News In the red, as was only to be expected, the Swatch Group’s results for the first six months of the year are nevertheless welcome. The stock market recognized that fact and the bearer share gained more than 10% on the day after their publication.
Announced in the early evening of 13 August, the Swatch Group’s results for the first half of 2009 were followed by a 12.8% rise in the bearer share price on the very next day while the SMI closed largely unchanged on the previous day -0.02%). For once the Swiss stock market was not wrong: although negative – how could it have been otherwise in the prevailing global economic context? – the first six months of the world number one in watchmaking were far superior to those of the branch as a whole which saw its exports fall by 26.4% to 6.1 billion francs between January and June 2009 (see article under the heading Time Zones).
In more detail, the group’s gross sales were down 15.3% at 2,480 million francs and the net profit by 28% at 301 million. Following the maintenance of intense marketing activities and R&D investments, together with a resolute commitment to safeguard jobs, the operating result for its part fell by 41.8% to 345 million. Cash flow (247 million) on the other hand is largely unchanged from the figure for the first half of 2008 (268 million).
By business area, the sector of watches and jewellery (19 brands) saw its sales contract by 16.4% to 1,960 million francs, while the operating result was 31% lower at 285 million. Economic conditions were particularly difficult in the United States, Japan and Spain but, unlike last year, exchange rate volatility has had no significant repercussions on sales.
Turning now to the manufacturing sector (watch movements and components) - in which sales of mechanical calibres remained at a very high level, while those of quartz movements marked time - sales reached 838 million (-12.3%) and the operating result 76 million(-49%).
Finally, in the electronic systems business area which delivers its output largely to the automotive and wireless telephone industries, sales were 24.9% lower at 186 million, while the operating result was down from 33 to 2 million. This twofold decline is explained by two factors, namely a substantial reduction of volumes and growing pressure on prices.
This unrivalled performance in the present situation also enables the Swatch Group to remain confident in the future of its business. In the second half, it expects sales to be comparable to those reported in the last six months of 2008. Advances are expected for some leading brands. The positive trend of sales reported at the end of the first half – itself confirmed by the July results – is an unmistakable indicator. The stock market confirmed this by a steep rise in the price of the bearer share.
August 20, 2009
