News Despite the crisis and unfavourable exchange rates, the Swatch Group ended the year 2008 with a slight increase in turnover, a result the group hopes to replicate this year.
Despite exchange losses of 233 million francs due to the weakening of main currencies in relation to the Swiss franc, the Swatch Group saw its gross turnover increase slightly last year: +0.4% to 5,966 million. Its basic activity, watchmaking, grew by 2.2%, while electronic systems saw sales decline by 15.9%.
In the watch and jewellery sector, gross turnover rose to 4,796 million, an increase of 1.8% (+6.6% at constant exchange rates). While all price categories recorded an increase in local currencies, a perceptible fall in demand curbed the performance of most manufacturers – even luxury brands – at the end of the financial year. Although some markets in Asia, particularly China and the Middle East, recorded two-digit growth, the progression in Europe and the United States was more modest, with the spectre of recession beginning to weigh on the confidence of consumers in several countries at the end of 2008. This slowdown was more severely felt in the United States.
In terms of the production of watch movements and components, gross sales totalled 1,810 million francs (+7.5%), with 1,151 million attributable to group companies (+8.7%) and 659 million to third parties (+5.4%). This significant increase was possible solely as a result of major investment undertaken by the group to optimise the numerous stages of production, allowing considerable reductions in bottlenecks and improvements to production capacity. This effort will be continued in some sectors to ensure flexibility in meeting the requirements of third party clients but also to satisfy the needs of group companies.
For its part, the electronic systems sector recorded a gross turnover of 530 million francs, representing a decline of 15.9%. The latter is clearly a consequence of the slump in the car industry and the collapse in demand for mobile phones. However it is also the result of disinvestment by the Swatch Group in this sector, with the sale in the second half-year of the companies Sokymat Automative GmbH and Michel Präzisiontechnik AG underlining the group’s intention to focus on its core activity.
For 2009, despite expectations of a difficult economic environment, the Swatch Group anticipates renewed confidence internationally in the second half of the year and considers therefore that slight growth in relation to 2008 is “entirely realistic”. This confidence is based on demand observed in its own retail outlets and in order books: sales achieved in January and orders for the months of February and March confirm a steady month-on-month improvement compared to the trend observed last November and December... The group now has an entire year to make its forecasts come true!
February 06, 2009