Swatch Group Posts Big Half-Year Gains

By William George Shuster -- JCK Online, 11/1/2006 2:00:00 AM

The Swatch Group, based in Biel, Switzerland, reported half-year results in late August, including first-half net profits of $265.7 million, a 23.6 percent gain. Sales rose 13.1 percent to 1.8 billion, while operating profits grew 37.2 percent, to $323.8 million. First-half sales of finished watches totaled $1.4 billion, a 13.8 percent gain.

Swatch Group said all sectors—watches, movements, and electronics—contributed, and noted strong demand for its luxury watches and mechanical movements. The report said the shift toward the top price segment was the key factor in the increase in profitability. Breguet had the strongest growth among luxury brands, while the popularly priced Swatch brand had “an excellent performance.”

All Swatch Group brands increased market share worldwide, and the report said growth in the United States and Europe was solid.

Aiding the Group's gains were its stepped-up marketing efforts, including Omega's presence at the 2006 Winter Olympics, the launch of Swatch's Jelly in Jelly watches at an international event for its 333-millionth Swatch watch, and Tissot's presence at U.S. Nascar events.

Sales of movements and components rose 5.2 percent (to $883.5 million), largely because of healthy demand for mechanical movements, said the Group report. (The closing since 2005 of Far East facilities that made movements for low-price watches had minimal effect on results, said the report.)