Swatch clings to its factories despite the collapse of its Chinese sales.Image: montage watson
Never, except during the global confinements linked to the Cavid pandemic, the Swatch Group had recorded losses. Could it happen again this year? We take stock.
18.07.2025, 05:2718.07.2025, 05:27
Daniel
During the first half, Swatch Group achieved a turnover of nearly 3.1 billion Swiss francs, but only 17 million francs in profit. A derisory margin of 0.6%, far from what is expected of a group renowned for its two -digit performances, with prized and recognized brands worldwide, such as Omega, Blancpain, Tissot or Swatch.
Is Swatch Group in danger?
No. The group has solid financial reserves, accumulated over many years. He has no debts, and has a net financial position of 1.1 billion francs. However, this sum has decreased by 285 million since the start of the year, as spending has exceeded revenue.
Nick Hayek is currently put to the test at the head of Swatch.Keystone
Where does the problem come from?
Sales dropped 11.2%to 3.059 billion francs. This drop is partially due to the weakening of foreign currencies against the Swiss franc, which reduces the value of sales made abroad once converted, with an impact of -3.3 %.
But the main cause is the prudence of Chinese consumers. In 2023, Swatch still achieved a third of its turnover in the China region (which includes Hong Kong and Macao). In the first half, this figure fell to 24%. Good results in other regions have not made it possible to compensate for this loss.
What is the situation outside China?
For its flagship brands (Omega, Longines, Rado, Tissot), the group reports two-digit growth in the United States, Mexico and Canada, as well as stable sales in Europe and Japan. The Richemont group, competitor of Swatch, also mentioned similar trends.
Why such a marked fall in profit?
Swatch has more than 100 factories in Switzerland. In 2023, the slowdown in sales in China had already led to underminization of Swiss production capacities. When the factories turn slowdown, their fixed costs weigh heavily on profits. However, Swatch always refuses to adapt its production accordingly.
Why doesn’t Swatch close factories?
In the introduction of the 2024 management report, Nayla Hayek, president of the board of directors, wrote:
“Despite an unfavorable global economic environment, and especially the weakness of consumption in China, we have maintained our strategy, which is to preserve jobs and fully maintain our production capacities. We have chosen to protect what makes Swatch Group’s strength and soul: our employees, our know-how and our production. This is of course affecting our profitability, but the group is strong enough to support it. ”
This position was reaffirmed in the current half -year report.
What are the prospects?
Swatch tables on a resumption of commands from Chinese retailers. The boom in online commerce also gives positive signs of recovery of consumption. The group anticipates better use of its production capacities, which would improve its profitability.
Translated from German by Joel Espi
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