News Although the Swatch Group saw its turnover drop slightly in 2003, results for the second half-year are positive and auger well for 2004.
For the third year running, Swatch Group sales declined in 2003, to 3,983 million francs, or by just under 2% compared to the previous year's figure of 4,063 million. In local currencies, turnover increased however by 1.5%, with exchange rate effects causing an income shortfall of 143 million.
Other factors added some sparkle to this mixed bag of results: volume sales of watches, movements and stepper motors increased by 6.3% in 2003, to 127.1 million units, with the second half-year registering twofold growth (+4.2% in local currencies and +2.3% in Swiss francs, against -1.3%, and -6.6% respectively during the first six months of the year). Solid fundamentals are in place therefore to shore up the confidence of directors of the Biel based group, who are hoping for "strong growth in sales in Swiss francs during the current year." Their optimism also stems from the modest recovery of the world economy and the improvement - albeit still hesitant - in the climate of consumer confidence in most of the principal markets.
With 2,921 million francs, the finished watch sector saw its sales increase by 2.2% in local currencies in 2003 (-2.0% in Swiss francs). Luxury brands - Breguet foremost, but also Blancpain, Glashütte Original, Jaquet Droz and Léon Hatot - showed the strongest growth, however the middle of the range, thanks to Tissot, also registered pleasing results, while brands that were severely affected in the first half-year, such as Rado and Swatch, managed to gain ground in the second part of the year. By region, sales benefited from continued buoyancy in Asia (save during the SARS period naturally), as well as in the United States, the Middle East and Eastern Europe. Western Europe stagnated however, despite some improvement in the final months of the year.
Turnover from the production of watches, movements and stepper motors fell both in local currencies (-3.1%) and in Swiss francs (-4.2%), to 1,239 million. Of this total, sales worth 562 million, or less than half, were made to third parties (-6.9%).
For their part, electronic systems registered a twofold increase (+1.4% in local currencies, +0.6% in Swiss francs), to 511 million. In this sector, the long-awaited recovery in demand occurred during the second half-year in all sectors. EM Microelectronic-Marin and Micro Crystal benefited from this in particular.
Continuing to enjoy a sound and durable financial base and a respectable cash flow, the Swatch Group, on the basis of turnover in 2003 and in the light of accelerating growth during the last six months of the year, expects to achieve a satisfactory result in terms of operating and net profit, despite the strength of the Swiss franc. Observers are now waiting for 25 March, when the group will publish figures for these two results.
February 12, 2004