Swatch Group in the first half-year

For the second half, the Group anticipates further strong growth in local currencies with sales above 2019 levels.

Continuous recovery in the regions
At constant exchange rates, the Group net sales in the first half of 2021 were -12.3% below 2019. The currency-related decline in sales compared to 2019 was CHF 185 million or -4.5%.

The Watches & Jewelry segment (excluding Production) recorded an operating margin of 17.0%, higher than in 2019 with 15.6%.

Sales recovery accelerated from month to month. High growth rates were achieved primarily in China, Macao, USA and Russia. Above-average growth was reported in the Group’s own retail stores, parallel to the very strong increase in e-commerce, which once again confirms the importance of brick and mortar stores as well as of e-commerce as a separate and additional sales channel. Sales in airports and travel destinations in the first half of 2021 remained significantly below 2019.

Gradual increase in production
The orderbook situation in the Production sector also improved significantly. Activities in the companies again reached normal levels and short-time work was ended. In the first half of 2021, an operating loss in Production was still reported. In the second half of the year, production will again operate at full capacity.

Strong performance in Electronic Systems
The main activities of this segment, with Renata, EM Microelectronic-Marin and Micro Crystal, performed very well despite the negative currency situation, thanks to very high demand for electronic high-tech products and components as well as button cell batteries. At constant exchange rates, sales were +14.3% above the previous year, respectively +4.6% above 2019. Order backlog at the end of June 2021 was 50% above the previous year.

Personnel
The number of employees slightly decreased from the end of 2020 by -2.7% to 31,545 persons. The reduction related in particular to the closing of 135 retail stores. However, in the first half of 2021, 36 new stores were also opened in promising locations.

Financial situation
Operating cash flow after taxes of CHF 519 million reached the highest half-year figure in five years and was 38.0% higher than the first half year 2019. Free Cash Flow doubled in comparison with the same period in 2019 to CHF 380 million. The very high net liquidity of CHF 1,975 million at the end of June 2021 provides the Swatch Group with a lot of flexibility for medium and long-term investments.

The Group is debt free and finances all its real estate holdings from its own resources, such as the exclusive locations in Tokyo (Ginza), Zürich (Peterhof), Milan (Omega) and Düsseldorf (Harry Winston Salon). Also, no goodwill from business combinations is capitalized in the balance sheet. It was recognized directly in equity.

Outlook for the second half of 2021
Based on the significantly accelerated increase in sales in the second quarter, particularly in the month of June, the Swatch Group anticipates further strong growth in local currencies in the second half of the year, with sales above 2019 levels. The easing of Covid restrictions announced by Europe and Asian countries, as well as resumption of tourism in many regions, will provide a further boost in sales.

Brand highlights in brief
Harry Winston has experienced very strong demand for its jewellery. The brand has also opened three new flagship stores in Beijing, Shenzhen and Milan.

Continuing strong performance by Blancpain is leading to major order backlogs and the challenge to quickly increase production capacity.

The Olympic Summer Games in Tokyo opened on July 23rd. Once again, Omega enjoyed worldwide media visibility as official timekeeper. In September, with the global release of the new James Bond film No Time to Die, Omega will also show a very strong presence with the James Bond Seamaster Co-Axial Master Chronometer.

After its successful launch in China and the USA, the Tissot T-Touch Connect Solar will be introduced in additional markets such as Japan. Furthermore, it will also be equipped with additional new functions such as the option to receive live results of NBA games or cycling races of which Tissot is a partner.

Swatch very successfully launched the new bioplastic and bioceramic models to the market, and will continuously increase production capacity in the next months.

The technology companies in the Electronic Systems segment report an exceptionally good order backlog at the moment. The current massive demand for microchips has resulted in a worldwide shortage. EM Microelectronic-Marin, one of the few European manufacturers of ultra-low-power chips, profits from this situation and has gained access to new markets and customers. Swatch Group will invest heavily in the expansion of production capacity in Marin over the next few years. This confirms the strong commitment of the Group to Switzerland as an industrial and innovation hub, including for the microelectronics sector.

August 12, 2021