PARIS — The Swiss watch industry faces significant headwinds in 2015.
Exports of Swiss timepieces are expected to remain stable this year after progressing 1.9 percent in 2014, on par with the previous year, the Federation of the Swiss Watch Industry reported.
Releasing figures for December and the full year on Tuesday, the federation noted watch sales saw a gradual loss of momentum as the year progressed, with a decline of 0.3 percent in the fourth quarter due to sharp decreases in the key markets of Hong Kong and China in November and December.
“Even if this downturn is not hugely significant in itself, the emerging trend in recent months points to a more difficult situation for Swiss watch exports, not to mention serious consequences attributable to the strength of the franc,” the federation said, referring to the Swiss National Bank’s decision to de-peg the franc from the euro.
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“In an environment which is clearly less robust, forecasts have been revised. In 2015, watch exports are expected to remain stable in relation to 2014. Exchange rate fluctuations in particular will continue to be monitored closely and the results of the first months of 2015 will be decisive in assessing the general situation,” it said.
Swiss watch exports fell 2.5 percent in December to 1.8 billion Swiss francs, or $1.84 billion, according to the federation. Dollar figures are converted at average exchange rates for the period in question. In 2014 as a whole, exports of Swiss timepieces totaled 22.2 billion francs, or $24.34 billion.
Exports to Hong Kong fell 10.3 percent in December, indicating that sell-in remains weak following pro-democracy protests last autumn. Sales to China fell 27.2 percent during the month as a government anticorruption drive continued to sap demand for luxury timepieces.
The United States, the second largest market for Swiss watches, recorded a 0.9 percent drop in sales. This appeared to be a blip. For the full year, the U.S. posted growth of 6.2 percent, with an uptick in the fourth quarter as a whole.
Hong Kong remained the top market for foreign sales of Swiss timepieces in 2014, with sales remaining flat year-on-year. China, the third biggest market, posted a 3.1 percent drop in sales in 2014 versus the previous year.
Thomas Chauvet, luxury analyst at Citi, said the drop in Swiss watch exports in December was probably due in part to the later timing of Chinese New Year, which starts on Feb. 19 this year versus Jan. 31 in 2014.
He said it was consistent with a weak year-end performance by Compagnie Financière Richemont, which owns luxury brands including Cartier, Vacheron Constantin and Panerai.
Among the challenges facing the Swiss watch industry in 2015, Chauvet listed continued disruption in Hong Kong; the recent slowdown in the U.S.; the potential impact of a lower oil price on demand from Russia and the Middle East, and the strengthening Swiss franc.