Swatch Earnings Miss Analyst Estimates After Hong Kong Protests
(Bloomberg) — Swatch Group AG reported 2014 earnings that missed analysts’ estimates as political protests in Hong Kong weighed on demand for Swiss watches in that market.
Operating income fell 24 percent to 1.75 billion Swiss francs ($1.9 billion), the Biel, Switzerland-based owner of the Breguet and Certina brands said today in a statement. That compares with the 1.9 billion-franc analyst estimate in a Bloomberg News survey. The year-earlier figures was boosted by a 400 million-franc payment Tiffany & Co. made to Swatch to end a legal battle over a failed alliance.
Swiss watchmakers are reeling from higher costs after the Swiss National Bank’s Jan. 15 shock decision to end the minimum exchange rate between the franc and the euro. The company forecast sales to rise by a high-single digit percentage excluding currency shifts this year and a “healthy” profit in 2015 as some of the Swiss watchmaker’s brands raise prices by as much as 7 percent to offset the surge in the franc.
“With its 20 brands, its own production and its worldwide distribution network, the group is in a very strong position,” Swatch said.
The industry had already been struggling from a weakening of Chinese demand due to a government campaign against extravagance and pro-democracy demonstrations in Hong Kong that forced some stores to shut and weighed on tourism.
Annual earnings growth was 16 percent on average in the four years through 2013, based on constant exchange rates.
Cie. Financiere Richemont SA, the owner of the Cartier brand, reported on Jan. 15 that third-quarter revenue stagnated for the first time in six years.
To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Thomas Mulier, Tom Lavell
