News If the Swiss watch industry witnessed a surge in its exports from the beginning of January to the end of June (+15.5% to 7.2 billion francs), the Swatch Group did even better with an increase in turnover of 16.7% to 2.74 billion!
Despite problems of production capacity which it has faced for some time, the Swatch Group posted a record first half-year in 2007 with two-digit increases in turnover (+16.7% to 2.74 billion francs), operating profit (+27.1% to 511 million) and net profit (+39.4% to 460 million).
The engine of growth par excellence was the key sector of watches and jewellery, which includes 18 brands covering all price categories. It further demonstrated its importance to the Biel based group with sales well above the two billion franc mark (2.11 billion, +20.0%) and an operating profit of 353 million (+20.9%). Once again the best performance was recorded by the luxury sector (Breguet, Blancpain and Omega), however other price categories, headed by Longines and Tissot, also registered results of the highest quality, as did the Swatch brand, which posted growth in double figures. The group’s success is attributable to all geographical regions, even though Asia, America and Europe are comfortably ahead of the field. The only downside is Japan, where business remained stable due to the difficult economic situation and the weakness of the yen. The opening of the N. G. Hayek Center in Tokyo at the end of May gave a new boost to this market however.
The production of watches, movements and components, another important sector, recorded even better results: turnover up by 23.7% to 857 million francs and operating profit up by 87.7% to 122 million. Deliveries to group companies rose to 523 million (+32%) and those to third parties totalled 334 million (+12%). These record results prove that the group has managed to overcome certain problems of production capacity even though, as the group itself acknowledges, “some companies continue to face delays in delivery at particular stages of production, particularly in terms of movements, hands and dials”.
Last - and for once least - the electronic systems segment stalled during the first half of 2007, with sales up by a modest 2.7% to 306 million and an operating profit down by -16.1% to 47 million. The fault lies with mobile phones and the current trend towards ever cheaper models.
Based on these results, its solid portfolio of brands and its excellent position on the market, supported by a robust industrial fabric, the Swatch Group expressed keen optimism with regard to the rest of the year and has very ambitious expectations, not least because turnover registered in July and first estimates for August point to rates of growth on a par with the first half-year. The chances of another record year therefore look very good indeed!
September 04, 2007
