http://www.businesstimes.com.sg/arch...-2012-20130212

Published February 12, 2013

Export of Swiss watches to S'pore declines in 2012

But despite the dip, the Republic is one of top 10 export markets for Swiss timepieces

By Chuang Peck Ming


LUXURY timepieces still sold like hot cakes in almost all major markets last year as Swiss exports crossed the 20 billion Swiss franc (S$27 billion) mark for the first time. The exception was Singapore.

Shipments from Switzerland, which has a near-monopoly of the production of high-end mechanical timepieces, continued to climb in 14 of its top 15 markets, according to the latest figures released by the Federation of the Swiss Watch Industry.

Shipments to Singapore slipped 1.9 per cent from 2011 to 1.12 billion Swiss francs in 2012. And this came after a 25.1 per cent jump in the year before when Singapore's import of Swiss timepieces exceeded one billion Swiss francs for the first time.

Overall export of Swiss watches rose 10.9 per cent from 2011 to 21.42 billion Swiss francs last year - down from a 32.5 per cent surge in 2011 but still a clear indication that the Swiss watch industry can hold its own in a tough economic climate, while other export sectors struggled.

Despite the dip, Singapore remained one of the top 10 export markets for Swiss timepieces led by Hong Kong, followed by the United States and China.

The release of the latest Swiss watch export figures came just as two of Singapore's biggest luxury watch distributors, The Hour Glass and F J Benjamin, reported a drop in sales and profits.

F J Benjamin, which saw net profit for the three months ended Dec 31 dive 73 per cent to $1.3 million from the same period a year ago, said: "The lower profitability was due to a decline in sales in North Asia by 36 per cent as a result of reduced spending by visitors from the People's Republic of China for luxury timepieces during the October Golden Week, which continued into the fourth quarter of 2012."

Net profit of The Hour Glass fell 19 per cent in the same period to $14.60 million; sales dropped 7 per cent to $157.88 million.

But the declines are not recent. In the case of The Hour Glass, the fall in profits is traced to last March. In the nine months since then, they went down 9 per cent to $33.98 million, while sales slipped 4 per cent to $433.65 million.

The declines had continued even as The Hour Glass and others such as Cortina were pumping more money to make over existing boutiques and open new ones.

Local consumers, spooked early by a dipping economy, were already cutting back spending before the tourists did. This started as early as the last Chinese New Year, according to one senior watch executive. Hopes for a pick-up in the Christmas season were dashed when the Chinese also started to hold back purchases in the face of changing political leadership at home.

A 25-year veteran watch-boutique manager on Orchard Road lamented that his sales in last October-December were his worst Christmas sales ever. But such sentiments appear to be at odds with those in luxury watch markets elsewhere in the world.

Apart from Singapore, Swiss export of timepieces declined only in Thailand (-1.4 per cent), Mexico (-5.7 per cent) and Turkey (-8.3 per cent).

Even in China, where there was a curb on spending on luxury items, especially in the final months of 2012, Swiss watch shipments crept up 0.6 per cent last year to 1.65 billion Swiss francs.

Swiss watch exports to Europe, where many countries are still economically troubled, bounced back strongly.

Shipments to Italy went up 16 per cent and to Spain 17.4 per cent. They jumped 34.7 per cent in Belgium, 33.1 per cent in Germany and 32.7 per cent in the Netherlands.

The Swatch Group, owner of brands such as Omega, Breguet, Blancpain and Longines, accounted for half the increase in Swiss watch exports last year. It reported gross sales in 2012 rose one billion Swiss francs from the previous year, or up 14 per cent, to 8.14 billion Swiss francs.

"The strong group brands performed convincingly in all regions and price segments, notably outside Greater China as well, and realised further conspicuous growth in market share," Swatch says in a report.

Its watch and jewellery business did even better, with gross sales up 15.6 per cent to 7.29 billion Swiss francs.