27
Oct
2011
On Target For 2003Swatch Group On The Right Track
Despite a particularly adverse environment, the Swatch Group remains on target and intends to increase its market shares in every segment this year.
Iraq crisis, SARS, despondent consumers, the strong Swiss Franc and recent vagaries of the stock market – nothing or almost nothing can damage the Swatch Group’s confidence in its ability to take the hurdles which stand in its path. "We are on the right track", was the concurrent comment of Nicolas Hayek and Nick Hayek Jr (see photo), the Chairman of the Board of Directors and Chief Executive of the group respectively, at the traditional balance sheet press conference held on 7 May in Bienne. They were referring to the first quarter of 2003 during which the Swatch Group did particularly well by achieving sales in Swiss franc terms broadly equivalent to the figure for the first three months of last year, at a time when overall exports of the branch were down by 4.6%. This result was attributed to "a clear strategy which does not change with the circumstances" and looks better still when it is expressed in local currency terms: +6 to 7%! This remains true even if a "difficult" month of April may have partly offset this advance. Profitability is said to be rising in the early part of this year. That goes for the net profit and operating result alike.
This was enough for Nicolas Hayek to ride his hobbyhorse again and advocate a dollar-franc exchange rate acceptable at one and the same time to the export industry and the banks. "In Switzerland, the policy makers defend the banking sector first and foremost", he deplored, alluding to the asset management activity. "But today the parity of the greenback is imposing a severe penalty on exporters". That is proved by the 166 million which the Swatch Group lost last year because of the strength of the Swiss franc and the 170 million which it might cost the group this year! Those are substantial sums which could have been invested to safeguard the 14,000 jobs provided by the group in Switzerland or create new workplaces. This issue is bound to be raised again at the FH General Meeting on 26 June in Fribourg when the invited speaker will be none other than Jean-Pierre Roth, the Governor of the National Bank of Switzerland.
Another subject which irritates the Chairman of the Swatch Group Board of Directors is the stock market: "badly controlled and perverse in its reactions", which encourages company directors to conduct their business solely in the light of financial criteria. "If I had the five billion francs needed to take the group off the stock market, I would do so now, without a moment’s hesitation", he said. Several banks have offered him that sum but as a clever manager he refrained from accepting. Taking on new debt is not part of his culture. Nor does he want to become accountable to a banker simply because he owes him money.
As to the progress of business, the next rendezvous is on 21 August when the Swatch Group will publish its results for the first half of 2003.