Record revenues and job creation. Even as crisis continues to shake Europe, Swiss watchmaking has come up trumps, as the latest crop of positive results shows. First exports, which surged 19.2% to reach CHF 19.3 billion (USD 21.1 billion / EUR 16 billion) for the twelve months of 2011. This is 13% up on the previous record of 2008. The different groups in the sector have also all posted double-digit growth. In 2011, Swatch’s gross sales breached CHF 7 billion for the first time, gaining 21.7% at constant exchange rates to CHF 7.15 billion (USD 7.83 billion / EUR 5.92 billion). This boosted profit by 12.4% to CHF 1.6 billion (USD 1.75 billion / EUR 1.32 billion).
For the third quarter of its current financial year ending December 31st, Richemont’s sales progressed 24% to EUR 2.6 billion (USD 3.4 billion / CHF 3.1 billion). Hermès has announced a new record, with revenue for 2011 reaching EUR 2.84 billion (USD 3.75 billion / CHF 3.42 billion), +18.3%. This includes a 23% leap in watch sales. At LVMH, the world’s largest luxury group, revenue climbed 16% in 2011 to reach EUR 23.7 billion (USD 31.3 billion / CHF 28.5 billion), including the integration of Bulgari. Organic growth came to 14%. The takeover of the Italian firm has had a major impact on results at LVMH’s watch & jewellery division, whose revenue rocketed from EUR 985 million (USD 1.302 billion / CHF 1.187 billion) to almost EUR 2 billion (USD 2.64 billion / CHF 2.41 billion) !
Preparing for the future
Business is clearly booming for the sector’s leading names, although activity is expected to slow down in 2012. Despite this, watch companies are getting ready for what promises to be a rosy future, if recruitment figures are anything to go by. There are two main reasons for this. Firstly, Asia’s insatiable appetite for luxury goods. Secondly, companies must be prepared as Swatch Group gradually turns off the supply of movements and parts, and invest in their own manufacturing facilities.
Which is precisely what Swatch Group itself has been doing. Last year it invested CHF 580 million (USD 635 million / EUR 481 million) to expand production capacity and build up its distribution network, although this may not be enough to take on the constant increase in demand for certain parts, as the group remarked when publishing its 2011 results. The multinational is therefore planning more massive investments this year: between CHF 500 and 700 million (USD 548 and 767 million / EUR 414 and 580 million), says CEO Nick Hayek. Headcount has also increased to more than 28,000, after 2,800 staff were hired in 2011. The group plans to take on several hundred more this year.
All in the same boat
All the branch’s leading names seem to be enjoying this upward swing. Based on corporate announcements, Swiss daily Le Temps estimates that current and planned investments, excluding Swatch Group, amount to CHF 800 million (USD 877 million / EUR 663 million) and will generate several thousand new jobs over the next two to three years. Richemont brand Cartier has announced that it will shortly be taking on 600 staff at its different watch manufacturing sites. This recruitment wave is part of a plan to hire 2,000 people over two years. It’s a similar story over at LVMH’s watch division (Bulgari, Hublot, TAG Heuer, Zenith), which aims to develop its production capacity as of this year. “We anticipate a high level of business in watches in 2012 alongside a drop in parts supply by our main partners,” declared Francesco Trapani, President of LVMH Watches and Jewelry, early February.
Louis Vuitton has purchased a site in Meyrin, in the canton of Geneva, for its new workshops. All its staff will transfer there in 2013, including those employed at La Fabrique du Temps, a manufacturer of grande complication movements which in July last year became part of the LVMH stable. TAG Heuer, which acquired dialmaker Arte Cad in November 2011, intends expanding in the Jura, in Chenevez, to add to existing facilities in La Chaux-de-Fonds and Cornol. This would create 150 new jobs. Hublot, a recent arrival in Noyon and which last March took over Profusion which makes carbon-fibre parts, already has plans to double capacity at its manufacturing site within the next 18 months, with a hundred new jobs to boot. Meaning more records on the way?