Tissot Smart-Touch

PARIS — Swatch Group is temporarily reducing and in some cases halting production, but has not closed factories at this point, chief executive officer Nick Hayek said Thursday.

“It’s really case by case, because the reality of a battery manufacturer like Renata that’s in Baselland is quite different from an operation in Vallée de Joux, for example, so that’s why we really have to tackle every reality differently,” said Hayek, speaking in an online presentation on the results of the Biel, Switzerland-based group. The executive was flanked by chief financial officer Thierry Kenel and chief controlling officer Peter Steiger, who sat at a distance.

In January, the group, which owns labels including Omega, Longines and Blancpain, reported a 13.7 percent decline in annual net profit, weighed down by protests in Hong Kong.

While no factories are closed, the large majority have at least partially shut operations, and some have stopped production for several days already.

High-end Swiss watch labels Patek Philippe, Rolex and Hublot earlier this week announced the temporary suspension of production.

“It’s really changing every day,” added Hayek, who noted that the group’s stores are closed in Europe and much of the U.S.

In China, where the shops were closed for around five weeks, and have been opened for nearly two weeks, business is slowly coming back, Hayek said. 

“The trend is very good, shops are open, the people are coming and they start to consume and we think it will be back to more normal levels probably the next month if you take the whole month in consideration if nothing is happening,” he said. “It will take more time,” he also said, cautioning against expecting a fast bounce back.

Swiss watch export statistics for February showed the beginning of the impact of coronavirus on the industry, with a 9.2 percent decline in the value of exports, to 1.6 billion Swiss francs, or $1.64. billion, according to the Federation of the Swiss Watch Industry. Exports to Hong Kong and Mainland China fell steeply, down 42 percent and  51 percent, respectively, over the month.

While exports of all ranges of watches were down, the steepest drop came from mid-priced timepieces, with a 52.5 percent decline for those priced between 200 and 500 Swiss francs.

Watches priced over 3,000 Swiss francs performed the best, down only 1.3 percent.

The figures do not yet fully reflect the actual situation in certain markets, the federation noted. 

Asked how he felt about an investment in Swatch by asset manager Veraison, the executive was combative.

“It’s the joke of the day, this Veraison fund, these people bought perhaps 8 million Swiss francs-worth of shares and I don’t know what they want with this,” he said, adding there was no dialogue with the investors, while noting Swatch’s advisory board had received a letter from the investors.

The Tissot label intends to launch its new T-Touch Connect Solar watch sometime this year, its first watch that is compatible with Huawei’s HarmonyOS system, executives said, noting they expect the connected watch to draw new consumers to the group’s products.

Asked for guidance on sales this year, Hayek stressed the unsettled environment:

“The whole situation of 2020 is a little bit rocking us and shaking us and we are saying ‘what are we going to do here or there?'”

 

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