Mar 4, 2014
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LVMH watches head sees five-seven percent sales growth this year

Mar 4, 2014

NYON, Switzerland - Watch sales at the world's No.1 luxury goods group LVMH (LVMH.PA) are expected to grow by 5-7 percent this year, in line with the Swiss watch industry, the new head of the French group's watch unit said in an interview on Monday.

Jean-Claude Biver was speaking on the sidelines of an event marking the start of construction of a new factory for watch components for LVMH's Hublot brand, known for its porthole-shaped watches. The site should be operational by mid-2015.

"For the Swiss watch industry as a whole, I see 5-7 percent sales growth this year. For us, it will be about the same," Biver, who started on the job on March 1, told Reuters.

He said LVMH watch brands, such as TAG Heuer and Hublot, still had huge growth potential in China, a market to which they are still relatively little exposed.

"The Chinese don't like sports watches like those made by TAG Heuer or Hublot very much, for them they don't carry prestige, but this is going to change. Meanwhile, we may adapt a little to their taste," Biver said.

He said LVMH sales in Europe were still getting support from Chinese, but also Russian and Brazilian, tourists and this trend would continue this year.

"We're also very happy with the development in the U.S. and Japan. Latin America is also doing very well."

Sales at LVMH's watches and jewellery unit - both activities were up to now run jointly by Francesco Trapani - rose 4 percent at constant exchange rates to 2.784 billion euros ($3.85 billion) in 2013, but fell 2 percent in euros.

Biver said there were currently no plans to bring movement making facilities onto one single platform for all of LVMH's watch brands. "Each brand has its own specificities; there would be no benefit in putting all our capacities together."

He said LVMH, for which watchmaking is only a small part of its business, wanted to preserve the autonomy of each brand.

In recent years, Swiss watchmakers made huge efforts to bring all the know-how and production facilities necessary to make mechanical timepieces inhouse after industry major Swatch Group threatened and actually started to provide fewer supplies to rivals, such as Richemont and LVMH.

All big players have bought suppliers of watch components and invested large sums into extending their factories.

Hublot is spending 20 million Swiss francs ($22.71 million) on the new project that will allow it to double the size of its factory in Nyon, Chief Executive Ricardo Guadalupe said.

"In about three to five years, 75 percent of our mechanical watches will be equipped with our proprietary movements, against about 30 percent currently," Guadalupe said, adding the site of the new factory was big enough for another extension in a few years time if the brand's growth rates kept up.

Biver now oversees LVMH's watch brands TAG Heuer, Zenith and Hublot, while group managing director Antonio Belloni heads LVMH's jewellery businesses, including Bulgari, Chaumet, Fred and De Beers.

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