Feb 5, 2014
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Swatch bullish on 2014 after profit rise

Feb 5, 2014

ZURICH, Switzerland - Swatch Group said it expects healthy growth this year after watch and jewellery sales helped net profit rise more than 20 percent in 2013.

All its brands - which include pricey Omega and Breguet timepieces - had an "auspicious" start to the year, and both watch and jewellery sales have been very good in January, Swatch said on Wednesday.

Image source: AFP

"After four years of strong and dynamic growth by Swatch Group, as well as the entire Swiss watch industry, continued healthy growth is expected in 2014," the world's largest watchmaker said in a statement.

Net profit rose 20 percent to 1.921 billion Swiss francs ($2.13 billion), beating estimates for 1.658 million francs in a Reuters poll.

It was boosted by a payment of 402 million francs in damages from U.S. jeweller Tiffany after a partnership between the two soured.

Swatch's operating margin improved to 27.4 percent from 25.4 percent a year earlier, helped the Tiffany payoff.

The group will hike its dividend per bearer share to 7.50 francs from 6.75 francs last year, and per registered share to 1.50 francs from 1.35 francs.

The company, best known for its plastic Swatch watches that gave the group its name, posted a 9.1 percent rise in full-year sales to 8.82 billion francs last month. It said it expects double-digit sales growth this year on the back of stronger demand in China.

Last year, Swiss watchmakers sold fewer watches in China, where the government put a halt to illegitimate gifting. However, Swatch fared better than rivals because its Tissot and Longines brands, which do not cost enough to be considered possible bribes, still sell well to China's rising middle classes.

Swiss watch exports rose 1.7 percent in the 11 months to November, well below the double-digit growth rates of previous years. Sales to Hong Kong and China, which absorbed a quarter of exports, fell 6 percent and 15 percent respectively.

Peer Richemont, which is more focused on high-end timepieces, last month reported quarterly sales growth of 9 percent despite lower sales in China.

The world's No.1 luxury group LVMH said last week sales of its watches and jewellery unit rose 4 percent last year, helped by a strong performance in its own stores.

$1 = 0.9045 Swiss francs

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