The world's biggest watchmaker, the Swatch Group, has seen a drop in profits for 2001, down 7.7 percent to SFr504million ($304.3 million).

Swatch - which produces mass-market name-brand watches alongside several luxury brands - blamed the profit fall on tough global trading conditions.

Turnover also fell by 1.9 percent to SFr4.1 billion from SFr4.2 billion, while earnings before taxes and interest slipped by 5.7 percent to SFr644 million.

Swatch said its upper luxury and prestige brands had continued to sell well - traditionally the first to suffer in difficult economic cycles.

The company issued a cautiously optimistic outlook for 2002. "After a moderate start in the first quarter of 2002, turnover is expected to exceed the previous year's level," a company statement said.

"Despite the current difficult and uncertain economic environment, the Swatch Group's solid position will enable it to gain market shares and to take advantage of an economic recovery of which first signs seem to appear in some areas," the company said.

The Swiss stock market reacted positively to the figures, pushing stocks up 2.53 percent to SFr162 during Thursday morning trading.

swissinfo with agencies

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