March 18, 2010 / 11:52 AM / 7 years ago

WRAPUP 2-Swiss watchmaking industry on the mend, execs say

5 Min Read

* Swiss watch exports rise 14.2 percent in Feb

* Tag Heuer, Zenith see 2010 sales up at least 10 percent

* Hublot says Jan, Feb were record months for sales

* LVMH, Swatch, Richemont shares 1-2 pct higher

(Adds details from Zenith interview, quotes, background, updates shares)

By Astrid Wendlandt and Silke Koltrowitz

BASEL, March 18 (Reuters) - The Swiss watch industry looks to be firmly on the mend with exports up for a second straight month in February and order books filling up nicely, watch executives said at the industry's biggest annual gathering.

Watch brands Hublot, Tag Heuer and Zenith, all part of the world's leading luxury group LVMH (LVMH.PA), said at the fair in Basel, Switzerland, the year had started strongly and they expected double-digit revenue growth for 2010.

Vertime, a unit of Timex and watchmaker for Italian fashion house Versace, added to the confident tone saying that for the first time ever, half of its order book for the year was full.

Exports rose 14.2 percent in February to 1.2 billion Swiss francs ($1.13 billion) after rising for the first time in over a year last month, the Federation of the Swiss Watch Industry said on Thursday.

"We reached the bottom and things are picking up again, the atmosphere (at Baselworld) is more positive this year," Jean-Daniel Pasche, President of the Swiss Watch Industry Federation, told Reuters at Baselworld.

The Swiss watch industry, one of the pillars of the global luxury goods market, saw exports drop 22.3 percent last year.

U.S. consultancy Bain & Co believe global luxury sales fell 8 percent to 153 billion euros ($209 billion) last year, and predicted growth of just 1 percent this year.

But the signs are that, in watches at least, the bounce back might be stronger, as affluent shoppers in Asia and parts of the Americas, in particular, splash out after months of restraint.

"Swiss watch exports showed steady growth in February, providing clear confirmation of the trend of previous months," the Swiss federation said, adding that so far this year watch exports are up 8.6 percent on the same period last year.

Exports to China leapt nearly 50 percent, while demand from the United States was up nearly 19 percent.

Bouncing Back

The Swiss industry is home to Swatch Group, the world's largest watchmaker, and rival Richemont as well as independents Rolex and Patek Philippe.

Tag Heuer, LVMH's biggest watch brand, said it expected the recovery to firm up in Asia first then reach the Middle East, Western Europe and finally the United States.

"If consumption remains at the same level, we should have growth of at least that order (10 percent)," Chief Executive Jean-Christophe Babin told Reuters on the fringes of the event.

Babin expected the recovery in the United States, where Tag Heuer makes about a third of its sales, would be biased towards the second half of the year.

Tag Heuer aims to lift its advertising and marketing budget this year by about 30 percent and open some 20 shops, he added.

Zenith, which has just completed a restructuring, shedding a third of its staff to 250 worldwide, was similarly upbeat.

"With the indicators I have got, which are my order book and my sales, I can tell you that I am rather optimistic," Zenith Chief Executive Jean-Frederic Dufour told Reuters.

Zenith, which has struggled to position itself in the market and suffered much from the downturn, has cut its number of models to 133 from 800 and lowered its entry-level price to 2,900 euros from 6,000 to attract new customers.

"The climate is good for those brands that are putting themselves into question," Dufour said.

Meanwhile, Hublot, another LVMH brand, on Wednesday said it believed it could achieve its highest ever revenues this year.

"The last quarter of 2009 was already excellent, and 2010 has started in the same way. We have had the best months of January and February in our history," Chief Executive Jean-Claude Biver told Reuters.

Hublot, which was acquired by LVMH in 2008, makes watches that sell on average for about 50,000 Swiss Francs, combining rubber and precious metals.

Biver said a recovery at the brand was apparent in June and had accelerated since then, with the upturn particularly marked in Asia and South America.

Revenue generated by LVMH's watch and jewellery brands fell 19 percent on a comparable basis last year while operating profits from the division nearly halved.

At 1622 GMT, LVMH shares were up 1.2 percent at 87.03 euros, while Swatch was up 2 percent at 333 Swiss francs and Richemont climbed 1.6 percent to 41.64 francs. (Additional reporting by Katie Reid in Zurich; Editing by Simon Jessop and Elaine Hardcastle) ($1=.7321 Euro)

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