Swatch Group Annual Report 2011 Contents
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SWATCH GROUP ANNUAL REPORT 2011 2011 ANNU SWATCH GROUP A L REPO L R T SWATCH GROUP ANNUAL REPORT 2011 2011 T R L REPO A ANNU SWATCH GROUP ANNUAL REPORT SWATCH GROUP SWATCH 2011 The Swatch Group Ltd P.O. Box, Seevorstadt 6, CH-2501 Biel / Bienne, Switzerland Phone +41 32 343 68 11, Fax +41 32 343 69 11 E-mail: www.swatchgroup.com/contactus Internet: www.swatchgroup.com 1 SWATCH GROUP ANNUAL REPORT 2011 CONTENTS MESSAGE FROM THE CHAIR 2 OPERATIONAL ORGANIZATION 4 ORGANIZATION AND DISTRIBUTION 5 ORGANS OF THE GROUP 6 BOARD OF DIRECTORS 6 EXECUTIVE GROUP MANAGEMENT BOARD 8 AND EXTENDED GROUP MANAGEMENT BOARD DEVELOPMENT OF THE SWATCH GROUP 10 BIG BRANDS 11 WATCHES AND JEWELRY 12 RETAILING AND LANDMARKS 73 PRODUCTION 79 WATCHES 80 JEWELRY 88 ELECTRONIC SYSTEMS 89 CORPORATE, BELENOS 93 SWATCH GROUP IN THE WORLD 101 GOVERNANCE 125 ENVIRONMENTAL POLICY 126 SOCIAL POLICY 127 CORPORATE GOVERNANCE 129 FINANCIAL STATEMENTS 2011 141 CONSOLIDATED FINANCIAL STATEMENTS 142 FINANCIAL STATEMENTS OF THE HOLDING 206 Swatch Group’s Annual Report is published in French, German and English. The text on pages 1 to 128 is originally published in French, the text on pages 129 to 140 in German and the text on pages 141 to 216 in English. These original versions are binding. © The Swatch Group Ltd, 2012 2 SWATCH GROUP MESSAGE FROM THE CHAIR ANNUAL REPORT 2011 MessAge FROM THE Chair Dear Madam, Dear Sir, only in the prestigious high-end mechanical movement to the most affordable Dear Co-Shareholders, or luxury segments, but also in those that mechanical movements. From the Swatch target a broader audience. An industrial Touch, integrating the most sophisticated Our company’s working year is once again strategy, a product-driven strategy in touch technology at a reasonable price, to ending with a brilliant series of records: pursuit of our goal: Occupy Your Wrist! the most complex and innovative calibers – Gross sales exceeding seven billion Swiss such as our Omega Co-Axial movement or francs for the first time, standing at Occupy Your Wrist! is not only the spirit our column-wheel chronograph from 7143 million, with constant exchange that drives our company, our teams and our Longines. Not to mention the most ambi- rates, exceeding 2010’s figures by more senior management. Occupy Your Wrist! tious in terms of sophsitication and watch- than 21%. is also the symbol of the indispensable making, like Breguet’s 10 Hz balance and its – Operating profit of 1614 million Swiss reconquering of the world’s economy. silicon balance-spring, or Blancpain’s move- francs, more than 12% higher than the A stabilization that requires the ments comprising hundreds of compo- previous year. maintenance and development of a dense nents. The brand produces a caliber that – Operating margin of 23.9% versus industrial base, with a large number of boasts no fewer than 450 parts! And that is 23.5%, despite unfavorable exchange employees. An industrial base offering a only to mention a small number of our rates and inflated prices of raw materials. large number of jobs whose variety, com- extraordinary products. – Net income of 1276 million Swiss francs, plexity and prerequisites are such that an increase of more than 18%. every individual stands a chance of finding What is the motor, the heart of all this? In – Equity over eight billion Swiss francs for a challenging, rewarding position. In watchmaking, when we speak of the motor the first time, equal to an equity ratio of Switzer land, of course, because it is our or of the heart, quartz crystals or the insep- over 82%. country and comes to mind first, but also in arable balance-and-spring assembly inevita- – And, finally, the creation of more than the rest of the world. Occupy Your People! bly come to mind. No! At the heart of all 2800 new jobs in 2011 alone, which this you will not find any particular watch- brings our staff complement to slightly Twenty-eight thousand. Every day, making element involving a demanding more than 28 000 people. 28 000 of us fight to maintain this course design process and complex manufactur- and to preserve our company culture, ing, such as the components made by These extraordinary results confirm the 28 000 fighting to defend everything that a Nivarox-FAR. No! At the heart of all this is pertinence of the strategy followed by quest for short-term profit margins might the human being. Executives, engineers, Swatch Group since its creation in the destroy. 28 000 fighting to reinforce the watchmakers, workers, employees, all Eighties. This is a long-term, concrete power of the industrial world over the global those who work each day to manufacture policy, a strategy for the real economy. economy. A power exercised by the real and assemble countless elements and to Our results successfully reflect both the economy and which must counterbalance turn them into fascinating, attractive, energy invested by our 28 000 employees that of the financial world that has caused amusing, extraordinary, fashionable to dream up and create the products on such enormous difficulties, to the point of products. Products that attract numerous your wrist as well as the constancy with jeopardizing democratic traditions in several clients in every country across the world. which our Board of Directors and Manage- European countries. Occupy Your Heart! ment unhesitatingly follow the path that we set for ourselves 30 years ago. Expanding In the particular case of our watchmaking Just think of Swatch Group’s strength and production capacities in Switzerland. industry, we must maintain and create its sheer global presence! We are of course Increasing and maintaining the number of many kinds of activities through a rich pal- on the Place Vendôme and on the Champs- jobs. Rediscovering rare crafts that are for- ette of trades essential to the extreme Elysées in Paris; we are naturally on the gotten or verging on extinction. Making diversity of our products. Products that Bund in Shanghai, on Causeway Bay in sure know-how is preserved. Demanding range from the brilliant simplicity of a Hong Kong, on Red Square in Moscow, in creativity in all fields of watchmaking – not Swatch New Gent watch with a 51-part the Dubai Mall in Dubai, on Fifth Avenue in 3 MESSAGE FROM THE CHAIR SWATCH GROUP ANNUAL REPORT 2011 New York, on the Rue du Rhône in Geneva and many other prestigious places. But we are not only to be found in famous locations in big city centers; we are also present in places where people live, to which they travel and where they admire works of art, such as the Venice Biennial, or where the biggest sports events take place: in a word, has indeed been expressed through almost undoubtedly confirm this. But we are taking everywhere! More than 900 Swatch bou- 580 million francs’ worth of industrial on the challenge confidently and we will tiques, several hundred mono-brand or investments in 2011; through renouncing maintain this course with conviction. multi-brand boutiques, thousands of retail short-term price increases and instead con- partners. Substance. Reality. Swiss Made. centrating on increasing market share; and I would like to thank the Board of Directors, Not investment funds made of ethereal through intensifying marketing activities, the Executive Management Board and the matter. which we did in 2011 in all price segments Extended Group Management Board, all and for all our brands. our colleagues in Switzerland and all over And our products are on your skin, on your the world, for their support of our strategic wrist, accompanying you when you wear At the General Assembly on May 16, 2012, directions and for their commitment to them, doubtless more to add pleasure to the Swatch Group Board of Directors will making them a reality. the moment than to count the passing sec- propose a dividend of CHF 5.75 per bearer onds. Unique intimacy. Occupy Your Wrist! share and CHF 1.15 per registered share. Occupy Your Wrist! This distribution to shareholders, up by 15% It is this reality of our real production of real compared to the previous year, is in line products that is our strength. We remain with the record results achieved in 2011 sound, focused on the long term, single- and is also an indication of confidence in minded in our growth strategy. Even the the prospects for the activities to be contin- continuing weakness of the euro and of the ued in 2012. Indeed, it is our opinion that currencies linked to the dollar which has un- 2012 will see continued advancement. For Nayla Hayek healthily reinforced our national currency example, in 2012, the month of January Chair of the Swatch Group and resulted in a massive drop in our turn- ended with double-digit growth in the Board of Directors over of around 700 million Swiss francs Watch & Jewelry segment, even compared hasn’t stopped us from having a record to January 2011, which had already been year. At 23.9%, we have exceeded last exceptional. year’s already very high operating margin. This has been achieved by increased pro- We are very well-equipped to take on the ductivity and traditionally strict cost control future. Swatch Group will continue to invest – which remains one of the elements of our intelligently in its distribution network strategy to which I am most firmly commit- worldwide and energetically in its produc- ted. And this despite the highly unfavorable tion capacity in Switzerland, in all seg- exchange rate development and the high ments, and despite the fact that the Swiss increase in the price of important raw mate- franc is over-valued compared to the rest rials for our sector of activity such as gold or of the world’s currencies.