After a lot of calls, Vontobel in Zurich has finally released the annual report of the Swiss watch industry which has been eagerly awaited in the industry. The Swiss private bank published the findings of three analysts in a report called ‘Vontobel Luxury Goods Shop-Watch Industry’ and predicted that the Swiss watch industry may face an era of zero growth in 2015.
Similar to previous years, this survey report reveals the secrets that many brands do not want to make public. After all, watchmakers are often embarrassed when it comes to information about their business, which is not easy to explain. Closer to home, Vontobel’s survey report lists the production and sales of major brands, of course, the figures are only approximate estimates (because of lack of official data, including listed watch companies). However, they can at least serve as a reliable basis, and then speculate on the development trend of the relevant market.
Richemont Group Advantages
Vontobel predicts that the Swiss watch industry’s total exports in 2015 will be 22.3 billion Swiss francs, which means-zero growth! After two consecutive years of low growth of 1.9% in 2013 and 2014, it seems that the Swiss watch industry will stand still this year, stagnation, and the former glory is no longer. In the midst of misery, the Zurich private bank is still very clear about its preference in terms of stock value. Compared to Swatch Group, it is obviously more inclined to Richemont Group.
So why? From the perspective of the Richemont Group’s sales and operating profit, jewelry has contributed 30% and 50% respectively, and the Group is expected to continue to benefit from this dominant market business. Moreover, Richemont’s production plants are mostly located in the euro area, and most of its products are sold in US dollars, and the positioning is just right (Editor’s Note: The current euro is in a recession).
As Vontobel pointed out, Richemont was the second-best performing group of companies in the luxury goods industry in the five previous fiscal years to the end of 2014-with an average annual growth rate of 10.8%, second only to Hermès (13.4%). Last year’s exchange rate fluctuations caused Richemont to lose EUR 686 million, which severely hit the group’s accounts. The year-on-year net profit fell by 35.4% year-on-year, from EUR 2.67 billion to EUR 1.334 billion. Nevertheless, Vontobel is still confident in the development prospects and profitability of Richemont Group, which is consistent with the stock exchange’s attitude towards Richemont.
Top 20 Swiss watch brand sales in 2014 (in millions of Swiss francs)
Efforts of other groups
If only the timepiece is calculated, according to the data released by Vontobel in 2014, the Swatch Group (19% / 7.6 billion Swiss francs) still holds the world’s largest market share, leading Richemont Group (16% / 6.5 billion Swiss francs) and Rolex (12% / 4.8 billion Swiss francs). Surprisingly, Fossil sold 35 million watches in 2014, exceeding Swiss production (28.5 million) during the same period, with sales of 2.5 billion Swiss francs, occupying fourth place with a 6.3% share. Japanese brands are also not far behind, with sales of Seiko, Citizen and Casio totaling 3.8 billion Swiss francs, taking away one-tenth of the cake.
In terms of single brand, Rolex led with pole sales of 4.5 billion Swiss francs, far exceeding Omega and Cartier (see chart). The better news for Rolex is that, thanks to the strong performance of the US market last year, the ‘Big Crown’ continued to sing and advance; while Omega and Cartier were more affected by the sluggish performance of Hong Kong and mainland China. According to the 2014 Swiss watch brand sales rankings, Swatch ranked 4 in the Top 10 and Richemont Group in the Top 20.