Swiss watch exports at six-year low amid smartwatch encroachment

[ZURICH] Swiss watch exports posted their first annual drop in six years, hurt by slumping demand for less- expensive timepieces that are competing for buyers with Apple Inc and other smartwatch makers.

December exports declined 3.8 per cent, pushing shipments down 3.3 per cent on the year to 21.5 billion Swiss francs (US$21.2 billion), the Federation of the Swiss Watch Industry said Tuesday. That compares with a 1.9 per cent rise the previous year. Timepieces costing 200 francs to 500 francs - which comprise about 15 per cent of volumes - suffered the most last month, slumping 15 per cent.

The Swiss watch industry is grappling with a raft of problems: tumbling stock markets, fewer wealthy Asian tourists shopping in Europe and the arrival of the Apple Watch, which has weighed on sales of lower-priced timepieces and prompted brands such as Montblanc and TAG Heuer to introduce electronic functions of their own. Shipments will increase 2 per cent this year, according to the median estimate of 11 analysts in a Bloomberg survey.

"The 200-franc to 500-franc price segment has always faced a lot of competition, like from fashion brands," said Patrik Schwendimann, an analyst at Zuercher Kantonalbank in Zurich. "Those watches probably had even more to fight with last year with the rise of the smartwatches."

Swatch Group AG, the maker of namesake plastic timepieces, fell as much as 2.3 per cent in Zurich trading. Cie. Financiere Richemont SA, owner of the Cartier and IWC Schaffhausen brands, slid as much as 3.2 per cent.

While exports to Hong Kong continued their yearlong slide in December, falling 21 per cent, China recorded a 5.5 per cent advance, benefiting from a favorable comparison base in the year-earlier period. December shipments to France - where tourist numbers are down after the November terror attacks - fell 8.6 per cent.

"The figures are probably not as bad as feared, given what happened in France," said Jon Cox, an analyst at Kepler Cheuvreux in Zurich. "We see a bit of an impact on Europe from reduced tourism as a result from the attacks. But Asia is starting to look bit better outside of Hong Kong."

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