PARIS — Shares in Swatch Group AG finished up 2.3 percent on Tuesday as the Swiss watch giant beat estimates and reported a 25 percent surge in first-half net income to 724 million Swiss francs, or $779.7 million.
What’s more, the parent of brands including Omega, Longines, Tissot and Breguet said it spies “more opportunities than risks for the future, despite some negative trends such as the exchange rate and euro situation and a certain weakening in the high-end segment in parts of Greater China.”
It also blamed an overvalued Swiss franc and rising gold and diamond prices for putting pressure on margins.
The company characterized its prospects for the balance of the year as “promising” as it aims to achieve a record 8 billion Swiss francs in sales in 2012.
Citing growth across all regions and price segments, the Biel-based firm said gross sales gained 14.4 percent to 3.85 billion Swiss francs, or $4.14 billion.
Dollar figures are converted from Swiss francs using average exchange rates for the period in question. Swatch did not break out data for the second quarter.
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Swatch said sales in the watches and jewelry segment gained 16.7 percent to 3.4 billion Swiss francs, or $3.66 billion.
In the production segment, gross sales of watch movements and components jumped 23.2 percent to 1.19 billion euros, or $1.28 billion.
In a research note, Citi analyst Thomas Chauvet said Swatch’s sales target implies a “material deceleration” ahead. “We argue that Swiss watch exports will soften in the second half of the year to high-single-digit growth to reflect softer sell-out trends in Asia and southern Europe with inventory build-up in (the first half),” he wrote.
HSBC in Paris maintained its overweight rating on the stock and in a research note said: “Trends in luxury are certainly slowing, but at a gradual pace and results continue to exceed expectations.”