In a tense economic climate, dominated by crisis in the Euro zone, lacklustre growth in the United States, and a strong Swiss franc, watch sales continue to buck the trend. Vacheron Constantin has announced plans to invest CHF 100 million and double the size of its two production sites in Geneva and Le Brassus (Vallée de Joux) between now and 2020. In the same breath, the Manufacture revealed it will be increasing staff numbers from 700 to 1,300, while annual production is scheduled to grow from 18,000 watches to around 30,000.
The financial community was treated to more good news a few days later, when LVMH announced that its sales were up 15% for the first nine months of the year to reach revenues of €16.3 billion. The luxury giant reported a massive 76% growth in turnover to €1.2 billion for its Watches and Jewelry division, which includes Bulgari, Chaumet, Hublot, TAG Heuer and Zenith. Note, however, that a substantial proportion of this gain was due to the incorporation of Bulgari into LVMH’s accounts. Excluding currency impact and acquisitions, the group’s revenues still leapt 26%.
Moderate growth in 2012
Figures for the watch industry confirm these excellent results. For the nine months to September 30th, Swiss watch exports climbed 19.5% (CHF 13.5 billion). Exports for the fourth quarter only need equal the amount for the same period last year, i.e. CHF 4.9 billion, to give a total CHF 18.4 billion for the year. Compare this with the industry’s current record of CHF 17.03 billion in 2008.
All the indicators suggest that growth will stay on-course until December, thanks in particular to the emerging markets. Jean-Daniel Pasche, President of the Federation of the Swiss Watch Industry, is confident 2011 will be a record year. But what about the 12 months after that? “The current mood is more uncertain than euphoric,” he commented earlier in the month. “While a number of factors, including the strong Swiss franc, suggest we should err on the side of caution, we can still expect growth, even moderate growth, in 2012.”
Between January and September this year, exports of Swiss watches soared in markets such as China (+48%), Thailand (+42.8%), South Korea (+33.7%), Russia (+31.3%) and even Hong Kong (+28.9%), which remains the number-one market for Swiss watch exports at one-fifth of total value.