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Swatch posts flat profit but remains upbeat

Tennis star Anna Kournikova is one of the faces of Swatch's Omega Keystone Archive

Switzerland’s Swatch group has reported a flat net profit of SFr492 million ($386.5 million) for 2003.

The figure was in line with analysts’ predictions, but the world’s biggest watchmaker said it expected better sales this year.

Sales fell two per cent to SFr3.98 billion in 2003.

In a statement on Thursday, Swatch said the group result had been helped by marked improvements in the second half of 2003 as the group’s brands substantially improved sales and earnings.

However, the figure was 0.4 per cent down on the previous year.

Swatch’s operating income fell six per cent to SFr594 million which the firm blamed on the effects of the Sars virus in key Asian markets, the Iraq war and the appreciation of the Swiss franc.

The figures were in line with analysts’ forecasts for net income of SFr496 million and operating income of SFr596 million.

Optimistic

However, the company, which also makes the Tissot and Omega brands, said it was optimistic in its outlook for 2004.

It said the year had started well and that consumer sentiment appeared to be improving in many markets.

“This is bound to be reflected in higher sales for the group this year,” said Swatch.

The Biel-based group said it would resume its share buyback programme but gave no further details.

The company also proposed a dividend on bearer shares of SFr1.45 – up by almost a third on 2002, and a dividend on registered shares of SFr0.29.

Pressure

Swatch stock has risen by five per cent this year, but has been under pressure from the downturn in the global economy – like the rest of the sector.

It is also worried that tourism could be affected following this month’s Madrid bombings.

The luxury goods sector is only just emerging from a slump in the wake of the September 11 attacks on the United States, the Iraq war, the Sars virus and global economic problems.

Analysts say that Swatch has fared better than others and was helped by a glamorous advertising campaign featuring top model Cindy Crawford and tennis star Anna Kournikova.

swissinfo with agencies

2003 figures.
Profit: SFr492 million.
Sales: SFr3.98 billion.
Dividend: increased by 31 per cent.
Outlook: optimistic.

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