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News: Swatch Group says it will NEVER return to mega exhibitions like Baselworld

by Peter Chong on March 15, 2019

As the watch world ponder over the fate of Baselworld, The Swatch Group’s supremo Nick Hayek Jr delivers a strong message on his views on mega exhibitions. He said this during The Swatch Group’s Group Media Conference concerning the 2018 results held in Cité du Temps in Biel/Bienne, Switzerland on March 14, 2019.

“There is no need for it anymore”

Nick Hayek, President of the Executive Group Management Board and member of the Board of Directors of The Swatch Group.
14 March 2019
Cité du Temps in Biel/Bienne, Switzerland

But first, the Swatch Group results:

The Swatch Group 2018 results

The group announced that sales rose 5.7% to CHF 8.5 billion in 2018, while margins increased operating profits by 15.2% to CHF 1.15 billion.

Nayla Hayek, chair of the Swatch Group Board of Directors described the financial performance as: “A very solid result that inspires great confidence in the future.”

Nick Hayek Jr.

The Swatch Group Annual Report 2018

Press Release

The strongest sales growth came from the prestige and luxury range, particularly Blancpain, Omega and Longines, despite capacity bottlenecks in the supply chain that resulted in delivery delays for Omega and Longines in the second half of the year.

  • Group net sales increased by 6.1% to CHF 8 475 million at current exchange rates (+5.7% at constant rates).
  • Operating result increased by 15.2% to CHF 1 154 million. Operating margin increased from 12.5% in the previous year to 13.6%.
  • Net income increased by 14.8% to CHF 867 million, with a net margin of 10.2% (previous year: 9.5%).

Outlook

  • Business slowed in the last three months of the year under review. The month of December in particular was slow, due in part to the very high comparison basis.
  • Production companies in the Habillage sector (cases, dials, watch hands, etc.) worked at or even above capacity limits, which led to significant delivery delays, mainly for products for Omega and Longines.
  • Record number of 212 new patent applications in 2018.
  • January 2019 started with solid growth, even in comparison with the very strong January in the previous year. The Swatch Group expects a positive trend in 2019, both in demand and in elimination of capacity bottlenecks.

The Swatch Group anticipates healthy growth in 2019, despite the strong comparison basis in the first half of 2018. Demand is good and production problems and bottlenecks, particularly in the Habillage sector, will be resolved in the first semester. Further expansion of e-commerce, mainly in the middle and basic range, will open additional possibilities. The leadership position of the Swatch Group in China will become a major opportunity for the Group in 2019, even if ongoing market turbulence remains disruptive. Additional gains in market share are expected in Japan and the USA in 2019.

Growth drivers

Harry Winston will continue its dynamic growth trend in 2019, accelerated as well by the confirmation of the top position of the brand by the purchase of the Pink Legacy diamond.

The Harry Winston watch brand continues to march ahead, with strong affirmation of their top position from their jewellery division.

Blancpain ended 2018 with record sales. The product Fifty Fathoms is one of the drivers of this success. The brand appeals ideally to the millennium generation, and strong growth is also expected in 2019.

Omega is celebrating the 50-year anniversary of the moon landing with various additional product launches on this theme. Additionally, in the second half of 2019, the special editions „minus 1“ for the Olympic Games 2020 in Tokyo will be launched in Japan.

The high demand for the Longines V.H.P. (Very High Precision) collection could not be adequately served in the last quarter of 2018 due to production bottlenecks. Elimination of these bottlenecks will have a very positive impact on the development of the brand in 2019.

The Longines VHP had production setbacks, resulting in late delivery, slipping the fiscal year 2018.

Tissot will introduce its smart T-Touch with its own operating system during the course of 2019.

In January 2019, Swatch introduced Swatch Pay in Switzerland with great success, and further countries will follow during the course of the year. In February 2019, Swatch will launch the first Sistem51 products with the patented Nivachron balance spring with antimagnetic properties.

In future, all mechanical watches for Swatch Group brands will feature antimagnetic properties, either with the silicon balance spring or the Nivachron balance spring, both patented inventions. This means a substantial quality improvement in terms of precision and reliability. As a result, Swatch Group brands gain a clear advantage over many well-known brands in the Swiss and international watch industry which do not have similar antimagnetic quality characteristics. This improvement, which will be backed up by a longer guarantee period, will translate into clear market share gains in 2019 and beyond.

Baselworld fate

Commentary

In a move which surprised industry pundits, Nick Hayek announced in July 2018 that the Group will not be exhibiting in Baselworld 2019. The Swatch Group brands will showcase their novelties through a series of regional events around the world.

This move was re-affirmed during the Results Press Conference on Mar 14, when Hayek removed doubts that The Swatch Group may return to Baselworld after this year.

File Photo: Baselworld 2018

The six luxury brands in the group – Blancpain, Breguet, Glashutte Original, Harry Winston, Jaquet Droz and Omega will be showing retailers in Zurich during the Baselworld 2019 dates. The world’s media will have to wait till and event known as “Time to Move” which will be held from May 14 to 16 in Switzerland.

We will be bringing you “Live from Baselworld” reports next week from the Messe floor. And again from the Swiss Jura in May with “Life from Time to Move”. Watch this space.

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