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.
Donatella Versace will receive the International Award at the 2018 @cfda awards, which were announced tonight. Tap link in bio for a list of all the nominees and honorees. #wwdnews #wwdfashion (📷: @rahirezvanistudio )
The 2018 @cfda Awards nominees are out! @virgilabloh for @off____white for is nominated for Womenswear Designer of the Year. Tap link in bio for all the nominees. #wwdnews #wwdfashion ( 📷: @simonelezzi)
@chanelofficial is suing high-end vintage retailer @whatgoesaroundnyc for trademark infringement, a move that could cost the retailer millions. The French fashion house claims that it’s not only unintentionally sold counterfeit goods on occasion, but that it’s “gone out of its way to create an association with Chanel,” which does not exist. Read Chanel’s statement on WWD.com #wwdnews (@aitorrosasphoto)
Exclusive: Guillaume Henry has left @ninaricci, the fashion house said on Thursday. “After three years of mutually gratifying creative collaboration, Nina Ricci and Guillaume Henry have together decided that the designer will depart the house after the presentation of the fall-winter 2018-19 collection,” Ricci said in a statement. Get all the details on WWD.com #wwdfashion (📷: @aitorrosasphoto)
“When Bella enters a room all heads turn,” said @peterphilipsmakeup, creative and image director for @diormakeup. Last night, the two celebrated the product launch of Dior’s Lacquer Plump in Los Angeles with other celebs like @parisjackson, @winnieharlow and more. Head to WWD.com to see the rest of the photos from the night (📷: @chelsealaurenla) #wwdeye
“These shirts are an art form, it’s about getting the message out to as many people as you can. It breaks down the pretentiousness of the art gallery,” says Kumasi Sadiki, cofounder of @ebayontheblock, a store that sells merchandise by New York artists who are shifting their attention to clothes as a wearable medium. Pictured here is a design by artist @joegarvey_, one of the first to spearhead this movement. Head to WWD.com to read @mistywhitesidell full story on how their designs have become merch for the underground elite #wwdfashion
@netaporter is dedicating a part of its website – called the Fine Jewelry and Watch Destination – to highlight its high-end jewelry. The hub will feature products on the site, as well as incorporate styling advice and educational content about high-priced jewelry items. Get more details on WWD.com. #wwdaccessories
For “The Cher Show,” an upcoming musical based on @cher’s life and career, @bobmackie is once again collaborating with the singer in designing the costumes. For decades, Mackie has designed glitzy stage costumes and red carpet looks for the 71-year-old Grammy winner. Pictured here is a sketch of some of the pieces in the wardrobe of the musical, which is set to debut in Chicago on June 12 before making its way to Broadway #wwdeye