Swatch 2012 Gross Revenue Beats Estimates on AsiaDermot Doherty and Simeon Bennett
Swatch Group AG, the biggest maker of Swiss watches, reported higher 2012 revenue as customers in China and elsewhere bought more Omega and Longines timepieces, and said it expects “healthy growth” this year.
Gross revenue climbed 14 percent to 8.14 billion Swiss francs ($8.79 billion), the Biel, Switzerland-based company said today in an e-mailed statement. That beat an average estimate of 8.05 billion francs by nine analysts compiled by Bloomberg. Swatch said it expects to report “good” operating profit and net income for 2012, and that the first days of January indicate “positive growth” in the year.
Chinese and other Asian tourists who visit Europe are fueling growth in the luxury-watch market even as demand in China itself eases amid a slowdown in the local economy. Purchasing watches abroad lets Chinese consumers sidestep three layers of taxes imposed on timepieces in China.
“The figures probably indicate that Christmas demand was pretty good, pointing to a recovery in the greater China region, as well as ongoing strength from Chinese tourists in Europe,” said Jon Cox, head of Swiss research at Kepler Capital Markets.
Swatch shares declined 1.6 percent to 492 francs at 9:30 a.m. in Zurich trading. The stock has gained 6.7 percent this year.
“It has had a very strong run,” said Cox “There’s probably limited room for estimate upgrades in the short term.”
Revenue at Swatch’s watch and jewelry business increased 16 percent, while sales at its production division, which sells parts to other watchmakers, gained 10 percent. The maker of Blancpain and Certina watches said it had double-digit growth rates for almost all brands, “notably outside Greater China” and that it saw “conspicuous” market-share gains.
“Overall, a convincing sales statement especially concerning the key division watches and jewelry,” Patrick Hasenboehler, an analyst at Sarasin, wrote in a research note. The results are “particularly positive as the growth of the Swiss watch exports to Swatch Group’s key markets China and Hong Kong were below average in the period January to November.”
Chief Executive Officer Nick Hayek told Le Temps last month revenue may increase 5 percent to 7 percent in 2013. The U.S. market was “doing well” and demand in Europe was holding up “well,” Hayek said in an interview with the Swiss newspaper.
China and Hong Kong make up the biggest market for Swiss timepieces, accounting for 30 percent of exports of the country’s roughly 200 brands in 2011, according to the Federation of the Swiss Watch Industry.
Swatch will report key 2012 figures on Feb. 21 at the latest, it said.