PARIS — Swatch Group, the world’s largest watchmaker, on Thursday said it was bullish for 2006 while reporting that its 2005 net income grew 21 percent, driven by luxury watches and jewelry.

The Swiss conglomerate said net profits rose to 621 million Swiss francs, or $499.5 million, from 512 million Swiss francs, or $412.7 million, in 2004.

Operating profit grew 17.1 percent to 735 million Swiss francs, or $591.2 million. Full-year sales, reported in February, rose 7.7 percent to 4.49 billion Swiss francs, or $3.61 billion. Currency conversions were made at average exchange rates for the respective periods.

Swatch said sales in the first months of 2006 had been “strong” across all geographical zones and added that it was “optimistic” for the remainder of the year.

Swatch said it expected a solid showing at the Basel World watch and jewelry order-writing fair opening March 30 in Switzerland, where most of Swatch’s brands will introduce new models.

Luxury timepieces continued to be a boon, underscoring continued industry-wide growth in the high-end segment. Best known for its inexpensive Swatch brand, the group also owns top-tier names like Breguet, Blancpain, Omega and Leon Hatot.

Operating profit in the watch and jewelry division, which includes the Longines, Rado, Tissot, Hamilton and Glashutte brands, gained 13.4 percent to 626 million Swiss francs, or $503.5 million, on sales of 3.27 billion Swiss francs, or $2.63 billion, Swatch said.

Swatch’s production division didn’t fare as well; operating profits fell 4.1 percent to 47 million Swiss francs, or $37.8 million. But the firm said profitability should improve, thanks to a greater number of higher-margin luxury pieces on order this year.

Operating profit at the company’s electronic systems division improved 5.4 percent to 78 million Swiss francs, or $62.7 million, Swatch said.

This story first appeared in the March 24, 2006 issue of WWD. Subscribe Today.

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