Swiss watch exports hit seven-year low

Swiss watch exports have posted their biggest quarterly drop since 2009. 

The industry has declining demand from all its main markets.

Shipments fell 8.9% in the first quarter, adjusted for working days, according to data from Switzerland’s customs office. Exports declined 16% in March, to CHF1.5bn (€1.4bn), the lowest level for that month in five years, the Federation of the Swiss Watch Industry said.

The fall-off was broad-based, reaching 38% in Hong Kong, 33% in the US, and 14% in China.

“What’s most surprising is that almost all top markets are in the red,” said Zuzanna Pusz, an analyst at Berenberg, in London. “Even if you adjust for the tough comparison base, it’s a really big drop. And what’s most worrying is that there’s no clear outperformance elsewhere, no shift to another region to partially make up for what’s lost in Asia.”

A boom in recent years in demand for Rolex, Omega, and Cartier timepieces has turned to bust, as Swiss watchmakers confront a laundry list of challenges. That’s led to job-cut negotiations at Cartier, Vacheron Constantin, and Piaget.

It has also prompted some brands to reshuffle management: Parmigiani Fleurier’s interim chief executive resigned last month, just five months after he replaced Jean-Marc Jacot.

The export figures contrast with Swatch Group chief executive, Nick Hayek’s comment, in an interview with Le Temps, earlier this month, that the industry was healthy. He was quoted saying the Swiss franc was completely overvalued, causing terrible damage in Switzerland.

Mr Hayek had said he wanted to avoid job cuts in the downturn.

In that interview, Mr Hayek said it would be “exaggerated, but also wrong” to call the situation a crisis, pointing out that some countries continued to grow, and results in local currencies had been more robust than those reported in Swiss francs.

In February, Swatch reported a worse-than-expected 21% drop in net profit, to CHF1.12bn, pinning the blame on the nation’s currency.

“The completely overvalued Swiss franc has done terrible damage to the country,” the paper, on Saturday, quoted Hayek, a persistent critic of the Swiss National Bank and its efforts to temper the franc’s strength, since abandoning a cap against the euro in January, 2015.

Shares of Swatch, which makes Omega and Longines watches, fell as much as 2.5%.

Richemont, the owner of Cartier, dropped as much as 1.9%, and LVMH, whose brands include TAG Heuer, declined as much as 1.1%.

“It’s not a good number,” said John Guy, an analyst at MainFirst Bank, in London. “But we also had no great expectations going into the March exports. We do expect April to improve, and, if that remains soft, it will mean trends are weaker than we expect.”