Update On The Heiniger Affair...

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Rolex Chief Patrick Heiniger Resigns After 16 Years (Update2)


By Thomas Mulier

Dec. 17 (Bloomberg) -- Rolex Group, the Swiss watchmaker, said Chief Executive Officer Patrick Heiniger resigned for “personal” reasons after 16 years in the post.

Heiniger will leave Rolex at the end of the year, the Geneva-based company said in a statement late yesterday. Separately, Rolex today denied a L’Agefi report that the company may have lost 1 billion Swiss francs ($900 million) invested with Bernard Madoff, the U.S. money manager charged with fraud.

Heiniger, who replaced his father Andre in 1992, leaves as the financial crisis ends a boom for the watchmaking industry that led to the fastest growth in two decades last year. Sales of the luxury industry will decline 4 percent in 2009, as revenue growth from emerging markets slows, Melanie Flouquet, an analyst at JPMorgan Chase & Co., estimated yesterday.

“Him stepping down at this time does seem slightly odd given that the watch industry is in for a tough time,” said Jon Cox, an analyst who covers watches at Kepler Capital Markets in Zurich.

A drop in timepiece sales may lead to the bigger watchmakers “hoovering up some of the smaller players,” Cox said. “If we get this nuclear winter next year in the watch industry, a lot of watch companies will be in trouble.”

Longines President Walter von Kaenel said last month that newer competitors will be the biggest losers as a result of slowing demand for luxury timepieces. Montres Villemont SA, a Swiss watchmaker with 14 employees, has said it might file for bankruptcy after demand “collapsed” in Asia and eastern Europe.

Madoff Denial

Rolex said in an e-mailed statement today it “formally denies any implication with the Madoff affair.” Madoff has been accused of running a Ponzi scheme. He was arrested Dec. 11 and said clients of his New York-based firm lost $50 billion.

Rolex invented the Oyster, the world’s first waterproof watch, in 1926, and made headlines after Mercedes Gleitze swam the English Channel wearing the timepiece. The company makes more than 170 models of the Oyster now and employs 8,000 people.

In the 1990s, Rolex took over the entire manufacturing process of its watches, avoiding reliance on third-party suppliers. Heiniger was the third executive to lead the company since its founding by Hans Wildorf from Bavaria. The brand is worth $5 billion, according to Interbrand, a consultancy.

To contact the reporter on this story: Thomas Mulier in Geneva at [email protected].
Last Updated: December 17, 2008 08:28 EST