit margins, while the prospect of U.S. tariffs on pharmaceutical imports threatens to disrupt established trade flows and impact a sector heavily reliant on American demand. In Construction, despite some momentum from renewable energy and affordable housing initiatives, higher interest rates and sluggish permitting processes are weighing on sector confidence. Food producers are contending with shrinking margins, even as consumer demand for staples remains stable. While Switzerland remains in a fundamentally solid position, export-exposed sectors face growing external challenges. Navigating currency headwinds, global trade tensions and sector-specific cost pressures will be critical in maintaining stability in the second half of 2025. Alessandro Farsaci, and Head of Restructuring Switzerland at Alvarez & Marsal, comments: "Switzerland’s lower distress levels reflect the long-term benefits of prudent lending practices and a generally conservative financing culture. This structural resilience is proving to be an asset in today’s turbulent macroeconomic environment. However, as companies continue to face global economic challenges and geopolitical conflicts, demand for restructuring solutions is expected to remain elevated in the coming year." - -  Notes to the editors Methodology A&M’s Financial Restructuring Advisory team has developed a methodology to assess the performance and balance sheet robustness of European businesses, aiming to identify those that are in financial distress or may soon be heading in that direction. The study includes 7,900 listed and private companies, each with annual revenues exceeding €20 million, across 33 countries in Europe and the Middle East. These companies consistently provided data for all financial years from 2020 to 2024.  The ADA index analyses 18 KPIs to create two sub-scores: the performance score, which is based on the company’s own income statement as well as related KPIs measured against its industry peers, and the robustness score, based on detailed balance sheet data.  About Alvarez & Marsal Founded in 1983, Alvarez & Marsal is a leading global professional services firm. Renowned for its leadership, action and results, Alvarez & Marsal provides advisory, business performance improvement and turnaround management services, delivering practical solutions to address clients' unique challenges. With a world-wide network of experienced operators, world-class consultants, former regulators and industry authorities, Alvarez & Marsal helps corporates, boards, private equity firms, law firms and government agencies drive transformation, mitigate risk and unlock value at every stage of growth. To learn more, visit: alvarezandmarsal.com   Contact:   Nicolas Weidmann
Dynamics Group
+41 (0)79 372 2981
nwe@dynamicsgroup.ch
  Alessandro Farsaci
Managing Director, Restructuring
Alvarez & Marsal
afarsaci@alvarezandmarsal.com   [1] The index analyses 18 KPIs to create two sub-scores: the performance score, based on the company’s own income statement as well as related KPIs measured against its industry peers; and the robustness score, based on detailed balance sheet data. The scores are applied on a scale from zero (heavily impacted) to 10 (very solid situation). It covers private and public companies with revenues of more than €20 million.