Swiss watchmaker Swatch said its profits rose for the half of the year but the group’s performance was hurt by the overvalued Swiss franc.

The watch group, whose brands include Swatch plastic watches as well as prestigious and luxury brands such as Omega, Blancpain, Harry Winston, Breguet and Longines and Tissot, also reported “very positive” sales to the Middle East.

“As in the previous year, the first half of 2017 was characterised by worldwide turbulence,” the group said in a statement.  “However, the Swatch Group, with its 20 strong brands and its own retail network, is very well represented worldwide, and was able to generate net sales of CHF3. 705 billion. 

This represented a rise of 1.2 per cent at constant rates in the first half of the year, but a fractional decline of -0.3 per cent at current exchange rates, it said, pointing out that the “overvalued Swiss franc dampened growth in the first half of the year”.

Profits for the first half meanwhile increased by 6.8 per cent to CHF281 million, it said.

Sales in watches and jewelry were “very positive” in local currency, especially in the upper segment, where high double-digit growth was achieved in its own retail business.

Sales rose 2.9 per cent at constant rates in the Watches & Jewellery segment, excluding production. Sales for the whole segment rose 1.2 per cent, adversely affected by low production sales to third parties.

Sales in mainland China recorded significant growth, sales in Hong Kong stabilised while Japan showed a mixed picture, the group said, adding that it recorded very positive sales in the Middle East. 

In Europe, sales of the brands increased compared to the first half of the previous year, this in Great Britain, Spain, Italy, and also again in Switzerland. 

The North American markets showed growth in local currencies, especially in the group’s own retail.


PRODUCT HIGHLIGHTS

The Omega Speedmaster, now celebrating its 60th anniversary, remains an absolute bestseller, Swtch said. The “Speedy Tuesday”, launched in January, sold out online in approximately four hours. Swatch also ensured good revenues with the launch of the New Skin, Swatch X You and Sistem51 Irony while the first editions of the Longines Master Collection Blue and the Tissot Ballade Silicium and T-race Cycling ensured high volumes. 

In the Prestige and Luxury segment, new products accelerated growth into the high double digits, it said. 

Harry Winston grew not only with its high jewellery collections Lotus Cluster, Art Deco and Sunflower, but also with its new exclusive watch models such as the Midnight Date Moon Phase. 

Breguet was successful with its new ladies’ watches Tradition and Phase de Lune, and Blancpain with the Villeret and Bathyscaphe collections.

Swatch said it remains positive for the second half of the year, and will continue its long-term strategy of retaining its manufacturing base in Switzerland for all segments, and not reduce its workforce.

The group anticipates very positive growth in local currency in the second half of the year. In addition to its already strong own retail business, wholesale should also develop positively, due to the gradual dissolution of uncertainty among individual distributors, it said.

Omega and the IOC have extended their timekeeping contract for the Olympic Games by an additional 10 years, up to and including the Olympic Games 2032, so that Omega’s term as official timekeeper of the Olympic Games will now total 100 years. 

In the second half of the year, Omega will launch new products such as the Seamaster Planet Ocean Big Blue, the Speedmaster Racing Co-Axial Chronometer and the Speedmaster 38 mm Collection onto the market. 

Blancpain with the new Bathyscaphe 38 mm and the Villeret 6104 ladies’ watch, as well as Breguet with the Tradition Dame and the Classique Phase de Lune will support growth. 

Together with the new Harry Winston collections, the entire Prestige and Luxury brand sector will further accelerate growth in the second half of the year, the group said. 

Longines will cause a sensation and add further momentum with the Conquest V.H.P. (very high precision quartz movement with an almost infinite calender), as well as Tissot, with the launch of the Chrono XL NBA and Every Time Swissmatic, it added.