Swatch First-Half Net Falls

Watch and jewelry sales shine.

Swiss watch company the Swatch Group Ltd. posted a 9.1 percent dip in profits for the first half, even though its watches and jewelry segment rallied with double-digit sales growth.

This story first appeared in the August 18, 2008 issue of WWD.  Subscribe Today.

The Zurich-based company’s net income declined to 418 million Swiss francs, or $398.6 million at average exchange, during the first six months of the year. This compared with profits of 460 million Swiss francs, or $374.8 million, a year earlier. (Currency conversions were made at average exchange for the respective periods).

The decline in profits was mostly due to a loss on investments and negative currency effects, according to the company. Sales rose 8.5 percent to 2.97 billion Swiss francs, or $2.83 billion, versus 2.74 billion Swiss francs, or $2.23 billion.

The watches and jewelry segment reported an 11 percent jump in sales to 2.35 billion Swiss francs, or $2.24 billion, compared with sales of 2.11 billion Swiss francs, or $1.72 billion for the same year-ago period, despite ongoing production bottlenecks and unfavorable exchange rates.

“Brand marketing activities continued to be vigorously pursued worldwide and will even be increased, as in previous years, in the second half,” the company said. “The Olympic Games currently under way in China provide outstanding worldwide visibility for the Omega brand as official timekeeper. In the long term, this will allow the brand to further advance its leader position worldwide as well as in China.”

Looking forward to the second half of the year, the company said it expects solid improvement in sales and profitability, as well as continued worldwide expansion.