Swatch kept every factory running through the slump — profit fell 89%

When the Swatch Group published its 2025 results on 31 January 2026, the figures showed what keeping an industrial base through a downturn costs. Net sales of CHF 6,280 million were down 1.3% at constant exchange rates and 5.9% at current rates. Operating profit fell from CHF 304 million the year before to CHF 135 million — a 2.1% margin — and net profit collapsed to CHF 25 million, down 89% year on year. A CHF 6.3 billion group finished the year within rounding of breakeven.

The group's own statement did not attribute the collapse to demand alone: 'The Group's decision to deliberately maintain production capacities and jobs led to an operating loss in the Production segment.' While competitors cut capacity and headcount through two years of weak demand, Swatch kept its workshops, its components supply and its watchmakers on the payroll — and paid for the idle capacity out of current earnings.

The commercial machine was not the problem. Watches & Jewellery excluding Production delivered CHF 549 million of operating profit at a 9.5% margin. The Americas had a record year, with sales up nearly 20% in local currencies; India, the Middle East, Mexico and Poland grew double digits. Group sales grew 4.7% in the second half and 7.2% in the fourth quarter, across all price segments.

The shape of the case is a bet with the timing reversed: absorb the bill at the bottom of the cycle, and own the only full industrial base in Swiss watchmaking when demand returns. The fourth-quarter acceleration and the 2026 outlook of 'robust sales and volume growth' are the collateral; the collapsed profit was the stake.