Swatch Group clocks up record figures

Marketing efforts in Asia for the Swatch Group were particularly successful Keystone

Net profit at Switzerland's Swatch Group, the world's leading watchmaker, broke through the SFr1 billion ($990 million) mark for the first time in 2007.

The group made SFr1.017 billion ($1.01 billion) last year, up 22 per cent compared with 2006. Turnover increased by nearly 18 per cent, to SFr5.94 billion.

However, the company issued a cautious note in a statement issued on Friday.

It cited fears about the fall in the exchange rate of the world’s major currencies against the Swiss franc.

The group benefited from rising demand for its top-range watches, including Breguet and Blancpain, as part of a continuing worldwide boom for luxury goods, particularly in China.

But it reported double-digit growth in sales in all price segments.

The group said sales had been good in all geographic regions, with Asia, Europe and the United States performing particularly well, although the Japanese market had been somewhat flat.

Swatch, with headquarters in the town of Biel, also makes watch components and movements, and has recently expanded its production capacity. It reported an increase of 21.6 per cent in their sales.

However, it admitted that it had been unable to fulfil all customer orders for watch movements.

Cautious forecasts

The group’s operational profit was in line with market forecasts, but the net profit was slightly less than expectations.

Analysts were cautious about the group’s prospects. HSBC warned that there was likely to be a slowdown in the watch segment.

Vontobel analyst René Weber warned that currency effects would have a more negative impact on sales in 2008. However, analyst Alessandro Migliorini at Helvea said the Swatch Group was “positioned well for the long run”.

Swatch was upbeat about its prospects, pointing out that the strong trend of 2007 had continued in the first two months of the year.

In an interview with Bloomberg television, CEO Nicolas Hayek Jr played down the impact of the economic slowdown in the US. “There’s the rest of the world which is growing fantastically,” he said.

The group outlined a two-pronged approach in its strategy. It wants to promote its range of brands particularly in emerging markets and reduce costs.

Market observers say the summer Olympics in Beijing, where Omega is the official timekeeper, will help promote worldwide awareness of the brand.

The Swatch Group celebrated the 25th anniversary of its innovative cheap plastic watch earlier this month.

swissinfo with agencies

In brief

The Swatch group has a stable of 18 brands in all price categories.

The Omega and Breguet brands are the major value drivers in the Watch and Jewellery business unit.

Other brands include Blancpain, Glashütte, Rado, Longines, Tissot, cK, Balmain as well as the plastic watch, Swatch.