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Swatch Sales Rise 14% in 2012

The watch giant expects to post good operating profit despite Olympics spending and currency moves.

PARIS — Swatch Group said gross sales rose 14 percent in 2012, breaching the barrier of 8 billion Swiss francs, or $8.5 billion, and early indicators point to continued strong growth this year.

 

The world’s largest watchmaker — parent of brands including Omega, Breguet, Blancpain and Swatch — posted sales of 8.14 billion Swiss francs, or $8.69 billion, in 2012 versus 7.14 billion Swiss francs, or $8.08 billion, the previous year, exceeding market expectations.

 

All dollar rates are calculated at average exchange rates for the period concerned.

 

Swatch Group said it expects to post “good” operating profit and net income for the year, despite unfavorable currency swings and heavy marketing costs linked to the Olympic Games in London, for which Omega was a sponsor. Swatch Group is scheduled to publish its key figures by Feb. 21.

 

“Again in 2012, the strong group brands performed convincingly in all regions and price segments, notably outside Greater China as well, and realized further conspicuous growth in market share,” it stated. “The brands report a good start in the new year, and healthy growth is again expected in 2013.”

 

In a research note published this week, Swiss private bank Vontobel forecast Swatch Group would announce its margin rose 30 basis points in 2012 to 24.2 percent.

 

Vontobel estimates total Swiss watch exports rose 12 percent last year, down from a 19 percent increase the previous year, reflecting a softening in demand in key Asian markets, though Chinese tourists are expected to continue underpinning European sales. It forecasts an 8 percent rise in foreign sales of Swiss timepieces this year.

 

Swatch Group reported that sales in the watches and jewelry segment, which account for 90 percent of overall revenues, were up 15.6 percent in 2012.

 

The production division, which manufactures components, recorded a 10.1 percent increase as the company expanded capacity and eliminated bottlenecks.

 

The electronics systems segment fared less well, with strong price pressures and adverse exchange rates contributing to a 7.4 percent sales decrease.

 

Swatch Group shares closed down 0.8 percent at 85.35 Swiss francs, as market sentiment was dampened by news that U.S. jeweler Tiffany & Co. is predicting its annual earnings will come in at the low end of its guidance range.