9 Financial instruments and risk management

9.1 Classification and measurement

Financial assets

Financial assets include cash and cash equivalents, accounts receivable, prepaid expenses, and current and non-current financial assets. Financial assets are classified and measured as follows:

Financial assets measured at amortized cost comprise debt instruments held to collect contractual cash flows that are solely payments of the principal amount and interest. They are initially measured at fair value including transaction costs and are subsequently measured at amortized cost using the effective interest method. Interest income, foreign currency revaluations, and impairment losses are recognized in the income statement. On derecognition, gains and losses are recognized in the income statement.

Financial assets measured at fair value through profit or loss (FVPL) include equity and debt instruments held for trading, and derivatives, unless they are designated for hedge accounting. They are measured at fair value. Dividends and fair value changes are recognized in the income statement.

Financial assets measured at fair value through OCI without recycling (FVOCI without recycling) comprise equity instruments not held for trading. They are initially measured at fair value including transaction costs and are subsequently measured at fair value. Dividends are recognized in the income statement, whereas unrealized fair value changes and foreign currency revaluations are recognized in OCI. On derecognition, the accumulated gains and losses recognized in OCI remain in retained earnings.

Additions and disposals of financial assets are recognized at the trade date. Financial assets are derecognized when the related rights to the resulting cash flows are sold or expire.

Impairment of financial assets

For all debt instruments not classified and measured at FVPL, an allowance for expected credit losses (ECLs) is recognized. ECLs are based on the difference between the contractual cash flow and the cash flow that the Group expects to receive. The Group generally applies a 12-month ECL in view of the low credit risk of its debt instruments. At every reporting date, an assessment is performed to determine whether the debt instruments still have a low credit risk. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, the allowance is based on the lifetime ECL.

For accounts receivable and contract assets, the Group applies the simplified approach, without tracking the changes in credit risks. Instead, the Group recognizes a lifetime expected loss allowance based on a provision matrix. Refer to notes 10 and 15 for information on expected loss allowances.

Financial liabilities

Financial liabilities include accounts payable, accrued expenses, and current and non-current financial liabilities. Financial liabilities are classified and measured as follows:

Financial liabilities measured at amortized cost comprise all financial liabilities that are not classified and measured at fair value through profit or loss (FVPL). Financial liabilities are initially measured at fair value net of transaction costs. They are subsequently measured at amortized cost using the effective interest method. Interest expenses and foreign currency revaluations are recognized in the income statement. On derecognition, gains and losses are recognized in the income statement.

Financial liabilities measured at fair value through profit or loss (FVPL) include derivatives not designated for hedge accounting and contingent consideration from business combinations. They are measured at fair value. Fair value changes are recognized in the income statement.

Financial liabilities are derecognized when the contractual obligations are fulfilled, cancelled, or expire.

The classification of financial instruments and their carrying amounts are presented below:

In CHF million	Amortized cost	FVPL	Hedge accounting	FVOCI with recycling	FVOCI without recycling	Total financial instruments	Non-financial instruments	Total
As of December 31, 2025
Cash and cash equivalents	2 304					2 304		2 304
Current financial assets	1 929	48	1			1 978		1 978
Accounts receivable	1 873					1 873	91	1 964
Prepaid expenses	–					–	118	118
Non-current financial and other assets	153	67			132	352	51	403
Total	6 259	115	1		132	6 507	260	6 767

Accounts payable	1 101					1 101	272	1 373
Accrued expenses	907					907	204	1 111
Financial debts	166	4	6			176		176
Lease liabilities	512					512		512
Total	2 686	4	6			2 696	476	3 172

As of December 31, 2024
Cash and cash equivalents	2 599					2 599		2 599
Current financial assets	1 425	52	4			1 481		1 481
Accounts receivable	1 932					1 932	81	2 013
Prepaid expenses	–					–	103	103
Non-current financial and other assets	211	64		4	238	517	47	564
Total	6 167	116	4	4	238	6 529	231	6 760

Accounts payable	1 143					1 143	249	1 392
Accrued expenses	864					864	215	1 079
Financial debts	301	12	6			319		319
Lease liabilities	493					493		493
Total	2 801	12	6			2 819	464	3 283

Financial assets of CHF 16 million are pledged as collateral for the Group’s own liabilities (previous year: CHF 19 million).

9.2 Fair values

Financial instruments measured at fair value are assigned to one of the following three hierarchy levels according to the input data available to measure them:

Level 1: Fair values are determined using quoted prices in active markets. The fair values of listed equity instruments and bonds are determined using level 1 fair values.

Level 2: Fair values are determined using quoted prices in inactive markets or according to the discounted cash flow method based on observable market data. The fair values of derivatives are determined using level 2 fair values.

Level 3: Fair values are determined using external valuations or according to the discounted cash flow method based on unobservable data. The fair values of private equity instruments and non-listed equity instruments are determined using level 3 fair values.

The carrying amount of financial instruments measured at amortized cost is a reasonable approximation of their fair value.

The fair values of financial instruments by level of hierarchy are as follows:

	2025		2024
In CHF million	Fair value	Level	Fair value	Level
Financial assets
Current financial assets – other than derivatives	41	1	41	1
Current financial assets – derivatives	7	2	11	2
Non-current financial assets	67	1	64	1
Financial instruments at FVPL	115		116
Current financial assets – derivatives	1	2	4	2
Hedge accounting	1		4
Non-current financial assets			4	1
Debt instruments at FVOCI with recycling			4
Non-current financial assets	118	1	227	1
Non-current financial assets	14	3	11	3
Equity instruments at FVOCI without recycling	132		238

Financial liabilities
Current financial debts – derivatives	4	2	12	2
Financial instruments at FVPL	4		12
Current financial debts – derivatives	6	2	6	2
Hedge accounting	6		6

There were no transfers between the different hierarchy levels during the reporting year or the previous year.

The reconciliation of the level 3 fair values of non-current financial assets is as follows:

In CHF million	2025	2024
January 1	11	8
Additions	–	4
Fair value changes recognized in OCI	3	–1
December 31	14	11

9.3 Derivatives and hedge accounting

The Group hedges interest rate risks and foreign currency risks arising from its operating activities, financial transactions, and investments using derivative financial instruments. Derivatives are measured at FVPL unless the derivative financial instrument was designated for hedge accounting.

To apply hedge accounting, various criteria must be fulfilled relating to documentation, probability of occurrence, effectiveness of the hedging instrument, and reliability of the valuation. The Group decides on an individual basis whether or not hedge accounting is applied.

Changes in value resulting from cash flow hedges are recognized in OCI and reclassified to the income statement when the hedged transaction is recognized in the income statement. Changes in value due to ineffectiveness are recognized in the financial result when they occur.

When the hedged transaction results in the recognition of a non-financial asset or liability, the amounts are transferred from other reserves and included in the initial measurement of the cost of the non-financial asset or liability.

The following table outlines the fair values and nominal amounts of foreign currency derivatives:

	2025			2024
In CHF million	Fair value of financial assets	Fair value of financial liabilities	Nominal amount	Fair value of financial assets	Fair value of financial liabilities	Nominal amount
Fair value hedges	–	–	33	–	–	20
Cash flow hedges	1	6	257	4	6	257
Not used for hedge accounting	7	4	1 670	11	12	1 441
Total derivatives	8	10	1 960	15	18	1 718

9.4 Financial risk management

The Group is exposed to a variety of general and industry-specific risks, which can have a material impact on the Group’s consolidated financial statements. Principles and guidelines for the management of these risks are determined annually by the Board of Directors, the Supervisory and Strategy Committee, and the Group Executive Committee.

The objective of risk management is to promote sustainable growth, enhance value creation, and mitigate potentially adverse impacts on the Group’s financial performance. Risk management is monitored by the Supervisory and Strategy Committee and the Finance Steering Committee. The Finance Steering Committee is comprised of internal experts who are not members of the Board of Directors.

Sensitivity analyses are performed to assess the effects of different market conditions. These analyses enable risk exposures to be evaluated on a Group-wide basis. They provide an approximate measure of the risk that can arise based on specific assumptions in the event of isolated changes to individual parameters of a defined amount. The actual impacts on the statement of comprehensive income may differ, depending on how the market develops.

The most significant financial risks to which Schindler is exposed are as follows:

Interest rate risks

Exposure results from movements in interest rates that can negatively affect the Group’s consolidated financial statements. Significant risks result from financial assets and liabilities denominated in CHF, EUR, USD, BRL, CNY, or INR.

Foreign currency risks

Exposure to foreign currency risks arises from transactions in currencies other than the functional currency of the Group company. Significant risks result from transactions in EUR, USD, BRL, CNY, or INR.

Price risks

Exposure results from changes in the valuation of equity instruments.

Liquidity risks

Exposure arises in the event that debt obligations cannot be met when due, or external borrowings cannot be refinanced.

Credit risks

Exposure results from the inability or unwillingness of counterparties of financial assets to fulfill their payment obligations.

Interest rate risks

To mitigate interest rate risks, the Group constantly monitors the interest rates that apply to its financial liabilities and maintains a low level of debt financing. However, changes in interest rates may impact the Group’s interest income.

Risks from changes in interest rates are modelled using sensitivity analyses that demonstrate the effects of changes in market interest rates on interest expense and interest income. If market interest rates had been 1 percentage point higher or lower during the reporting year, net interest income would have been CHF 38 million higher or lower (previous year: CHF 34 million higher or lower).

Foreign currency risks

The Group mitigates its foreign currency risks through the natural hedging by matching the income currency with the expense currency, as well as through the use of derivative financial instruments to hedge transactions. Intra-Group financing is conducted in local currencies. Foreign currency risks are regularly monitored by key management. Speculative investments in foreign currencies as well as the the raising of debt in foreign currencies are not permitted.

The following table shows the net positions of significant currency hedges and the impact on the net financial result in the event of a movement of +/– 5% in the respective currency.

	2025		2024
In CHF million	Net position	Sensitivity +/–5%	Net position	Sensitivity +/–5%
EUR	174	+9 / –9	185	+9 / –9
USD	–54	–3 / +3	–37	–2 / +2
BRL	–	–	–25	–1 / +1
CNY	52	+3 / –3	52	+3 / –3
INR	–12	–1 / +1	–12	–1 / +1

Unhedged net positions amount to less than CHF 10 million and the resulting foreign currency risks are insignificant (previous year: less than CHF 10 million).

Price risks

To ensure the effective management and mitigation of underlying price risks, decisions regarding investments in equity instruments are taken exclusively by the Supervisory and Strategy Committee, the Finance Steering Committee, or Global Treasury.

As of December 31, 2025, the Group is invested in equity instruments totaling CHF 155 million (previous year: CHF 261 million). If the prices of the equity instruments as of December 31, 2025, had been 10% higher or lower, net financial income and OCI would have been CHF 2 million and CHF 13 million higher or lower, respectively (previous year: CHF 2 million and CHF 24 million higher or lower, respectively).

Liquidity risks

Liquidity risks are mitigated by maintaining a substantial liquidity reserve in cash, as well as through the efficient use of debt markets for financing purposes based on Schindler’s creditworthiness.

Future cash outflows related to the Group’s financial liabilities are as follows:

		Cash outflows
In CHF million	Carrying amounts	Total	< 1 year	1–5 years	> 5 years
As of December 31, 2025
Accounts payable	–1 101	–1 101	–1 101
Accrued expenses	–907	–907	–907
Derivatives, net	–2	–2	–2	–	–
thereof cash inflows		1 968	1 910	58	–
thereof cash outflows		–1 970	–1 912	–58	–
Lease liabilities	–512	–576	–158	–307	–111
Financial debts	–166	–166	–56	–110	–
Total	–2 688	–2 752	–2 224	–417	–111

As of December 31, 2024
Accounts payable	–1 143	–1 143	–1 143
Accrued expenses	–864	–864	–864
Derivatives, net	–3	–3	–3	–	–
thereof cash inflows		1 733	1 658	75	–
thereof cash outflows		–1 736	–1 661	–75	–
Lease liabilities	–493	–579	–171	–315	–93
Financial debts	–301	–301	–209	–23	–69
Total	–2 804	–2 890	–2 390	–338	–162

The contractual maturities are based on the undiscounted, contractually agreed payments of the principal amount and interest.

Lease liabilities with cash outflows beyond five years include payments for leases of land and buildings for which the Group has assessed contractual extension options as reasonably certain to be exercised. Future cash outflows beyond ten years amount to less than CHF 30 million (previous year: less than CHF 30 million).

Credit risks

Credit risks are mitigated through the active collection management of accounts receivable and contract assets, as well as through down payments received for customer contracts. In addition, limits are in place on the value of financial instruments that may be held with any single financial institution.

Furthermore, in view of Schindler’s large customer base and global presence, the concentration of credit risks in accounts receivable and contract assets is limited. Refer to notes 10 and 15, for further information on bad debt allowances and expected loss allowances on contract assets, respectively.

The Group is invested mainly in time deposits and high-quality, low-risk, and liquid securities. Cash and cash equivalents as well as financial assets are held with counterparties that are primarily rated as investment grade, as defined by public rating agencies, i.e., with a rating of BBB– and higher. Financial assets without a rating mainly comprise time deposits held with non-publicly rated Swiss cantonal banks.

In CHF million	AAA range	AA range	A range	BBB range	< BBB range	No public rating available	Total
As of December 31, 2025
Cash and cash equivalents	330	735	850	161	35	193	2 304
Current financial assets	120	663	610	17	1	559	1 970
Non-current financial assets	–	40	1	–	–	156	197
Total	450	1 438	1 461	178	36	908	4 471

As of December 31, 2024
Cash and cash equivalents	328	811	924	174	47	315	2 599
Current financial assets	120	512	347	8	1	478	1 466
Non-current financial assets	–	50	–	4	–	202	256
Total	448	1 373	1 271	186	48	995	4 321

The information above excludes derivatives and equity instruments. Equity instruments are subject to price risks only.

Capital management

Schindler’s capital management is designed to maintain a strong credit rating and solid key performance indicators, to support ongoing business operations, to enable sustainable growth, and to enhance long-term value creation. Capital is managed through the monitoring of net liquidity and the equity ratio.

In CHF million	2025	2024
Net liquidity	3 946	3 661
Equity ratio in %	43.9	42.1

The key figures disclosed are defined as non-GAAP measures. The definition of these non-GAAP measures is available on the Group’s website.