Challenges to persist through '26: Swatch

Swatch Group AG is bracing for economic and political upheaval to persist this year, as the Swiss watchmaker hit out at tariffs and trade disruption that have upended the luxury industry.

"Challenges will continue to accompany us every step of the way," board chair Nayla Hayek said in Swatch's annual report published Wednesday, adding that the company faced an "uncertain, sometimes schizophrenic world, where the self-interest of the strongest prevails at the expense of the collective interest."

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Swatch's operating profit margin tumbled by more than half in 2025 as the company grappled with weak demand in China, a strong Swiss franc and the fallout from President Donald Trump's tariffs in the US.

The watchmaker now faces disruption in the Middle East, which UBS analysts estimate accounted for about 9% of sales in 2025. Shares of Swatch have fallen about 10% since the start of the conflict.

Still, Swatch reiterated the upbeat guidance it gave when reporting full-year results in late January. The company expects "very positive sales and volume developments for 2026" which it said will help boost profitability.