Swatch Group profit lowest for seven years
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Swatch Group, the maker of Omega and Tissot timepieces, has reported its lowest first-half profit in seven years, with demand tumbling in Hong Kong, France and Switzerland.
Its first-half operating profit fell 54 per cent to 353 million francs (US$359 million), the company says. This followed an earlier warning that earnings would probably fall 50 to 60 per cent.
After previously forecasting growth, CEO Nick Hayek says sales for the year may fall as much as 6 per cent. Terrorist attacks in France are keeping tourists at bay, denting sales.
However, Swatch says its full-year results will be close or equivalent to those of last year.
Swiss watch exports declined a record 11 per cent in the first half, says the Federation of the Swiss Watch Industry.
Swatch says the first three weeks of this month showed good growth in China, particularly for its luxury brands Blancpain, Breguet and Omega.
The company also says the drop in Hong Kong’s retail sales has bottomed out.
Questions & Answers
Q.What is the extent of the drop in Swatch Group's first-half operating profit?
What is the extent of the drop in Swatch Group's first-half operating profit?
The company's first-half operating profit fell by 54 per cent, reaching 353 million francs (US$359 million). This was largely in line with an earlier warning about a 50 to 60 per cent earnings decrease.
Q.Which specific markets have seen a decline in demand for Swatch Group's timepieces?
Which specific markets have seen a decline in demand for Swatch Group's timepieces?
Demand has significantly tumbled in Hong Kong, France, and Switzerland. Terrorist attacks in France are specifically mentioned as keeping tourists away, thus impacting sales in that region.
Q.Has Swatch Group seen any positive developments in its sales recently?
Has Swatch Group seen any positive developments in its sales recently?
Yes, the company reports good growth in China during the first three weeks of this month, especially for luxury brands like Blancpain, Breguet, and Omega. The drop in Hong Kong's retail sales has also reportedly stabilised.
Q.What is Swatch Group's forecast for its full-year results?
What is Swatch Group's forecast for its full-year results?
Despite the first-half decline and an expected overall sales fall of up to 6 per cent, Swatch Group anticipates its full-year results will be close to or equivalent to those achieved last year.