The Swatch Group's 2025 annual report made for uncomfortable reading. Net profit fell to CHF 25 million, down from CHF 219 million in 2024. Operating profit dropped to CHF 135 million from CHF 304 million. Net sales came in at CHF 6,280 million, a decline of 5.9% at current exchange rates.
Those are the numbers that made the headlines. The story underneath them is more complicated, and more interesting.
What happened
The profit collapse wasn't driven by a collapse in watch sales. It was driven by a deliberate decision to keep the lights on.
Swatch Group is unusual in the watch industry because it doesn't just make watches. Its Production segment, which includes movement maker ETA and component suppliers, serves the broader Swiss watch industry. When third-party orders dried up in 2025, as many brands cut production in response to softening demand, Swatch Group chose to maintain full capacity and headcount.
That decision was expensive. The Production segment posted sharply negative results, dragging down the group's overall profitability. CEO Nick Hayek defended the choice, arguing that laying off skilled workers only to rehire them later would cost more in the long run and damage the company's industrial base.
The second-half turnaround
Here's where the headline numbers get misleading. Swatch Group's year wasn't uniformly bad. The second half of 2025 showed sales growth of 4.7% at constant exchange rates, with the fourth quarter accelerating to 7.2% growth.
That momentum, according to the company, carried into January 2026 across all price segments. Management expects "substantial growth" for the full year 2026, with higher production utilization expected to "massively reduce, or even help reverse" the production losses.
Investors noticed. Swatch shares jumped 7% on the day the results were published, which tells you the market was pricing in something worse.
What it means for the industry
Swatch Group's results are often treated as a proxy for the broader Swiss watch industry's health. That's partly fair: the group owns Omega, Longines, Tissot, Breguet, Blancpain, and a dozen other brands. But its dual role as both watchmaker and component supplier means its financials are uniquely exposed to industry-wide production swings.
The 2025 results suggest the worst of the post-tariff, post-correction cycle may have passed. Swiss watch exports returned to growth in December, and February's 9.2% jump (reported separately by the Federation of the Swiss Watch Industry) reinforced the trend.
None of this guarantees a smooth 2026. Tariff uncertainty persists. China's luxury demand remains uneven. And the mid-range segment, where Swatch Group brands like Tissot and Hamilton compete, faces pressure from both independent microbrands and smartwatches.
But if Hayek's bet on maintaining capacity pays off, Swatch Group will be better positioned than competitors who cut deep and now need to rebuild.
Sources
- The Swatch Group reports 2025 fiscal results and 2026 outlook - Time and Watches
- Swatch sees 2026 rebound after weak 2025 profits - Retail Insight Network
- Swatch Group 2025 Results: A Year of Transition, Not Decline - The Hour Markers
- Swatch Group Profits Slump 89% in 2025 - Yahoo Finance
- Swatch Group Annual Report 2025: Cautious Optimism - Insight Luxury
