PARIS — Swatch Group said net profits jumped 26 percent in 2012, beating market expectations, and it expects another year of healthy growth after a positive start to 2013.
The world’s largest watchmaker — parent of brands including Omega, Breguet, Blancpain and Swatch — posted net income of 1.61 billion Swiss francs, or $1.72 billion, in 2012 versus 1.28 billion Swiss francs, or $1.44 billion, the previous year. All dollar rates are calculated at average exchange rates for the period concerned.
“The 2013 financial year started well in January with continued healthy growth,” Swatch Group stated.
“The signals from the markets around the world clearly indicate continued healthy growth potential for the Swiss watch industry and the Swatch Group,” it said. “Against this backdrop, there is a realistic prospect of long-term growth in the Swiss watch industry of 5 to 10 percent per year.”
Swiss watch exports rose 12.6 percent between January and November 2012, according to the Federation of the Swiss Watch Industry, which is due to publish full-year results on Tuesday. Though demand has softened in key Asian markets, Chinese tourists are expected to continue underpinning European sales this year.
As previously reported, gross sales at Swatch Group rose 14 percent last year, breaching the barrier of 8 billion Swiss francs, or $8.5 billion, for the first time.
In its full results statement, the group said its operating profit margin rose by 150 basis points to 25.4 percent in 2012. This was sharply higher than forecast by Swiss private bank Vontobel, which earlier said it expected the margin to increase by 30 basis points to 24.2 percent.
The Swatch Group results come on the heels of disappointing data from rival Compagnie Financière Richemont. The parent of brands including Cartier and IWC reported last month that revenues in its fiscal third quarter rose 9.3 percent to 2.86 billion euros, or $3.72 billion, as sales in the Asia-Pacific region flattened out.
Thomas Chauvet, luxury analyst at Citi, maintained his “neutral” rating on Swatch Group shares.
In a research note, he pointed out that the company’s cash pile has been steadily decreasing due to higher inventories, the acquisition of small movements and components suppliers, purchases of raw materials and a personal loan to the chairman of Swatch group’s largest Asian customer, Hengdeli Holdings.
“The acquisition of Harry Winston jewelry brand for approximately $1 billion in January 2013 will put further pressure on cash flow this year,” Chauvet said.
“While management emphasized that this is a good use of ‘low-yielding cash,’ we are not fully convinced by the rationale of the Harry Winston deal, which will dilute margins/returns and require additional investments in sourcing, manufacturing, distribution and working capital,” he added.
Swatch Group shares closed up 5 percent at 543.50 Swiss francs, or $703.75.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye