PARIS — In December, Swiss watch exports registered their second monthly sales decline in 2018, but posted strong annual growth overall last year, the Federation of the Swiss Watch Industry said on Tuesday.
In the final month of 2018, revenues from the timepiece exports were down 2.8 percent, totaling 1.6 billion Swiss francs, or $1.83 billion. Among factors dampening the December turnover was a 10.1 percent decrease of sales in China, which “intensified the slowing of growth observed since the beginning of 2018,” according to the federation.
Business in Europe sank 5.8 percent, while revenues from watches priced at less than 500 Swiss francs dropped 20.3 percent. Also contributing to the industry’s softening were timepieces made with other metals and other materials, which registered revenue declines of 15.2 percent and 22.7 percent, respectively.
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“The weak December 2018 Swiss watch export numbers will probably not support the stock price evolution of Richemont and Swatch, and especially the negative recordings from the Asia region will make luxury investors frown,” wrote Christian Weiz, an analyst at Baader, in a research note.
September was the other month in 2018 when Swiss watch exports were in the red.
For full-year 2018, Swiss watch exports rose 6.3 percent, but registered a marked slowdown in the second half, amid signs of a deceleration in China.
“Macroeconomics, commercial and political uncertainties influenced developments in the sector, which also had to deal with competition from other luxury goods and connected objects,” the federation said, adding there were also considerable changes in distribution.
In 2018 as a whole, the value of Swiss timepiece exports totaled 21.2 billion Swiss francs. Growth in the first half of the year was 10.6 percent, versus 2.3 percent in the second half.
“The signs of stagnation, economic indicators and continuing uncertainties at many levels suggest that the right approach to 2019 is cautious optimism,” the federation said. “Watch industry exports are expected to continue to grow, but at a more modest level.”
Sales of wristwatches, which made up 95 percent of exports on a value basis, generated 19.9 billion Swiss francs, up 6.1 percent on-year. Volumes were down 2.3 percent to 23.7 million units, 570,000 fewer timepieces than in 2017.
The number of quartz watches sold declined 5 percent, although sales were up 4.2 percent in value terms. Mechanical timepieces increased in volume and value, by 3.9 percent and 6.6 percent, respectively.
Watches made of precious metals, steel and bimetal, the principal materials, posted significant increases in value. Timepieces made of steel, which is used for more than 50 percent of watches, registered a 4.3 percent rise in volume.
The other materials group was down 15.2 percent, and the other metals category declined 12.2 percent.
The federation said watches with an export price below 500 Swiss francs fell back, especially in terms of the number of units sold, down 5 percent. Timepieces priced at more than 500 euros posted a rise of 7.5 percent by value and 8.1 percent by volume.
On a geographic basis, the Swiss watch industry’s annual gains were led by Asia, although the increase in America was offset by a downturn in Europe.
Asia generated 53 percent of the sector’s sales and grew 12.2 percent. Sales in Hong Kong, the industry’s most important market, rose 19.1 percent, while revenues were up 11.7 percent in mainland China, where there was a gradual slowdown starting in January. Sales in Japan gained 9.1 percent and were up 0.7 percent in Singapore, 0.8 percent in Taiwan and 25.7 percent in South Korea.
After three years’ decline, the U.S. was back to growth, with the pace accelerating throughout the year.
All of the markets in decline for the sector last year were in Europe. Sales were down 4.4 percent in the U.K., 14.3 percent in Italy and 11.4 percent in Spain. Timepiece revenues were up 4.3 percent in Germany and 9.1 percent in France.