The Swatch Group recently released their 2017 financial results and, by and large, the news was good for the largest manufacturer of Swiss timepieces (as measured by revenue). In total, revenue for the entire group rose 5.8% at constant exchange rates and 5.4% at current exchange rates. This equates to CHF7.96 billion (or $8.10 billion). In addition to that, net income also increased 27.3% to CHF7 million ($768.7 million). In doing so, it ended two (2) straight years of declines in net sales as well as a three (3) year decline in net income.
When it comes to the watch and jewelry segment for the Swatch Group (which accounts for approximately 96% of the total group revenue), numbers were up 7.3% at constant exchange rates and 6.9% at current exchange rates. This equates to CHF7.70 billion or $7.84 billion).
All of this is very much in line with the reporting of the Swiss Watch Federation (FH or Fédération de l’industrie horlogère suisse). Shown below are the last three (3) months of the 2017 calendar year from their reporting.
If you are not familiar with the monthly reporting that the Swiss Watch Federation does (and this is a topic that we will be reporting on in the near future), these are export numbers of Swiss Made timepieces out of Switzerland and do NOT represent sales numbers to the public. There is a correlation, of course, but they should not be confused with actual sales numbers.
As the largest producer and exporter of Swiss Made timepieces, the Swatch Group is huge. Listed below are the 18 watch brands that they currently own. In addition to that, they also own the watch movement manufacturer ETA and also Nivarox FAR; the company that produces extremely high quality hairsprings.
Our friends at TheWatches.tv have put together a great video on the Swatch Group and we do highly recommend it. This video will help get you up to speed with all things Swatch Group related and give you a good “big picture” understanding.
Additional Information and Indicators
While the entire year for the Swatch Group was good, it was the last quarter of the year and, in particular, the month of December that really stood out for them. For the watch and jewelry segment of the Swatch Group, sales exploded 14.9% in the fourth quarter of 2017. According to the Swatch Group, December “recorded the second best monthly sales in the history of the Swatch Group”.
The Swatch Group does not disclose sales numbers by brand. But, they did indicate that their prestige and luxury segment has the strongest increase. In how the Swatch Group breaks out their brands, this would cover the following:
- Harry Winston
- Glashutte Original
- Jaquest Droz
- Leon Hatot
Further, Harry Winston was singled out for “extraordinary performance” and Omega for “a very strong acceleration in the second half of the year”.
According to the Swatch Group, great strides were made in the “Basic” and “Middle” ranges timepieces (their terms, not ours):
Flik Flak, Swatch, Calvin Klein, Hamilton, Mido and Tissot achieved impressive growth rates in the second half of 2017, while export figures for the Swiss watch industry were clearly negative in these segments. This indicates a massive gain in market share.
The following shows the information that the Swatch Group is referring to:
From a brand standpoint, it is probably Tissot that shines the brightest among the many Swatch Group owned brands. It was reported that Tissot’s annual sales exceded CHF1 billion in 2017 and, according to the Swatch Group, puts the brand into the ranks of “exclusive Swiss brands” that have achieved this elusive financial milestone.
Is It All Rainbows And Unicorns?
2018 Brand Outlook
The Swatch Group anticipates further very positive growth in local currencies in 2018, not only from its own distribution channels such as retail and e-commerce, but also from third-party channels…Swatch Group, with its global presence and its unique and diverse distribution channels, including online, will continue to generate very dynamic growth in local currency in 2018. The very good start in January confirms sustained consumption in most regions and countries, not only in the prestige and luxury sector, but also in the basic price segments.
While no representative of a publicly traded company is ever going to come out and tell you (except in very, very rare circumstances) that things are not upbeat, positive and all rainbows and unicorns moving forward, we feel that the outlook now for 2018 is generally positive. There is one circumstance that has proven to be an issue in the past and could very well be one in the future. That is China. While the Swatch Group does not break down sales by distribution channel, they did indicate that sales were the strongest in the Asia Pacific region. It was this region, and China in particular, that causes the very large downturn that started a few years ago. This is a story unto itself. However, suffice it to say that the Swatch Group and other Swiss brands very much over compensated for the tremendous sales growth in that region and when it came to an abrupt halt, they were left “holding the bag”. Since we cannot get the specific sales numbers from the Swatch Group, we can get a bit of an idea as to what is happening here by looking at the Swiss watch export numbers from the Swiss Watch Federation (FH) by country. The image below shows the 10 ten reported countries at the end of 2017. Hong Kong ranks #1 and China as #3. While the United States is ranked at #2, year over year (YoY) shows that the numbers are not good. How the Chinese numbers continue to perform as well as how responsibly the Swatch Group (and other Swiss brands) handle the situation with the Chinese will go a long way in determining how well the Swatch Group performs in the future.
Make sure that you never miss a single new product, sale, live stream show, news post, article, review or anything else that is added to Talk About Watches! Simply subscribe to the email notification list and we will let you know about updates once per week as well as breaking alerts as they happen!
All trademarks, trade names, or logos mentioned or used above (including screen shots) are the property of their respective owners. Their use does not necessarily constitute or imply the endorsement, participation or recommendation of the owners in any deal, offering, sale or special. They are used here merely for representative and informative purposes.
(Scroll To The Bottom)