Swiss watchmaker Swatch has credited a weakening franc for the high levels of growth it experienced at the end of 2017, and in the first months of 2018. CEO Nick Hayek said that the company, which has struggled in recent years, notched up double-digit growth at the end of 2017, a trend which continued into the new year, which contributed to record levels of monthly growth.
The watchmaker, which has other brands such as Tissot, Omega, and Longines within its stable, experienced higher production costs because of a strong franc as the majority of its revenue comes from export markets. The franc has since fallen it to its lowest level against the euro in three years. This has spurred exports growth of 10% in the first quarter of 2018.
Hayek has an optimistic outlook for the rest of 2018. He expects strong growth in markets such as China, targeting the growing middle class in the world’s second-largest economy. Though a recent corruption crackdown may have put off some Chinese officials and business people from ‘showing up with golden watches’, Hayek, in an interview with CNBC, explained:
It is very good. Corruption is always bad and it’s always bad for the middle class and we need the middle class to grow.
Hayek also touched on the potential threat from smart watches, dismissing them as a competitor since they introduced consumers to the idea of wearing different watches at different times.
And Swatch, in fact has created this. You know the name Swatch is not Swiss watch, it’s second watch. The idea of Swatch, and that’s why Swatch has this name, is that you are not owning only one watch. You change your watches.
Nick Hayek, CEO, Swatch
Barry Callebut, another Swiss company and the largest supplier of chocolate and cocoa products in the world, also reported a good start to its financial year, as its sales volume grew 8%. Hilti, a Swiss power tools manufacturer, grew its foreign sales by nearly 10% in another strong performance.
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