Swatch Group in 2022

In 2022, Group net sales amounted to CHF 7,499 million, up 4.6% on the previous year at constant exchange rates (2.5% at current exchange rates). Sales grew by 25% in local currencies in all regions, with the exception of China, where Covid-related confinements resulted in sales shortfalls of over CHF 700 million. Operating profit amounted to 1,158 million compared to 1,021 million in the previous year, while net income was 823 million (previous year: 774 million). Demand for the MoonSwatch – of which over one million have been sold to date – remains strong, even in January.

Watches & Jewelry
At constant exchange rates, Group net sales were 4.6% above the previous year. The negative currency impact was CHF 151 million or -2.1%. The Watches & Jewelry segment (including Production) reported an operating margin of 17.2% (previous year: 15.9%).

Consistent double-digit sales growth in Europe, America, the Middle East and most of the Asian markets was severely dampened by the significant decline in sales in China. Year on year, the sales shortfall in this region amounted to more than CHF 700 million. The fourth quarter was particularly affected. First the lockdowns, and then the massive Covid wave, after the measures were lifted, led to shortfalls of over 30% in this quarter. The decline in the month of December alone was around minus 50%. January shows growth again with sales which will exceed the strong corresponding month in the previous year.

Retail business reported double-digit growth, not only for the Swatch brand, but also in particular for the Harry Winston, Breguet and Omega brands. The Group continues to invest very selectively in new retail stores. At the end of 2022, a building was acquired at a top business location on the P.C. Hooftstraat in Amsterdam.

Demand for the 11 Bioceramic MoonSwatch models also remains unbroken high nine months after their launch, and queues in front of Swatch stores are still the order of the day. Despite an additional 70 points of sale and greatly increased production, daily demand still far exceeds available product. The MoonSwatch is popular with an extremely broad spectrum of customers of all ages and origins. In the wake of this hype, the entire Omega Speedmaster collection, for example, the Moonwatch models, also profited from greatly increased interest.

Production
The production sector reported significantly higher sales and improved margins than in the previous year. Difficulties in procuring certain raw materials and components hindered an even better result and led to delivery delays, despite increased safety stock. Order books at the end of 2022 were 24% above the previous year.

Electronic Systems
Products of the highly specialised companies in the segment continued to be in extraordinarily high demand. This was the case for extremely low power consumption semiconductors from EM Microelectronic-Marin, as well as high-tech products from MicroCrystal for market leaders for mobile devices and the automotive and medical industry. Sales for the segment, to which battery producer Renata and timekeeper Swiss Timing also belong, were CHF 371 million or 18.2% above the previous year. Operating profit was CHF 47 million, corresponding to a margin of 12.7% (previous year: CHF 27 million or 8.6%).

Inventories
In view of potential energy shortages and possible delivery bottlenecks, the Group decided to massively increase safety stock where feasible. This measure will also pay off, considering higher demand in China after its zero-Covid strategy exit. The major portion of the CHF 484 million or 7.6% higher inventories was in the categories of raw materials, work in progress, and semi-finished goods.

Research and development
Intensive research and development activities in the year under review led to 209 new patent applications (previous year: 202).

Personnel
The number of employees increased in comparison with the previous year by 617 or 2.0% to 32,061 persons.

Outlook 2023
Group Management anticipates strong sales growth in 2023 in all regions and segments. After the end of Covid measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau. In addition, lifting of travel restrictions in China will revitalise sales in tourist destinations. The sales growth in January in China reinforces the Group’s expectation to aim for a record year in 2023.

The Board of Directors decided to propose a dividend of CHF 6.00 per bearer share and CHF 1.20 per registered share at the Annual General Meeting on 10 May 2023 (previous year: CHF 5.50 per bearer share and CHF 1.10 per registered share).

February 09, 2023