GENEVA, January 17, 2015

Salon International de la Haute Horlogerie celebrates its quarter-century in Geneva from January 19th to 23rd 2015

Sixteen of the world’s most expensive watch brands, of which three-quaters are produced by Richemond (CFR), will present new and old creation. The industry spend as much as 30 million Swiss francs ($35 million) for the great manufactural event. What the organizer could not forecast was the End-Gong  of the Swiss National Bank (SNB).

Was it the right timing for the Swiss National Bank to disappoint the luxury watchmakers, just as they were preparing for the annual Geneva watch show on next Monday?

The extremely sudden decision to put an end to the tight bonding between the Swiss franc and the euro it’s not an absolute disaster for the watchmakers industry, but it will steal away some of the glance of the event.  As the Swiss watchmakers have a substantial cost base, the new situation will have a negative impact on margin and translated earnings. Watchmakers either need to increase  prices or cut costs.

This “Swiss-Made” industry flourishes by its home attributes and  label: savoir-faire and precision. The local product development  and production will have to face higher costs, which will necessarily induce to more innovation and diversification.

Tighter margins must be considered in the future.

Almost a third of the Swiss watches are exported to the euro zone. In this situation of a weak currency, the industry will be constrained to either increase prices, or to reduce the margins. Otherwise Swiss watch exports may decline this year. There are not yet full-year data for 2014 available, but Swiss Watches exports rose 2.3 percent in the first eleven months of 2014, still far away from growth rates that shown as much as 22 percent in 2010.

Adjustments for new market challenges are needed.

Richemont’s Cartier brand started last year by putting 230 employees on shorter work weeks to adjust to weaker demand. Richemont reported Thursday in Geneva that revenue in the quarter through December stagnated for the first time in six years as protests in Hong Kong disrupted sales in the biggest market for Swiss watches. The low oil price and gains demotivate wealthy customers by new watch pieces acquisitions.

The one consolation watchmakers have is they’re entering this crisis with bigger cash than ever before. Richemont’s net cash position increased to a record 4.9 billion euros ($5.7 billion). A 10 percent appreciation of the Swiss franc against the euro cuts earnings at Swatch by as much as ca. 18 percent and at Richemont as much as 9 percent. Richemont will probably respond by raising prices.

The first signs of Swiss watch industry future shape  after the SNB decision will be given with the beginning of next week.  This industry is able to reinvent the wheal.

Five exhibitors, five days and 4,500 square metres paved the way for the Salon International de la Haute Horlogerie (SIHH) in 1991, a bold venture which brought together a handful of prestigious Maisons whose values were those of Fine Watchmaking. Over the years, the SIHH has put Geneva firmly at the centre of the world watchmaking map, and confirmed a certain idea of what time measurement should be. An idea that will have every opportunity to express itself during this 25th anniversary edition.

Strong commitment to “horological calendar”

“From what were indeed modest beginnings, the SIHH quickly grew,” recalls Fabienne Lupo, managing director of the SIHH. “Some Maisons have left while others have joined as groups have formed within the sector. Now firmly established in the halls at Palexpo each January, the SIHH is undoubtedly a highlight of the horological calendar.”

With 16 exhibitors sharing close to 40,000 square metres, the SIHH 2015 will once again prove what a keynote event it is, and set the tone for the twelve months to come. Open exclusively to retailers and media representatives, the SIHH has become a unique showcase for the year’s new launches and a prelude to the trends taking shape. “The fine watchmaking we have defended for the past twenty-five years expresses its creativity through technical and aesthetic innovation,” says Fabienne Lupo. “The exhibiting Maisons defend a tradition that draws on breakthroughs in new technologies and efforts undertaken in favour of the métiers d’art.” At the confluence of these different forms of expertise, the SIHH has imposed a style and an atmosphere that have never been equalled.

Source:

http://www.sihh.org/