Message of Nayla Hayek, Chair of the Swatch Group Board of Directors on the occasion of the Annual General Meeting of May 24, 2018, at the Tissot Velodrome in Grenchen (SO), Switzerland.
The spoken word (in German) is valid
Dear Fellow Shareholders,
Dear Madam, Dear Sir,
The black hole – the beginning or the end!!
Stars, galaxies, universes. Astronomy, the world’s first time measurement system and connected with so many other sciences.
Who has never stared up at the starry sky on a clear summer’s night and let their dreams run wild? Who has never made a wish when they saw a shooting star? Let’s be honest: now and then, a little irrationality doesn’t hurt. But only if we keep in mind that we forge our own destinies and remember that happiness does not fall from the sky. A small glimpse of this universe can be found in our Annual Report 2017, where you can also see the zodiac signs of our companies, the management, and our board of directors! Once again this year, you have received a very special Swatch, made just for you and featuring a unique zodiac sign combination: the Swiss cow in the Milky Way.
But let’s again be a bit more serious. Western philosophy has always revolved around this issue of destiny. Is the future determined in advance or not? Are human beings free or are they not? Philosophers have filled huge and challenging books on this topic, some of which tell us that we are free and that our fate is in our own hands, while others take the opposite view, proclaiming that we are not at all free and that everything is preordained. Some even combine the two approaches. So, each to her –or his – own opinion!! But now to the fate of Swatch Group in 2017. There were various elements that contributed to the success such as for example, the work we do, the joy of success and, of course, our innovation.
Work is what all those involved in our Group do on a daily basis, from the members of the Board of Directors to the senior management to the engineers, the sales force, the IT specialists, the marketing and PR teams, the financial and controlling professionals, all the way to the employees working in production at the various companies, and many more. I could go on but it would be impossible to list them all. A total of 35 400 people give their all every day to keep Swatch Group on the road to success.
Our international presence confirms to us every day that the vast majority of the world’s population has a warm and friendly respect for Switzerland and its inhabitants. Our craftsmen and women continue to be among the most talented and the best, our people among the most peaceful and humane, our country the most sought after, our researchers and entrepreneurs among the most successful. Our researchers from our own R & D laboratories with their various partners, including the Swiss Federal Institute of Technology in Zurich, are making progress in the implementation of new concepts for renewable energies. Switzerland also has an important role to play in this area.
Joy in innovation is what our teams experience when, for example, they create a new product. Consider the beauty of Harry Winston jewelry creations and the profound satisfaction felt by those who conceive and craft them.
Think of the Breguet watchmakers who develop a masterpiece like the Marine Equation Marchante 5887; the creative talents at Swatch launching a new SKIN model; the employees at Omega who celebrated the 60th anniversary of the Speedmaster; or Blancpain’s commitment to protecting millions of square meters of ocean and underwater life; but also production and research teams and the people that give everything for our brands in different regions around the world. That is what work and joy is all about!
Nevertheless, we should not forget our motto: to embrace and preserve the fantasy that we had as six year olds, even though work and joy are the essential factors for our success.
What determines the time we measure using our products, if not our planet’s movement around the sun, our nearest star? Products are sometimes acquired for their beauty, sometimes for their precision, but often simply out of the desire to measure the time the earth takes to complete a full revolution on its axis as well as to revolve around the sun. Perpetual calendars, equation of time measurements, tourbillons, Co-Axial escapements: all are attempts to house within a tiny yet reliable mechanical movement something that faithfully matches the movements of the Earth. Several of our brands have a special affection for moon phase complications, but Blancpain is the unsurpassed master.
Is the moon phase not a poetic means of carrying with us the romantic face of our somewhat mysterious natural satellite, which is believed to play a considerable yet largely unknown role in our lives? This Moon radiates a very special glow at Omega, whose watches were worn by those privileged human beings who set foot on its surface. It is also Omega that has paid tribute, through one of its most prestigious collections, to the constellations that are believed to influence our future from the time of our birth.
In November of 2017, Omega opened its new production building. Since 1882, the company has been operating on this site, where the most modern watch assembly, training, and quality control plant in the industry has now started operations. Designed by award-winning Japanese architect Shigeru Ban, the building is an environmentally-friendly masterpiece made of sustainable Swiss spruce with an ingenious indoor climate and energy concept. All work steps, including T2 (watch assembly) and T4 (shipping), as well as the warehousing and logistics processes, are no carried out in the building. The new building was also designed for Omega’s quality assurance and technical control processes, including the METAS-approved tests for Master Chronometer certification.
For me, there is not only the work, the joy, the success, and the figures, but also the pride I feel, as Chair of the Board of Directors of Swatch Group, to be able to report on a successful year in 2017, in which we again believed in our long-term strategy, and to look forward to 2018.
Yes, the head may sometimes be in the clouds, but both feet are planted firmly on the ground!
Allow me to run through the 2017 results for a moment. In the breakdown of the year, I would like to highlight certain elements:
– Not only did the Watch & Jewelry segment (excluding Production) post 6.9% annual sales growth at the current exchange rates, the operating margin of this same segment grew by 27.4%.
– What is even more interesting in my opinion is the fact that growth reached 12.2% in the second half of the year and even 14.9% in the fourth quarter – an acceleration fully confirmed in December with the second-best monthly sales in the history of Swatch Group!
Despite the negative currency exchange rates, our group’s net sales rose by 5.4% compared to the previous year to almost 8 billion Swiss francs in 2017 or, more precisely, 7 billion 960 million Swiss francs. The overall operating result improved by 24.5% to one billion two million Swiss francs, while the operating margin grew from 10.7% in the previous year to 12.6%. Consolidated net profit increased by 27.3% to 755 million Swiss francs, with a net margin of 9.5%, a significant improvement over the previous year (7.9%). Given these encouraging results, the Swatch Group Board of Directors’ dividend proposal is CHF 7.50 per bearer share and CHF 1.50 per registered share, which marks a return to the level achieved in 2015, which was a highly successful year.
Dear Madam, Dear Sir, Dear Fellow Shareholders, for helping shape the destiny of our company and thus avoiding leaving it to the stars alone; for accepting the eclipses that make everything seem threateningly dark; and for remaining optimistic with regard to the famous black holes that could swallow up everything but are fortunately a long, long way off, you remain the living soul of our company. I wish to thank each and every one of you from the bottom of my heart. My sincere gratitude also goes to the Board of Directors, to the Executive Group Management Board and to the Extended Group Management Board, as well as to the 35 400 colleagues for their unfailing commitment over the past year. Sincere thanks to all of you.
Chair of the Swatch Group Board of Directors
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