Outlook second half-year 2016
Swatch Group anticipates clear growth in local currency in the second half of the year compared with the weaker second half of 2015, and thus an annual result closer or equivalent to the previous year. The outlook for the Group, with its unique brand portfolio and its global retail and distribution network, remain good in all regions and segments in local currency. In the mid to long term, there are many more opportunities than risks. In the first three weeks of July, very good growth was achieved in Mainland China compared with the previous year, especially by the luxury and prestige brands Breguet, Blancpain, Glashütte Original, Omega and Longines. Positive developments can be seen in Southeast Asia, too. Also, markets will continue to develop positively in parts of Europe, particularly in Italy, Spain and Great Britain. The situation in France and Belgium will remain difficult. Decisive growth factors in the coming months will be the normalization of tourism in parts of Europe as well as the further positive developments in China. On the other hand, third-party distributors in Hong Kong are still very uneasy, which will cause further delays in reorders. In North America and Japan, growth in local currency will be achievable.
The Olympic Games in Rio de Janeiro, Brazil, will give an additional worldwide boost to the Omega brand, since the brand is the official Games timekeeper and is underway with nine watch models dedicated to the Rio de Janeiro Games. Omega will also launch the new Seamaster Planet Ocean Deep Black models and the Speedmaster Moonphase Master Chronometer in the second half of the year.
The Tissot brand currently accompanies the Tour de France as official timekeeper and is naturally represented by the new model Tour de France T-Race. Through the NBA, the North American professional basketball league and the WNBA, the women’s basketball league, Tissot will also achieve significantly greater international visibility, particularly with the new NBA collection and the Tissot Ballade Silicium Chronometer, the first wristwatch under one thousand francs with a silicium balance spring. Longines will further expand its position specifically in Asian markets with the new Equestrian and Symphonette collections. Swatch started selling its new Touch Zero Two with fan, fitness and timing functions on 7 July, and as of September, the new Sistem 51 Irony will be available as well as the Swatch Token launched in China.
Sales in all brands are supported through significant long-term marketing investment, the extensive retail network and also by the many new product launches in all segments. Since no structural changes were made to the production base and the entire workforce is highly motivated, the Group can rapidly meet increasing demand, also with regard to the new Swiss made. Thanks to the strong vertical integration of the manufacturing chain and the Swiss production base, the new Swissness rule of at least 60% domestic added value is a unique home advantage for the Swatch Group.
The technology companies, which regularly develop highly innovative electronic products and components, will continue to provide market innovations in the second half of the year. EM Microelectronic-Marin, worldwide leader in the development and manufacture of lowest power ICs, is, for example, working together with ABB on a smart sensor technology for self-monitoring and controlling ABB low-voltage motors used in the most diverse machines and production lines. Renata, in collaboration with Belenos, is already installing the production line for the new batteries, which will be used particularly in the area of electric mobility. Batteries with the new vanadium pentoxide compound for the cathodes and the new electrolyte composition not only have a much higher energy density than previous battery types, but also recharge faster. In addition, they have a longer life and are far safer than well-known lithium batteries. A letter of intent for collaboration with the Chinese automobile and motorcycle manufacturer Geely has already been signed.
