January 10, 2012 / 8:58 AM / in 6 years

Swatch sees more growth after record sales in 2011

ZURICH (Reuters) - Swatch Group UHR.VX, the world’s largest watchmaker, said it was confident of achieving 5-10 percent sales growth in 2012 and shrugged off the impact of the strong Swiss franc to post record sales in 2011.

Dampening expectations of a slowdown in the watch industry, Swatch said on Tuesday it experienced the strongest turnover in the group’s history in December, while all regions and price segments had got off to a positive start in January.

“We will still have a year of growth, not just with the expansion of the distribution network and new products, but of growth meaning more turnover and more profits,” Chief Executive Nick Hayek told Reuters in a telephone interview.

He said that despite the uncertain environment 5-10 percent sales growth sales should still be reachable. Analysts noted second-half sales growth had slowed compared with the first half.

“The outlook statement is not as typically bullish as the company has been in the past,” Kepler Capital Markets analyst Jon Cox said in a note.

The group, best known for its colorful plastic Swatch watches, said on Tuesday sales in 2011 rose 21.7 percent at constant rates to 7.14 billion Swiss francs ($7.5 billion), compared with a forecast for 6.8 billion by analysts at Kepler.

By 1031 GMT shares in Swatch were up 4.2 percent, outperforming a 1.3 percent firmer STOXX European personal and household goods index .SXQP.

STRONG SWISS FRANC

Exporters were heavily burdened in 2011 by the strong Swiss franc, which hit multiple records against the euro and dollar and flirted with parity against the single currency in August. This prompted the Swiss National Bank to impose a cap of 1.20 francs to the euro in September to try and alleviate the pain.

Strong demand in Asia, however, has helped stave off the worst effects for the watch industry and exports rose 16.2 percent in December, compared to a 3.8 percent rise year-on-year in exports overall.

“Despite the strongly negative currency impact during the course of the year and our traditionally defensive policy concerning price increases, group management expects good results for operating profit and net income,” Swatch Group said.

The maker of high-end watch brands such as Omega and Blancpain said the strong currency had a negative impact of 10.8 percent on sales in 2011, hurting its electronic systems division the most, where sales fell 16.3 percent.

Growth was strong in all regions and price segments thanks to investment in retail activities and marketing campaigns around the world, it said.

The group, which also supplies most of the parts and movements to the Swiss watch industry, said sales in its production segment rose 32.6 percent to 2.015 million Swiss francs. It said, however, it was still grappling with production bottlenecks, despite expanding capacity.

Swatch Group said 2012 would be “a major challenge,” but it was confident of generating qualitative growth in 2012, after a positive start in all regions and price segments in January.

($1 = 0.9529 Swiss francs)

Additional reporting by Nathalie Olof-Ors; Editing by Jon Loades-Carter and Hans-Juergen Peters

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