Swatch warns political, economic challenges to continue in 2026

[ZURICH] Swatch Group is bracing for economic and political upheaval to persist in 2026, as the Swiss watchmaker hit out at tariffs and trade disruptions that have upended the luxury industry.

In its annual report published on Wednesday (Mar 18), Nayla Hayek, the company’s board chair, said: “Challenges will continue to accompany us every step of the way.”

She added that the company faced an “uncertain, sometimes schizophrenic world, where the self-interest of the strongest prevails at the expense of the collective interest”.

Swatch’s operating profit margin tumbled by more than half in 2025, as it grappled with weak demand in China, a strong Swiss franc and the fallout from President Donald Trump’s tariffs in the US. 

It now faces disruption in the Middle East, which UBS analysts estimate accounted for about 9 per cent of sales in 2025. Shares of the company have fallen about 10 per cent since the start of the conflict.

Still, Swatch reiterated the upbeat guidance it gave when reporting full-year results in late January.

The company expects “very positive sales and volume developments for 2026”, which it said will help boost profitability. 

Its policy of maintaining jobs, production and inventory in anticipation of an upturn has also faced criticism from investors for keeping costs high.

Criticising the “irrational decisions surrounding tariffs” that dogged the industry in 2025, Hayek reiterated Swatch has no plans to shift production.

SEE ALSO

Swatch flags positive sales momentum, lifting shares

Swatch slams Morgan Stanley over report on losing market share

She said in the report: “We are committed to ‘Swiss Made’ and will remain so. There is no question of us producing our watches in other countries simply to please the local authorities.” BLOOMBERG