Swatch Group said Monday that it sees strong growth potential for the Swiss watch industry in general and particularly its activities especially in view of the good start this year. The company posted net earnings up 26% for the full year 2012 and raised its dividend by 17%.
“Signs received from various markets around the world suggest maintaining a strong growth potential for the Swiss watch industry and Swatch Group,” said the world number one watch maker in a statement. “Realistic prospects of long-term growth for the Swiss watch industry emerge from about 5% to 10% per year,” it added.
The manufacturer of Swatch watches, Omega and Tissot has posted net earnings higher than market expectations, to 1.61 billion Swiss francs (€1.3 billion), while analysts had expected 1.48 billion Swiss francs according to Thomson Reuters. The company has raised its dividend to 6.75 Swiss francs per bearer share, for 2012, compared to 5.75 Swiss francs for 2011, and 1.35 Swiss francs per registered share.
Operating margin increased from 23.9% to 25.4%, a performance well received by stock exchanges. The shares rose 2.32% to 529.5 Swiss francs in the morning session, while its sector index in Europe is stable.
René Weber, an analyst at Vontobel, notes that Swatch was able to improve its operating margin, while LVMH, the world number one of luxury watches, has announced a slight decline in profitability last week. “(Swatch) will be one of the most efficient groups on the whole year 2012,” he said.
Swatch has announced an increase of 14% to 8.14 billion Swiss francs in sales for the month of January and wants to achieve higher growth than its peers in 2013, with possibly another year of double-digit growth. The manufacturer of watches could alleviate the fears of those who see the luxury sector suffer from a decline of sales in China.
Last week, the luxury group Richemont, which owns Cartier jeweler, reported conservative estimates, after reporting lower than expected sales for the third quarter. But other luxury groups were more optimistic about China. Burberry, which warned of a deterioration in the Chinese market in September, recently reported that consumer sentiment had improved.
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