Swatch Group's 2023 Performance: Strong Sales Growth & Optimistic Forecast for 2024

Intro and overview

Following their mid-year report in 2023, which highlighted an impressive 18% increase in sales, Swatch Group has now released a detailed overview of its 2023 financial performance.

This leading corporation from Biel, renowned for its ownership of prestigious brands such as Omega, Longines, Tissot, and Breguet, reported a 12.6% rise in sales at constant exchange rates. This translates to a 5.2% growth at current rates, totaling €7,572.48 million.

Despite experiencing slower growth in the Q4, suggesting potential shifts in business and industry trends, Swatch Group maintains a positive outlook for 2024, with expectations of remarkable growth.

2023 highlights

2023 marked a year of robust performance for the Group, nearing a turnover of €7.6 billion, although it fell short of the pre-pandemic figure of €8,136 million in 2018. The group navigated through significant exchange rate volatility and challenging currency conditions. The negative impact on currency, amounting to €531.84 million or 7.4%, significantly influenced their profitability. The Group expressed concerns over the inability to counterbalance the swift decline of major currencies against the Swiss franc through price adjustments alone.

As per Swatch Group's report, the company's annual sales for 2023 rose by 12.6% at constant exchange rates. This performance surpassed the export growth of 11.9% reported by the Federation of the Swiss Watch Industry at the end of November 2023, which was a 7.9% increase.

These figures are indicative of the Group's brands gaining market share, especially Swatch (probably also due to latest Blancpain & Omega collaborations) in the lower-priced segments. However, the second half of 2023 saw a marginal reduction in growth compared to the first half, with a roughly 8% increase in fourth-quarter sales in local currencies. Similarly, net profits showed an upward trend with an 11.3% increase from 2022, amounting to €854.4 million.

• Asia: Swatch Group experienced significant double-digit growth in regions including Hong Kong, Macao, Thailand, India, Japan, and China.
• Europe: The group here presented modest single-digit growth, with Switzerland in particular witnessing a surge of over 30% in sales.
• North America: with brands like Omega, Tissot, and Swatch setting new records. The Group emphasized the sustained demand for Moonswatch and the successful Blancpain x Swatch collaboration, which led to high demand for the original Fifty Fathoms models, creating a significant uptick in store traffic.

Group investments and product development

In the past year, Swatch Group significantly increased its investments to €770.88 million, focusing mainly on production equipment and retail properties. The company also expanded its workforce, adding 1,541 new positions, including 802 in Switzerland. A notable aspect of the Group's strategy has been maintaining high inventory levels, which stood at €7,016.64 million (approximately 92% of 2023 sales), an increase of €436 million in raw materials, work in progress, and semi-finished goods. This approach is seen as a strategic move to safeguard uninterrupted production amidst potential supply chain disruptions.

Promising forecast for 2024

Looking ahead to 2024, Swatch Group anticipates a challenging yet promising landscape. The Group predicts excellent growth opportunities in local currencies, especially in the lower and medium-priced segments such as Swatch, Tissot, and Longines. Omega is also expected to receive significant attention as the official timekeeper of the 2024 Olympics. Despite this optimism, the Group remains cautious about the ongoing impact of exchange rate fluctuations, particularly given its substantial industrial operations in Switzerland.