The Swatch Group recently announced positive results for the first half of 2017, with Group net sales of CHF 3,759 million (+1.2%) and a rise of 6.8% for net income, at constant exchange rates.
Performance in Watches & Jewelry, especially in the upper segment, had a sales growth of +2.9% at constant rates in the Watches & Jewelry segment (excluding Production). Production recorded lower capacity utilisation than in the comparable period last year, in significant part due to delays from third party orders. However, they have seen increased tech-related orders for Dual Frequency RFID technology (NFC and UHF) and the new Real Time Clock (RTC) modules.
Watch sales in Mainland China recorded strong growth, Hong Kong has stabilised, and the Middle East and Europe have shown sales growth. The Chinese tourism dollar is still being affected by currency matters.
Any growth is good news in the watch industry at the moment. Swatch are very optimistic about the second half of 2017, expecting growth in both retail and wholesale.
In summary :
1) Group net sales, +1.2% at constant exchange rates, of CHF 3 759 million, or CHF 3 705 million, -0.3% at current exchange rates.
2) Sales growth of +2.9% at constant rates in the Watches & Jewelry segment (excluding Production). Sales for the whole segment, including Production +1.2%, adversely affected by low Production sales to third parties.
3) Operating margin in the Watches & Jewelry segment (excluding Production) increases by almost 25%, from 10.7% to 13.2%, despite negative currency impact. The Watches & Jewelry segment, including Production, achieved an operating margin of 11.8% (previous year: 11.2%).
4) Operating result increases by 5.1% to CHF 371 million, despite retention of production capacities for third parties and workforce. Operating margin grows from 9.5% in the previous year to 10.0%.
5) Net income increases by 6.8% to CHF 281 million with a net margin of 7.6% (previous year: 7.1%).
6) Accelerated growth of all brands in local currency in June and the first weeks of July, most pronounced in the Prestige and Luxury segment. The retained production capacities allow quick response to the positive development.
7) Strong growth in local currency in the Group’s own retail network.
8) Positive outlook for the second half of 2017 with many new product launches. Good development in Production, which will mainly profit from the growth of the own brands, not only in value but also in volumes.
For the full press release, click on this link