Swatch Group Tops $1 Billion in Net Income

The Swatch Group, the world’s largest watchmaker, topped the $1 billion mark (1.015 billion Swiss francs) in net income in 2007 for the first time in its history, says the company.

The company this month reported 1,015,000,000 Swiss francs (about $1,002,451,000) for 2007, a 22.3 percent gain over 2006. Overall sales also surpassed the strong showing of the previous year, rising more than 17 percent. Gross sales almost reached the 6 billion mark (in Swiss francs).

From a geographic perspective, “all regions delivered positive results, with Asia, Europe and the USA performing particularly well,” says the company.

The Swatch Group’s core segment, watches and jewelry, “delivered another strong performance in 2007, posting new record figures once again,” says the report.

“This extremely positive trend was already visible in spring 2007 with the huge demand and numerous orders received at the [international] BaselWorld watch and jewelry show,” says the company. “All price segments delivered double-digit sales growth in 2007, helping boost profitability across the board.”

Dress Your Body (DYB), the Group company specializing in the diamond and jewelry sector, also posted above-average growth.

The high demand for watches and jewelry also helped substantially boost net sales 21.7 percent for the watch movements and components, across all price categories, that the Swatch Group produces. Still, notes the company, “the massive increase in demand for both mechanical movements and ‘Swiss-made’ quartz movements in recent years has posed tough challenges for production. Even with ongoing investment in expansion and rationalization measures, production of these movements has always been at the limits of capacity.”

The Swatch Group’s Electronic Systems segment had to battle with a “more volatile business environment” in 2007, but still had record sales of 623 million Swiss francs, a 6.3 percent increase.

The report said that “the strong trend seen in 2007” continued this year in January and February. Consequently, the Swatch Group expects “ongoing substantial sales growth and further profitability increases across all segments” in 2008, despite economic problems. Those include “a sharp weakening of foreign currencies, in particular the US dollar, the yen, and to a certain extent the euro, against the Swiss franc, coupled with marked increases in gold, diamond and raw materials prices. These will create new challenges for the Group in 2008.”

A highlight this year for the Swatch Group will be the Summer Olympic Games in Beijing, China, for which it is the official timekeeper. “The highly visible presence of Omega as timekeeping and data handling partner … will further promote awareness of the brand worldwide,” says the report.