July sees decline in watch exports due to Steel and China

Last month was marked by an erosion of 0.9% to 2.20 billion francs, mainly due to a fall of 11.7% for steel watches as well as a sharp decline in sales to China.

Watch exports marked time in July, after a first half of uninterrupted growth. The phenomenon is attributed to steel watches, down 11.7% to 759,700 pieces or 6.1% to 793.5 million francs, as well as a sharp decline in sales to China.

All segments combined, exports of wristwatches declined by 3.3% to 1.41 million pieces sold, for a value of 2.10 billion (-1.0%) francs. Watch exports as a whole eroded by 0.9% to 2.20 billion.

Precious metal timepieces thus fell by more than 10% in the number of pieces, but their cumulative value climbed 0.1% to 740.5 million. The contrast is even more marked for bimetallic products, with a drop of 13.1% in the number of units sold, but a jump of nearly 5% in turnover, indicates the monthly report of the Federation of Swiss watch industry (FH) published on Tuesday.

The number of pieces in the “other materials” category, on the other hand, jumped by more than a fifth, to 410.3 million units, while the value only increased by 10% to 82.5. million.

The clogged Chinese outlet

While the United States further strengthened its position as the leading overseas outlet for Swiss watches – with growth of 5.2% to 340.0 million – the Middle Kingdom posted a decline of 16.6% to 262, 9 million. The industry umbrella points to a base effect, with exports to China soaring by more than 18% in July 2022.

Over the first seven months of the year, the value of watch exports continued to show an increase of nearly 10% to 15.5 billion.

The slowdown observed in July penalized the values ​​of luxury representatives on the Swiss Stock Exchange. At the close, the Geneva luxury brand manager Richemont was in balance at 123.20 francs, when the bearer of the Biel-based watchmaker Swatch had fallen by 1.9% to 244.10 francs, the red lantern of a SLI up 0.26%.

Enjoining not to attach too much importance to the evolution of exports over a single month, Patrick Schwendimann recalls that the important Chinese market benefited from catch-up effects when it came out of confinement. The expert from the Cantonal Bank of Zurich predicts a much more robust underlying trend than the outlook for July suggests, anticipating sharp rebounds in August and September.

At Barclays, Carole Badjo underlines the modest side of the decline observed in July, after the 14% rise observed in June. The analyst also welcomes the ever-growing appetite of the country of Uncle Sam, notwithstanding the worsening economic situation across the Atlantic.

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