Swatch Sees Strong Second Half as First-Half Profit Rises 6.1 Percent

BIEL, Switzerland — Swatch Group AG, the maker of $50 colorful namesake watches as well as $5,000 Omega timepieces, said it expects a strong second half after first-half profit rose 6.1 percent.

Net income increased 6.1 percent to 768 million Swiss francs ($820 million), the Biel, Switzerland-based company said today in a statement.

The Chinese government’s clampdown on corruption and extravagant spending among officials will probably weigh on sales of luxury goods this year, especially in the high-priced segment, Thomas Chauvet, an analyst at Citigroup Inc., said in June. Growth in China is a concern for watchmakers as buyers there purchase more than a quarter of Switzerland’s production, making it the largest market for the past five years.

Swatch’s first-half gross revenue rose 8.7 percent to 4.18 billion francs, the maker of Tissot T-Touch diving watches said. Operating profit advanced was 910 million francs.

Shipments of Swiss watches to greater China fell 14 percent in the first five months of the year, according to the Federation of the Swiss Watch Industry. Swatch is expanding in markets outside of Asia such as the U.S. to offset risk of depending too much on that region, Chairwoman Nayla Hayek said at the annual shareholders meeting on May 29.

The low- and mid-range segments of the Chinese market yield the most opportunity, Chief Executive Officer Nick Hayek said April 25. On Jan. 30, he forecast that mainland China’s watch market will expand about 10 percent in 2013. He also said at the time that he sees no reason for the Swiss watch industry not to have “healthy” growth this year.

Swatch Group bought watch and jewelry brand Harry Winston for about $1 billion in March. The company estimated in February that the Swiss watch industry will probably grow 5 percent to 10 percent annually on the long-term.By:

By: Thomas Mulier; Editor: Anjali Cordeiro