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Swatch Sales Tick Ahead

Switzerland's Swatch Group, the maker of Omega, Swatch and Breguet watches, said "outstanding" double-digit growth in Asia, and the Middle East drove its...

PARIS — Switzerland’s Swatch Group, the maker of Omega, Swatch and Breguet watches, said “outstanding” double-digit growth in Asia, and the Middle East drove its full-year sales ahead by a better-than-expected 17.6 percent.

Swatch, whose other brands include Jacquet Droz, Blancpain and Glashutte Original, said unfavorable currency exchange rates and rising raw materials costs had “squeezed” margins for the year.

But it said it expected to report “above-average” increases in operating profits and net income for 2007. Meanwhile, Swatch predicted that strong market conditions for high-end watches would continue this year.

“Despite the current wave of turbulence in financial markets, [Swatch] expects the positive trend to continue,” the company said, predicting double-digit growth for January.

Extraordinary demand for high-end watches over the last few years has driven growth at most luxury Swiss timepiece manufacturers. Since many of the most complicated — and coveted — pieces take months to produce, demand often has exceeded supply.

The Swiss Watch Federation reported exports of Swiss-made timepieces grew 17 percent in November, with exports of luxury pieces growing even faster.

Swatch said sales of its watch and jewelry division last year gained 20.4 percent to 4.71 billion Swiss francs, or $3.93 billion at average exchange rates. Though growth was exceptional in Asia and the Middle East, Europe and America also “recorded solid double-digit growth in sales,” Swatch said.

Demand for movements from outside companies contributed to a 20.9 percent rise to 1.68 billion Swiss francs, or $1.4 billion, in sales at Swatch’s production division, while sales at its electronic systems grew 6.2 percent to 630 million Swiss francs, or $525.6 million.

This story first appeared in the January 22, 2008 issue of WWD.  Subscribe Today.