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A 'dismal currency situation' contributed to Swatch's 3 per cent drop in net sales. Image courtesy: <a href="" target="_blank">Swatch</a>
A 'dismal currency situation' contributed to Swatch's 3 per cent drop in net sales. Image courtesy: Swatch

Swatch sales decline by $12 billion

Unfavourable currency conditions and the overvalued Swiss franc have been blamed for a fall in Swatch Group’s 2015 sales.

The latest financial results from Swatch Group show that overall net sales for 2015 decreased 3 per cent to CHF8.5 billion (AU$12.1 b) at current exchange rates compared with the previous year.

According to Swatch, the CHF185 million (AU$265.9 m) sales drop was caused by “the ongoing unfavourable currency situation versus the still massively overvalued Swiss franc”.

“The financial year 2015 was shaped by the currency shock caused by the Swiss National Bank (SNB), which decided to abolish the euro minimum rate at the beginning of the year,” a company statement read. “As a consequence there were significant shifts in sales in the markets, as well as a marked distortion of the international product pricing structure.”

According to Swatch, calculated at constant exchange rates, net sales declined 0.9 per cent, while in euros, net sales increased 10.3 per cent.

Watches and jewellery

Swatch’s watches and jewellery segment – including production – showed a similarly weak performance in 2015 compared with 2014.

The segment generated net sales of CHF8.2 billion (AU$11.7 b), a 3 per cent drop at current exchange rates and a 0.8 per cent decrease at constant exchanges rates. It was noted, however, that wristwatch exports for the Swiss watch industry had declined 3.6 per cent at the end of December 2015.

Swatch’s overall operating profit and net income fell 17.2 per cent to CHF1.5 billion (AU$2.1 b) and 21 per cent to CHF1.1 billion (AU$1.6 b), respectively.

Despite what Swatch described as a “dismal currency situation” in 2015, the company remained upbeat about the coming year.

“[Swatch] group management expects, despite the ongoing challenging environment in various regions, a sustainable development in sales in local currency in 2016, based on worldwide ongoing very good consumption demand for Swiss watches,” the company statement read.

“January 2016 confirms that … watch consumption rose strongly compared to the previous year, [which is the] reason why the Swatch Group expects growth of well over 5 per cent in 2016 in local currency.”

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Sunday, 29 March, 2020 08:56pm
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