The Swatch Group, the world's largest watch producer, on Aug. 20 reported a 9.8% drop in net profits for the half year (ended June 30), to about $139.5 million (231 billion Swiss francs), despite gains in gross sales and earnings. The Biel, Switzerland, conglomerate also said it has lowered its full-year sales growth target to 5%-8%, down from 10%-12%. (Full-year sales for 2000 rose 18%). But company officials said final results will depend on sales during Christmas—its most important selling season—as well as on the financial and currency markets. The Swatch Group report and financial analysts blamed the lower profits on several factors, including: Sluggish overall sales in its core watch division (down .6%); production problems leading to shortages of some new watches; weaker sales in the United States as well as for the Swatch watch (the core of the group's watch