Swatch Group posted higher 2012 revenue yesterday as customers in China and elsewhere bought more Omega and Longines timepieces, and the biggest maker of Swiss watches said it expected “healthy growth” this year.
Gross revenue climbed 14 percent to Sf8.14 billion (R75.5bn), the company said. That beat an average estimate of Sf8.05bn by nine analysts.
Swatch said it expected to report “good” operating profit and net income for the 2012 year, and that the first days of January indicated “positive growth” in the current year.
Chinese and other Asian tourists who visit Europe are fuelling growth in the luxury watch market even as demand in China 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,” researcher Jon Cox at Kepler Capital Markets said.
Swatch shares declined 1.7 percent to Sf84.55 at 3.30pm in Zurich trading. The stock has gained 6.7 percent this year.
“It has had a very strong run,” Cox said. “There’s probably limited room for estimate upgrades in the short term.”
Revenue at Swatch’s watch and jewellery business increased 16 percent, while sales at its production division, which sells parts to other watch makers, 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. It beat its own revenue target of Sf8bn.
Patrick Hasenboehler, an analyst at Sarasin, wrote in a note that it was “overall, a convincing sales statement”.
The results were “particularly positive as the growth of Swiss watch exports to Swatch’s key markets China and Hong Kong were below average from January to November”.
Chief executive Nick Hayek told Le Temps last month that revenue might increase by between 5 percent and 7 percent in 2013. The US market was “doing well” and demand in Europe was holding up “well”, Hayek said. – Dermot Doherty and Simeon Bennett in Geneva for Bloomberg