Swatch fire hits shares and alarms Swiss rivals

A fire in a workshop owned by Swatch sent shares in the world's largest watchmaker sharply down yesterday and prompted fears about the knock-on impact on the broader Swiss timepiece sector.

The blaze broke out in Swatch's unit at Grenchen in the Swiss canton of Solothurn. The company said it is fully insured, but Swatch's stock nevertheless dropped 2.2 per cent in trading before recovering to end down 0.76 per cent at 589 Swiss Francs (£4.02).

The Swatch workshop, which was destroyed, made "standard movements"– the components that drive the moving parts of a watch. They are mainly sold to other firms, such as Richemont and LVMH, rather than being used in Swatch's own products. LVMH owns the Tag Heuer, Hublot and Zenith brands.

"It's very serious," said Jon Cox, an analyst at Kepler Cheuvreux in Zurich, told Bloomberg. "It may have an impact on the whole Swiss watch industry as Swatch is the biggest supplier of movements."

The affected workshop unit is estimated by analysts to make about two-thirds of the mechanical movements used in Swiss timepieces.

The fire could stop production of some components for several weeks, Swatch's chief executive, Nick Hayek, said yesterday.

Swatch's operating profit from manufacturing components jumped 37 per cent last year. But even before the fire, Swatch was planning gradually to reduce its deliveries of components to rivals, having been granted the go-ahead by the Swiss antitrust authority in October to do so.

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