Swatch posts steep drop in sales and profit as China struggles

By John Revill

ZURICH (Reuters) -Swatch Group's sales and profit fell during 2024, the Swiss watchmaker said on Thursday, as improvements in the United States and Japan failed to offset a steep downturn in China.

The maker of Omega, Longines and Tissot watches said its full-year sales fell 14.6% to 6.74 billion Swiss francs ($7.44 billion), missing forecasts for 6.95 billion francs in a consensus of analysts compiled by Visible Alpha.

Net income at the company, which also makes the Swatch plastic watches, plunged to 219 million francs from 890 million francs a year earlier, missing forecasts for 365 million francs.

Swatch said it was seeing "persistently difficult market conditions and weak demand for consumer goods overall in China".

Its sales in greater China and South East Asia - which are heavily dependent on Chinese tourism - fell by 30%.

The figures reflected the ongoing difficulties for many luxury companies in China, where customers have been shunning expensive purchases during the country's economic slowdown.

Swatch is highly exposed to China, Hong Kong and Macau, generating 27% of its sales in the region, down from 33% a year earlier.

The Swiss watch industry as a whole struggled during 2024, with total exports down 2.7% in the first 11 months of the year, according to industry figures, with exports to China down 26%.

The mid and lower price levels have been hit most by the downturn, a problem for Swatch which generates 81% of its watch revenue from timepieces which retail for less than 7,500 Swiss francs, according to estimates from Zuercher Kantonalbank.

Also, unlike Cartier-owner Richemont, which earlier this month reported a big uptick in sales, Swatch's jewellery business is much smaller and unable to offset the downturn in watch demand.

"Overall Swatch Group is more exposed to China than its rivals, and also lacks the strong jewellery business which has supported Richemont's results," said Zuercher Kantonalbank analyst Patrik Schwendimann.

Swatch, usually known for its upbeat outlooks, said 2025 "promises positive momentum worldwide."

Still, "demand in China will continue to be rather restrained," the company said.

($1 = 0.9064 Swiss francs)

(Reporting by John Revill; Editing by Rachel More and Saad Sayeed)

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