This month luxury conglomerate Swatch Group released financial figures from 2012 showing that earnings are up a billion dollars over the previous year. The Bienne, Switzerland-based company, which is the world’s largest holder of watch manufactures, earned $8.79 billion (CHF 8,143 million), an increase of 14% over 2011. Although the company owns various holdings, the Watches & Jewelry segment was one of their strongest earners, with double-digit growth at luxury manufactures like Breguet, Blancpain, Glashütte Original, Omega and Longines.
An increase in demand from the burgeoning Asian market has driven growth in the watchmaking industry, and Swatch has capitalized with additional expansion of production capacities. For example, the group recently integrated the Harry Winston brand into their luxury portfolio. So far this year, signals from the world markets indicate a trend of continued growth potential for the Swiss watch industry, with the Swatch Group estimating long-term growth of five to ten percent per year. As a result, their Board of Directors are set to propose an increase in dividend payments to shareholders at their Annual General Meeting (to be held in May 2013). At CHF 6.75 per bearer share and CHF 1.35 per registered share, it would be an increase of 17.4% over the previous year, a strong endorsement of their belief in continued growth for the year to come.
The luxury conglomerate weathered the economic slowdown of recent years well thanks to their adaptive expansion, which CEO Nick Hayek told the Wall Street Journal in 2011 was a clear priority. “In some segments we have had capacity problems and we could have sold more. For brands like Blancpain, Breguet, and Omega, growth could have been more. Everybody is talking about a slowdown but we don’t really see it…Some areas have more problems than others, but there are lots of opportunities for growth.” Although customers may be spending less overall, they still tend to invest in purchases like a luxury timepiece. ”Swiss-made means something to people,” says Hayek.