Swatch Group has returned to growth

After an unprecedented year in 2020, the Swatch Group has returned to growth, posting a 30.7% increase in sales. The Watches & Jewellery segment posted a strong operating margin of 17.7% for the full year. For 2022, the management expects a double-digit sales growth rate.

In 2021, the Group’s net sales amounted to CHF 7,313 million, a 30.7% increase compared to the previous year at current exchange rates (29.6% at constant exchange rates). Operating profit amounted to CHF 1,021 million (previous year: CHF 52 million). Net profit reached CHF 774 million, compared with a net loss of CHF 53 million the previous year.

Strong Watches & Jewelry segment

At constant exchange rates, Group net sales were -7.4% below 2019 (second half: 2.6% below 2019). Net sales for the 4th quarter even exceeded 2019 levels, at constant exchange rates. Brands in all price segments contributed to this result. The negative currency impact on sales was CHF -322 million or -3.9% compared with 2019. The Watches & Jewelry segment (excluding Production) realised an operating margin of 17.7%, considerably higher than the 15.2% recorded in 2019.

The travel activity, which was still severely restricted in some cases, led to regional shifts in sales compared with 2019. Mainland China and the USA realised historical record sales levels.

Despite a retail network reduced by 22%, equally high sales levels as in 2019 were realised in the Group’s own retail business. In particular, the strong performance of e-commerce was a contributing factor.

Normalisation in the Production sector

Sales in the Production sector almost reached 2019 levels in the last months of the year. Order books were considerably higher than at the end of 2019, and production capacity utilisation normalised, whereby strong product demand for some brands far exceeded available capacity.

Upturn in Electronic Systems

The long-term Group strategy to strengthen “Workplace Switzerland” through targeted investment in local production sites paid off in particular for the Electronic Systems segment. Strong demand for electronic components and button cell batteries led to increased sales of +14.8% at constant exchange rates compared with 2019. Operating result reached CHF 27 million, corresponding to a margin of 8.6%. Swiss Timing, particularly as official timekeeper for the Olympic Summer Games in Tokyo, also contributed to the result.

Research and development

Intensive research and development activities led to 202 new patent applications in the year under review (previous year: 205).

Personnel

The number of employees decreased slightly in comparison with the previous year by -3.0% to 31,444 persons. The reduction related in particular to the closing of 172 retail stores and the discontinuation of Calvin Klein activities. In the year under review, 55 new stores in prime locations were opened.

Cash flow and net liquidity

After-tax operating cash flow was CHF 1,298 million (+58.5% against the previous year). Free cash flow amounted to CHF 1,033 million, or 14.1% of net sales. Net liquidity increased by CHF 858 million or +50.5% to CHF 2,558 million.

Outlook 2022

Group Management anticipates double-digit sales growth in local currencies in 2022. This will be ensured by numerous, and in some cases, spectacular new products from the brands in all segments. Omega, as timekeeper for the Olympic Winter Games in Beijing, will be present worldwide in the media in February, and in September, Tissot, as timekeeper for the Asian Games in Hangzhou, will be visible far beyond the Chinese market.

At the end of 2021, order books in the Electronic Systems segment were twice as high as at the end of 2019, which will lead to sales growth in the current year.

 

February 10, 2022