Swiss watchmaker optimistic about business prospects

Hayek leads the world's largest watchmaking group Keystone

The chief executive of the Swatch Group, a leading Swiss manufacturer of watches and jewelry, is upbeat about business prospects for the coming year.

Nick Hayek says the Swatch GroupExternal link hopes to reach the ambitious target of a 7%-9% increase in sales this year.

“It is not impossible. It might work if sales in [November and December] are equally strong as those in the three previous months,” he told the NZZ am Sonntag newspaper.

For 2018, the Swatch Group foresees a substantial rise in sales.

“We have to be careful not be euphoric. But there are excellent business opportunities and for once, the exchange rates are in our favour,” Hayek continued.

He said that sales started picking up since July and recorded a 10% increase in September, while October is likely to be even better.

All price segments of watches benefited from the upswing, according to Hayek.

The brands, Omega, Blancpain and Longines, even have production bottlenecks and could not cover the demand.

Strong Swiss franc

The Swiss watchmaking industry has suffered a setback over the past few years following the Swiss National Bank’s decision in 2015 to lift the CHF1.20 cap on the Swiss franc against the euro, hurting the export industry, notably the watchmaking sector.

“Consumers couldn’t understand why they should suddenly pay 10%-20% more for the same product,” Hayek is quoted in the NZZ am Sonntag.

The Swatch Group employs about 36,000 people in 50 countries. In 2016, net sales were CHF7.533 billion ($6.710 billion), decreasing 11% from 2015 results.

Overall the Swiss watch industry is responsible for around 1.5% of Gross Domestic Product (GDP). It is Switzerland’s third biggest export sector behind the pharmaceutical-chemical, and machine tool sectors.