Switzerland’s largest watch conglomerate, the Swatch Group, just announced a strong set of results for 2018, with all key metrics up for the year. Revenue for the year rose 6.1% to SFr8.5 billion, with net profit rising 14.8%, and the net margin growing to 10.2%, compared to 9.5% a year before. The numbers echo the Swiss watch industry’s year as a whole, evidenced by the statistics just released by trade body Federation of the Swiss Watch Industry.

According to the group, business was so good, in fact, that the group’s components makers hit their production capacity, leading to delays in delivery.

But the situation was slightly more nuanced across the year, with a slowdown taking hold in the second half, particularly in the fourth quarter, just as it was for the rest of the watch business. According to the Swatch Group, the last three months of 2018 were slow, with December being an especially bad month.

One consequence of that was a continuing upward creep in inventory, which rose SFr600m in the year. Some of it was for raw materials like gold and diamonds – including the 18.96-carat Harry Winston Pink Legacy bought for SFr50m – but some of it was also semi-finished and finished watches, primarily from Omega and Longines.

The group added that its habillage division, made up of specialist companies that make components like cases, dials and hands, was working “at or even above capacity limits”, resulting in delayed deliveries of watches, especially those from Omega and Longines. This has been born out by the significant delays in several high profile Omega limited editions of recent years, including the 1957 Trilogy and first Speedy Tuesday.

The recently revived Omega cal. 321 movement unveiled for an upcoming Speedmaster model

January was off to a strong start for Swatch Group, which expects the rest of 2019 to be positive. Amongst the key drivers of sales in 2019 will be Omega, which will roll out commemorative Speedmaster watches for the 50th anniversary of the Moon landing, as well as “Minus 1” limited editions for the 2020 Olympics in Tokyo.

The results announcement also included a declaration that all mechanical watches from Swatch Group brands will eventually be equipped with antimagnetic hairsprings.

Source: Swatch Group