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Swatch Group Posts Record Sales in 2010

Swiss firm said gross sales advanced 18.8 percent despite production bottlenecks.

PARIS — Swatch Group, the world’s largest watchmaker, posted record sales in 2010 despite production bottlenecks and negative currency effects, and said the outlook for this year was positive after double-digit growth carried through into January.

The Swiss company, whose 19 brands span luxury Breguet timepieces through to affordable plastic Swatch watches, said gross sales totaled 6.44 billion Swiss francs, or $6.19 billion, up 18.8 percent in organic terms versus 2009 and up 8 percent compared with 2008, its previous record year.

All conversions are made at average exchange rates.

“The extraordinary strength of our brand portfolio was again reflected in an excellent performance by the watch segment in practically all markets and price segments,” Swatch Group said.

The Biel-based company did not provide a net profit figure. It is scheduled to publish key 2010 figures on Feb. 24.

“The group expects an improved operating margin and a higher net profit for the financial year 2010 compared with the previous year. This improvement will be visible in all areas of the group. The record figures expected in absolute terms will be attenuated by the extremely strong Swiss franc,” it said, adding foreign currencies had an adverse impact on sales of 3 percent in 2010.

Sales of watches and jewelry totaled 5.53 billion Swiss francs, or $5.32 billion, up 24.5 percent in organic terms versus the previous year, fueled by the success of new products such as the Omega Ladymatic, the New Gent from Swatch and Breguet’s Type XXII 10Hz chronograph.

Stripping out the negative impact of exchange rate volatility, sales were up 28.1 percent, confirming that Swatch Group outperformed sector peers. Foreign sales of Swiss watches rose 21.8 percent between January and November, according to the Federation of the Swiss Watch Industry, which will publish full-year data on Feb. 3.

Gross sales for the group’s production segment also picked up after lagging during the first half, ending the year with an increase of 7.5 percent to 1.54 billion Swiss francs, or $1.48 billion.

In a research note, Citigroup maintained its buy rating on the stock, with a price target of 410 Swiss francs, or $426 at current exchange rates. “Swatch continues to maintain controlled, quality growth and a high exposure to emerging markets alongside cost discipline and a strong balance sheet,” it said.

Shares in Swatch Group closed down 4.9 percent at 373.80 Swiss francs, or $388.61, as traders took profits.