PARIS — Reporting brisk demand for watches across price ranges in the first half of the year, Swatch Group signaled it expects to grow strongly in the coming months and continue to grab market share.
“The second half of the year offers excellent opportunities for continued strong growth and further expansion of market share,” the company, which sells brands ranging from Omega to Swatch, said in a statement.
The group said first-half sales rose 12.6 percent at constant rates, lifted by robust business for watches across price ranges and fueled by appetite from Asia and North America.
Sales for the period totaled 4.27 billion Swiss francs, or $4.25 billion, with the company flagging robust growth in all price segments and noting a continuation of the “positive trend” through July. The company clocked double-digit sales growth in North America, a market that has been challenging for watchmakers in recent quarters.
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In its statement, Swatch noted “very high growth rates” in Asia, both in wholesale and own retail channels as well as online. It recorded a “comparable strong increase” in sales in Switzerland but noted growth in Europe varied significantly in the different regions.
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Net income was 468 million Swiss francs, a 66.5 percent rise, with a margin on net sales of 11 percent, compared to 7.6 percent for the same period last year. Swatch noted “good capacity utilization” as well as investments to increase production capacity.
Analysts said profit and sales beat expectations.
Sales growth and operating profit growth were around 3 percent higher than consensus estimates, noted Rogerio Fujimori, an analyst with RBC, in a research note for clients. The analyst flagged growth driven by Asia and North America with significant market share gains across price segments and led by Omega, and said he expects further profit growth.
“Accelerating growth for its flagship brands Omega and Longines and resulting improving capacity utilization should drive significant margin expansion,” he noted.
Swatch’s leading market positions across price points allows investors to tap into growth driven by Chinese middle-class consumers, Fujimori added.
Swatch noted it has increased inventories by around 6 percent to 6.7 billion Swiss francs as it stocks more gold and diamonds.
“In view of the turbulence in global trade, with the introduction of punitive tariffs, it is strategically even more important to increase stocks of essential raw materials,” noted Swatch. The group also cited product guarantees and the need to be able to supply replacement parts in some cases over 30 years, as another reason for keeping high levels of inventory.
Swatch hired 800 new employees, mostly in production in Switzerland, over the first half of the year, bringing the total count to 36,200.