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Overall exports in September fell 12.4 percent in value and over 20 percent in volume, with China and Hong Kong’s high double-digit slumps accounting for two-thirds of the decline.

PARIS – The summer glow didn’t last long for Swiss watches.

Exports in September contracted sharply, slumping 12.4 percent in value and 20.8 percent in volume, according to figures released by the Federation of the Swiss Watch Industry on Tuesday.

The industry organization said it was “the most marked of the year” to date, with a total value just hovering above the 2 billion Swiss francs mark.

Monthly export tallies had seen a slight improvement in July and August, although the FHS had expressed a negative outlook for the rest of the year.

For the first nine months of 2024, the Swiss watchmaking sector saw exports decline by 2.7 percent.

September exports to China and Hong Kong, which have now gone down to fifth and fourth place respectively in market ranking by size, fell 49.7 percent and 34.6 percent year-on-year.

This is a further sign of the marked deterioration of the Greater Chinese market, where growth is flagging due to factors including high youth unemployment and an ongoing real estate market slump.

These poor results accounted for two-thirds of the month’s decline, according to the FHS. The decline of these two markets, plus the 10.7 percent and 13.9 percent drops recorded for exports headed respectively to the U.K. and Singapore, made up 80 percent of the global decline.

The global picture was dim, with Asia coming off the worst with a 22.6 percent decline for the region. Europe, where Germany and Spain grew over 5 percent each, was deemed “less concerning” by the industry body despite its 3.4 percent slump.

One bright spot was the U.S., which grew a modest 2.4 percent but consolidated its position as the leading market for Swiss timepieces. Japan, now in second place, rose by only 2 percent that contrasted with its summer boom.

This reflected the combination of a stronger yen and reduced regional price gaps, according to Citi anaylist Thomas Chauvet.

All material categories were impacted by the downturn in exports last month in unit numbers and value, with steel watches continuing their downward trend. Volumes decreased by high double-digit percentages across all categories.

All price ranges were affected, with a bell-shaped curve that saw the mid-price range between 500 and 3,000 Swiss francs contract by a third. Luxury watches, at 3,000 Swiss francs and above at export price, declined 10.9 percent and 7.3 percent in volume and value respectively.

Calling the higher price point “relatively resilient,” Bernstein’s Luca Solca said in a research note that there was “potential for gradual recovery, given the intent of the Chinese government to improve the economy” with stimulus packages despite short-term demand woes affecting the whole luxury industry.

Although the better performance of the high-end watches could be due to higher product availability from brands like Rolex, “this may lead to broader luxury watch resilience than expected,” Solca noted.

Chauvet further pointed out that the Swiss watch export figures of the past three months were “rather inconsistent with negative sell-out trends,” in a research note, as luxury groups start to report third-quarter earnings.

On Tuesday, LVMH Moët Hennessy Louis Vuitton reported a 4 percent decrease in organic sales for its watches and jewelry division in the third quarter of 2024, while the consensus estimate expects an 8 percent slump for Compagnie Financière Richemont’s specialist watchmakers ahead of its Nov. 8 interim results and a 5 percent decline from the Swatch Group.

Canadian company’s executives are in Tokyo to try to move buyout offer forward

Alimentation Couche-Tard’s proposed $47bn buyout of Seven & i is a better deal and less risky than its target’s break-up plan, the Canadian retailer’s chief said in Tokyo as he urged the Japanese group to start talks.

Couche-Tard executives said on a trip to Japan that they wanted more information on Seven & i’s business and the chance to discuss their bid with government officials who would have to review any deal.

Their visit comes after the Canadian company increased its offer for the 7-Eleven owner by 20 per cent and follows an announcement from the Japanese group that it planned to split its convenience store operations from non-core businesses, a move investors and analysts said was an attempt to fend off the bid.

“We think [our offer is] more compelling than what was proposed last week, with a great deal more certainty and much less risk,” said Alex Miller, the recently appointed chief executive and president of Couche-Tard.

“Our offer is a certainty, right, it’s cash, versus a hope that [Seven & i] can continue to execute on a plan that’s not delivered value over the last years,” added Brian Hannasch, the company’s former chief executive and now special adviser to the group.

The comments were made during a joint interview in Tokyo that included Couche-Tard’s chief financial officer and its billionaire founder, Alain Bouchard, who has been targeting Seven & i for roughly 20 years. Couche-Tard made an offer for the group in 2020 before the Covid-19 pandemic derailed the plan.

The Canadian company launched a $39bn bid for the Japanese group that was made public in August. Seven & i rejected the offer, saying it “grossly” undervalued the business and did not account for the difficulty of getting a deal past US competition regulators.

Miller on Thursday said the group was confident of being able to handle US antitrust scrutiny. “We . . . are prepared to make significant divestments as part of this transaction,” he said. “Our goal is to engage in these substantive discussions.”

However, Bouchard said Seven & i, the Japanese group’s founding Ito family and government officials had so far refused a meeting. “We’re here . . . because of our compelling offer we have made to Seven & i. And we hope to be able to have access to the internal information that we need to look at,” said Bouchard.

Couche-Tard believes the government will eventually engage in talks once Japan’s ongoing parliamentary election campaign is over.

One person familiar with the situation said that while a meeting had yet to be agreed, the two companies had been discussing the terms under which one might take place.

Couche-Tard recently sent Seven & i a new potential acquisition price of close to $47bn. The bid, which if completed would be the biggest foreign takeover of a Japanese company, is being considered by a special Seven & i committee.

“We are interested in the entirety of Seven & i, absolutely, including Japan,” confirmed Miller, adding that they would keep local operations intact.

The group’s chief financial officer, Filipe Da Silva, added that financing the deal would not be an issue and that it was holding talks with Japanese financial institutions and partners who could help fund the deal while allowing its investment-grade credit rating to be maintained.

Seven & i’s stock price has risen more than 30 per cent since the first Couche-Tard offer in August. But at ¥2,218 ($15) a share, it is still below the Canadian company’s latest bid of closer to $18.

Some investors are putting pressure on Seven & i to review the offer. US-based Artisan Partners told the Japanese group’s board in a letter this week that Couche-Tard’s offer was “clearly superior to the speculative value that could potentially be achieved by implementing the restructuring plan”.

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Insiders say Northvolt, Europe’s best-funded start-up, has been beset by problems from the start

Northvolt has been plagued by problems from incompetent management and poor safety standards to over-reliance on Chinese machinery, according to current and former workers at the cash-strapped Swedish battery maker.

Ten past and present workers of Europe’s best-funded start-up told the Financial Times its crisis had been caused by a litany of issues as it sought to do too much, too fast.

“Making batteries is hard, really hard. We tried to do almost everything at once,” said one former senior executive. “And the problems just kept piling up. I just don’t know if they can make it now.”

Founded in 2017 by two former Tesla executives and with backers including Volkswagen, Goldman Sachs, BlackRock and Siemens, Northvolt grew rapidly as it sought to become a European battery champion, with its workforce reaching 7,000 this year.

The project was meant to symbolise Europe’s comeback in a crucial technology but instead it is fighting for survival as it seeks fresh capital to continue operating, from investors reluctant to plough in much more.

The company is now at risk of turning into a tale of hubris, and of how Europe is failing to compete with big Chinese, American and other Asian rivals.

“The Chinese are being so fast on this,” said one former Northvolt chemical engineer. “They are established and they have already done it. So they’re just better. We are late to the party.”

Northvolt hired top battery-making talent from Japan and South Korea as it aimed to reduce European dependence on China by developing its own active material and finding new sources of raw materials.

Instead, employees describe a company reliant on machines — and the workers who operate them — from China and South Korea at its only factory in the northern Swedish town of Skellefteå.

One construction worker said there were hundreds of Chinese and Koreans in Skellefteå. “They stay in their own separate camp and come in every day to install and run the machines.”

The Chinese workers — especially from Wuxi Lead Intelligence, the world’s largest maker of battery manufacturing equipment — have stayed longer than anticipated, according to a former R&D engineer. They added that communication had been difficult, citing an incident when an alarm went off: “We didn’t hear it, so someone from Wuxi said we need to go out through Google Translate.”

All past and present Northvolt employees who spoke to the FT asked to remain anonymous, saying the company had told workers not to speak to the press.

Northvolt has pursued ambitious expansion projects despite its struggles in Skellefteå. It planned to nearly quadruple the size of the Skellefteå factory even as production languished at less than 1 per cent of capacity, and to build new gigafactories in Sweden, Germany and Canada, an active material plant and a recycling facility in Sweden, an energy storage business in Poland and an aircraft battery research unit in the US.

It has abandoned or suspended many of these projects in recent months, while executives hint that the new gigafactories are likely to be delayed. About a quarter of its Swedish workforce is to be fired.

“Even when we only had one or two projects in [Skellefteå] we could not meet output,” said the former R&D engineer. “Then they were talking about opening new factories. Shouldn’t we focus on getting the first one right? They bit off more than they could chew.”

Northvolt grew so fast in terms of employees and projects that processes were chaotic and management often incompetent, most of the workers said.

“I have never seen so many managers and directors unprepared to deal with the situation in public, and how to properly address their employees,” said a quality control worker. They added that Northvolt had “a lot of inexperienced workers in all areas — managers, engineers, production, technicians, even directors”.

A former data engineer said that despite joining “as an intern with no experience”, they had been given “massive responsibility because there was nobody else to do it . . . I was learning on the go, messing things up.”

They added that frequent restructurings meant “it felt very chaotic”, with “the goal . . . changing all the time”.

Northvolt became a darling of green investors, raking in ever larger amounts of capital including via a $2.8bn private placement in 2021, a $2.7bn convertible note in 2022 and a $5bn debt round this year backed by banks including JPMorgan, Citigroup, Deutsche Bank and BNP Paribas.

Several employees said the strong financial support had led to questionable decisions.

“Managers didn’t listen carefully to engineers,” said the construction worker. “They only had one goal: deliver the project within a fixed timeframe. They didn’t care about the budget.”

Top managers “build a model, change it and demolish it”, they said. “It does not make sense to me. It makes sense to management because they think they have a lot of money.”

A former material handler said there was a sense of creating products quickly to help raise money, describing the process as “this is going to get sent back but if we deliver it we will reach our goal and get the funding”.

BMW, a Northvolt shareholder, was the first customer to sound the alarm, pulling a $2bn contract this year and giving it to South Korea’s Samsung.

“I see a lot of defective products,” said the quality control worker. “For that reason, our average yield is low.”

Northvolt has also suffered from safety problems. Swedish environmental prosecutors told the FT last month that the company would soon be served an investigation notice on suspicion of gross manslaughter after a worker’s death in December from injuries sustained the previous month in an explosion on a production line.

Northvolt has said it is in contact with prosecutors and police but declined to comment further.

A construction contractor died late last year at the Skellefteå site. Police are also investigating three deaths this year of Northvolt workers in unexplained circumstances away from the factory, although the company insists there is nothing to link them.

The former material handler said there was “a very big lack of safety thinking” at the company. “We were sent into areas with open containers of dangerous materials and with no proper safety equipment . . . There’s a part of me that is genuinely concerned if I’ve been contaminated with something that could make me sick.”

Since 2021 Northvolt has been involved in 47 workplace accidents involving chemicals classified as particularly dangerous by Sweden’s work environment authority, according to public broadcaster SVT. “They have not understood the meaning of removing risks,” Mikael Stenmark, a union safety representative at Northvolt, told SVT.

Northvolt told the FT that it “has to meet highest safety standards by law, and safety is key when operating battery cell factories”, adding that it lost a similar amount of time to injury as other Swedish industrial companies, and that it was improving in this area.

On the role of Wuxi’s equipment, Northvolt co-founder and chief executive Peter Carlsson last month acknowledged there had been “challenges when we have ramped up and how we are working together”. The Chinese company had not “built a service organisation” or “worked with a European customer before”, he told the FT.

He added that the commitment from Wuxi workers “on site is super strong”, and that production in Skellefteå had quadrupled since the start of the year, albeit from a low base.

Wuxi said it had a “strong track record of delivering reliable, high-performing equipment” worldwide, and that the presence of its personnel was “standard industry practice” to ensure “optimal” operation during the “installation and ramp-up phases”.

It acknowledged there were “challenges” with a multilingual workforce collaborating on a complex project but said it “continuously invest[ed] in solutions to bridge any gaps”.

Northvolt said it had “always underlined that building up a European battery cell landscape is one of the most complex tasks in industry today”.

It stressed that as “the most advanced European battery manufacturer” it was “pioneering in all different fields at the same time”. It said a recent strategic review would “further increase focus on cell production”, and that it had strengthened its management team. “We clearly see positive developments, and will continue to improve,” it added.

Northvolt is now fighting for its life. After struggling to raise billions in fresh equity it has scaled back its demand in recent weeks to about €200mn, according to Swedish and other news reports, in a push that has taken on added urgency as it deals with jittery investors. A subsidiary that was meant to build out the Skellefteå factory, Northvolt Ett Expansion, declared bankruptcy last week.

The business backdrop is also bleak. Electric vehicle sales in Europe have slowed and manufacturers including Volvo Cars and VW have scaled back their ambitions, something insiders say is not helping it convince investors.

“You had these Swedes . . . selling what they called the greenest batteries on earth, using this fact they had cheap hydropower as a massive selling point,” said one large European automotive shareholder, who is not invested in Northvolt. “But it never made sense to build it in Sweden. They don’t have the people, the skills, and they got too much money, too fast, and wanted to do everything at once. It was always going to be a disaster.”

A person close to Northvolt said the problems at Skellefteå were typical for a new factory, but that unlike large industrial groups the Swedish start-up lacked a wider organisation to fall back on for experience and revenues.

“The biggest challenge in industry,” the person added, “is a new plant, new people, new processes, new product . . . And we had all four together.”