Swatch Group in the first half-year

At constant exchange rates, Group net sales for the first half of 2023 were +18.0% above the previous year. The negative currency impact was significant and amounted to -6.7%, or CHF -242 million. At constant exchange rates, sales were even +8.5% above the previous half-year record in 2018.

Watches & Jewelry
The Watches & Jewelry segment (including Production) achieved a significantly increased operating margin of 19.4% (previous year: 15.7%). The first half of 2023 was characterised by the lifting of the last travel restrictions in Asia, which resulted in significant sales increases in local currencies in most major markets. In addition to the expected recovery in Mainland China, with a clear double-digit increase, tourism destinations such as Thailand or Macao in particular benefited from the rapid rise in travel activity. After years of declining consumption, business in Hong Kong SAR has completely revived, resulting in a tripling of sales. The most important European markets also recorded very strong growth, led by Switzerland with an increase of almost 50%, followed by Italy, Spain and France. Sales in North America developed extremely well, particularly in the lower and medium price segments, with high double-digit growth rates.

Global demand for Swatch watches and the MoonSwatch not only continued unabated, but even accelerated. The Tissot brand per-formed extremely strongly, with significant market share gains in North America. The outstanding development of the Group’s own retail network, with growth rates well above 20%, underlines the unique positioning of the Group’s brands. The retail businesses of Harry Winston, Omega, Longines and Swatch developed very successfully. The share of sales of the Group’s own retail business exceeded the 40% mark of total sales of the Watches & Jewelry segment in the first half of 2023, with average sales per store more than 30% above the previous year. Additionally, the Group was able to acquire a prime property on Old Bond Street in London and a store on the Champs-Elysées in Paris.

Production
Strong demand for products from the brands, particularly Swatch and Tissot, helped the Group’s production companies to achieve very good capacity utilization. Timely procurement of the required raw materials remains a major challenge. Order books at the end of June 2023 were 20% over the previous year. The production companies are investing even more than in the past in vocational and technical training in order to alleviate the tense situation on the labour market. Swatch Group is the largest training company in the Swiss watch industry and will welcome a record number of new apprentices in August.

Electronic Systems
Sales and margins in this segment were negatively impacted by the weakness of the USD and EUR. Nevertheless, the segment’s order books at the end of June 2023 were at a similarly high level as in the previous year. For Swiss Timing, 2023 is an interim year without the Olympic Games, which led to a significantly lower result compared to the previous year. Segment sales in the first semester 2023 were +3.3% above prior year (at constant rates) and operating profit reached CHF 9 million, corresponding to an operating margin of 4.9%.

Inventories
Inventories increased by CHF 314 million or +4.6% compared to December 2022, mainly in the categories of raw materials, work in progress and semi-finished goods. This allowed ensurance of increased production on the one hand and further completion of the safety stock of raw materials and components on the other hand in order to improve even more the independence from third party suppliers.

Personnel
The number of employees increased by 2.6% in the first semester 2023 and amounted to 32,899 persons at the end of June (December 2022: 32,061).

Outlook for the second half of 2023
Group Management sees excellent growth opportunities in local currencies for the second half of 2023 in all regions and price segments. The Group brands will introduce many innovative products on the market, especially – but not only – in the lower and mid-range segments. The only cloud on the horizon remains the unfavourable currency environment.

August 10, 2023