Swiss watch exports - Distinct fall in volumes and value

The first half ended with a deterioration of Swiss watch exports. Monthly results had already shown a distinct fall since the beginning of the year and the month of June was down by as much as 31.9% against June 2008. However, this slowdown only had a limited effect on the cumulative variation since January. After six months, watch exports showed a 26.4% fall, i.e. a relatively constant rate for several months. In the first half, Swiss watch exports were worth the equivalent of 6.1 billion francs, or 2.2 billion less than in 2008.
After five years of strong growth, the industry’s exports slowed and started to decline from the end of 2008. The level is now below the 2006 results. The economic crisis which is affecting the world has generated a widespread fall in demand to which the Swiss watchmaking industry has not been immune. The consequences affect every single segment and more particularly suppliers. While a more favourable base effect does point to an improvement in the second half, the lack of visibility and confidence makes all forecasting difficult.

Products
Exports of wristwatches fell steeply in the first half. Their value stood at 5.7 billion francs, i.e. a 26.2% fall against January-June 2008. In parallel, 9.6 million timekeepers left Switzerland; this figure represents a decline of 3 million units (- 23.7%). Every single material has been affected, in particular steel, gold and bimetal watches. In volume terms, steel watches had the most significant impact on the total; this is logical as they account for more than one in two exported timepieces.
Mechanical timekeepers decreased in the same proportions as electronic products. The various price segments proved less homogeneous, but they all reported negative variations during the first half. After holding up well for several months, timepieces worth more than 3000 francs (export price) also reported a distinct fall. In general, wristwatches selling for more than 500 francs experienced the most severe declines. Products worth between 200 and 500 francs were the least affected with a fall restricted to around 10%.
Components exported by Switzerland also experienced a steep fall in value. Only alarm clocks and other types of clock showed a positive result (+2,8%), but with a limited influence on the total since their value amounted to 18.1 million francs. On the import side, the main components like cases, bracelets and dials also recorded a fall equivalent to one-quarter of their value, in keeping with the downturn in Swiss business activity.

Markets
In the first half of 2009, the fifteen main markets showed the following trend (total value in million francs and % variation by comparison with the first half of 2008):

1.Hong Kong1,022.3-22.2%
2.United States673.3-43.3%
3.France471.6-10.0%
4.Italy456.0-8.4%
5.Japan395.1-29.6%
6.Germany376.2-13.0%
7.Singapore266.8-30.3%
8.China253.3-36.4%
9.United Kingdom253.3-13.7%
10.United Arab Emirates224.5-34.0%
11.Spain142.2-38.8%
12.South Korea106.8+44.1%
13.Taiwan102.5-30.6%
14.Saudi Arabia85.0-28.9%
15.Thailand76.8-44.4%


The most important export market for the Swiss watchmaking industry, Hong Kong, recorded a fall that proved slightly lower than average in the first half. The United States continued to publish negative rates, among the worst in the table. The trend of exports to the main European markets proved more moderate. France, Italy and Germany showed the lowest fall in the first half. The UK followed closely behind because of the GBP’s favourable exchange rate while Spain has been falling heavily for around one year now. In Asia, Japan has been in the red for nearly two years. Other important markets like China, Singapore and the United Arab Emirates reported a fall of more than 30% against the first half of 2008. South Korea stood out as the only positive exception in the table. The value of Swiss watchmaking exports to that country rose by 44.1%, confirming the much faster growth rate achieved in the past twelve months.

July 21, 2009