Net sales at Switzerland's Swatch Group jumped 6.1% to 8.47 billion Swiss francs in 2018. (The figure is roughly the same in U.S. dollars.) It was the second consecutive increase after declines in 2015 and 2016. Net income rose 14.8% to CHF867 million.
The Swatch Group is the world's largest watch company (measured by watch revenues) and has a portfolio of 18 brands.
Blancpain, Omega and Longines were the star performers last year, achieving the strongest sales growth, the group said. (Swatch Group does not disclose sales by brand.) All three brands are powerhouses in China, which enjoyed a second year of double-digit growth in 2018, according to the Federation of the Swiss Watch Industry.*
Blancpain set a new sales record last year, the Swatch Group said in a statement announcing its year-end results.*
Omega and Longines sales could have been even higher. But bottlenecks in the Swatch Group's habillage division, which makes appearance parts for watches (cases, dials, hands, etc.), caused "a high level of back orders which led to significant delivery delays" in the second half of the year, the company said. The back orders amounted to CHF300 million, Swatch Group CEO Nick Hayek told financial analysts in a conference call.
The delays mainly affected Omega and Longines watches; the Longines V.H.P. (Very High Precision) collection was particularly impacted, the company said.*
The group's mid-priced and lower-price brands "performed well," it said.*
The group's retail sales, including e-commerce, increased "almost 10%," the company said.
Regionally, sales were strongest in Asia, although business there slowed down in the fourth quarter. "Sales in North America developed very positively, including the last three months of the year," the group said.*
'Healthy Growth' Ahead

Watches like the Blancpain Fifty Fathoms helped propel this year's growth.
"Demand is good and production problems and bottlenecks will be resolved in the first semester," it said. "The leadership position of the Swatch Group in China will become a major opportunity in 2019, even if ongoing market turbulence remains disruptive." Chinese consumers account for 40% to 45% of Swatch Group sales, according to Credit Suisse estimates. *Swatch Group said it also expects to increase market share in Japan and the U.S. this year. *
The company cited a number of "growth drivers" for this year:
*In February, Swatch will launch the first Sistem 51 watches with the new patented Nivachron balance spring with antimagnetic properties.
*Moreover, the company said, "in future, all mechanical watches for Swatch Group brands will feature antimagnetic properties, either with the silicon balance spring or the Nivachron balance spring. This improvement will be backed up by a longer guarantee period." It will result in "clear market share gains in 2019," the group says.*
Swatch will be extending its technical innovations into the Sistem51 lineup too.
*It expects new products celebrating the 50th anniversary of the moon landing to drive Omega sales. The brand will also launch in the second half of the year special edition Olympic-themed watches for the 2020 Olympic Games in Tokyo.
*This year Tissot will introduce a smart T-Touch watch with its own operating system.
*It predicts another sales record for Blancpain, whose Fifty Fathoms watches appeal to millennials, the group says.*
*The group expects e-commerce sales to grow, particularly for Swatch and Tissot.
Omega is expecting to have a big year, with the 50th anniversary of the Moon landing and the 2020 Olympic Games fast approaching.
A Patent A Day

In other developments in 2018, the Swatch Group said it had created 1,700 new jobs. Of that, 1,300 were production jobs in Switzerland. It employs more than 18,000 people in Switzerland, and at year end had a total workforce of 37,100. "The group is the largest industrial employer in Switzerland," it said. It has "close to 150 production facilities in Switzerland."
It also filed a record number of new patent applications in 2018: 212 versus 183 in 2017. That's "one patent per working day," it said.*


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