Swatch Group in the first half of 2022

For the second half of the year, the watchmaking giant has a very positive growth outlook for all price segments.

Watches & Jewellery: strong growth, albeit weaker in China
At constant exchange rates, Group net sales for the first half of 2022 were +7.4% above the previous year. The negative currency impact was -0.9%. The Watches & Jewellery segment (including Production) generated an operating margin of 15.7% (previous year: 14.2%).

All major markets in Europe, America and the Middle East increased their sales by double digits. High growth rates were also reported by most of the Asian markets, such as Japan, Taiwan, Singapore or Thailand. The strongest growth was achieved by the Group’s retail stores, both in the prestige brands such as Breguet and Harry Winston, as well as by Omega and Swatch. The lockdown in China in the months of April and May led to massive sales declines totalling approximately CHF 400 million, not only in Mainland China, but also in Hong Kong SAR and Macao. This was due to the fact that not only many retail stores were closed, but also because no products could be delivered from the central warehouses. The Ukraine conflict had a less than 1% impact on Group sales.

The launch of the Bioceramic MoonSwatch collection was altogether revolutionary, starting with the collaboration of the Swatch and Omega brands, followed by the product as such with the use of exceptional materials, and onward to the extremely selective distribution. With sales in only 110 selected Swatch retail stores, availability is even more exclusive than luxury brands such as Breguet, Blancpain or Glashütte Original.

Worldwide media hype for the MoonSwatch continues unabated. The stores are experiencing an incredible run of customers of all age categories and origins. Demand, which is increasing daily in the markets, currently far exceeds supply. Shortly after delivery, these products are already sold out. Exclusive sale through Swatch’s own retail network underscores the importance of physical stores. At the same time, Omega has been confronted with supply shortages of the Speedmaster Moonwatch, after a soaring increase in demand.

In the first half of 2022, the Group brands invested more in marketing than in the previous year, for example at Omega as timekeeper of the Olympic Winter Games in Beijing.

Good utilisation in production
The production sector significantly increased sales and margins thanks to normalised order books. Despite a massive increase in production capacities for the new MoonSwatch, the huge demand from the markets could not yet be completely satisfied.

Unabated growth in electronic systems
Due to worldwide shortages of electronic components, high-tech products from EM Microelectronic-Marin and Micro Crystal, as well as button cell batteries from Renata continued to be in high demand. Swiss Timing acted – once again – very successfully as timekeeper of the Olympic Winter Games in Beijing. Segment sales were +22.3% above the previous year in the first half of 2022, and operating profit reached CHF 25 million, corresponding to an operating margin of 13.8% (previous year: operating profit of CHF 3 million, margin of 2.0%). Order books at the end of June 2022 were 40% over the previous year.

Personnel
The number of employees remained practically unchanged at 31,405 persons at the end of June.

Outlook for the second half of 2022
Group Management is convinced that the goal of double-digit sales growth in local currencies for the entire year 2022 defined at the beginning of the year remains realistic. Growth prospects for all price segments, from Swatch to the prestige brands, are extremely positive. Regionally, the strongest growth in the second half of the year 2022 is expected in America, Asia and Mainland China. The production companies, and particularly the Electronic Systems segment will also contribute to the positive development.

August 18, 2022