Swatch Keeps Ticking in a Sea of Uncertainties

Swatch’s CEO Nick Hayak continued to make the rounds of the haute horology literati this week, touting the company’s increased sales even as the European Union pursued an antitrust probe into the Swiss watchmaking giant.

Omega
Olympic timekeeper Omega is another Swatch Group company.

Gross sales for the conglomerate were $3.87 billion in the first half of 2012, up 14.4 percent from the same time period in 2011. Operating profits rose 19.4 percent, despite unstable exchange rates and a worldwide scarcity of gold. A simultaneous effort to increase the retail networks of Swatch’s 19 different brands sought to diffuse the impact of high prices across the precious metals market.

Another obstacle the Swatch Group hopes to overcome is its unique position as a parts supplier to virtually all of its competitors. Swatch Group’s movements, miniature battery technology and miscellaneous hardware are used by smaller watchmakers who do not have the resources to construct many of their own parts.

Swatch has recently sought to restrict its shipments to these competitors, a move which has angered the European Confederation of Watch and Clock Repairers (ECWCR), the trade group which initiated the current antitrust probe.

“Normally, when a monopolistic stakeholder decides to cut supply, antitrust authorities protect smaller players, giving them time to organize themselves,” ECWCR said in a statement. “However, in this case, the Comco [the Swiss agency responsible for antitrust complaints] immediately awarded the Swatch Group an ability to reduce deliveries up to 30 per cent.”

The issue will be decided by the European Court of Justice, where all parties will make their case later this year. Meanwhile Swatch Group remains on track to reach its goal of $8 billion in sales for the year 2012, as compared to its $7.5 billion in 2011.

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Source: WatchPro. Photo courtesy Breguet and Omega websites.

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