The Swatch Group exceeds expectations

Nick Hayek is confident for the months to come. (Denis Balibouse / Reuters)

The luxury watch industry has performed very well over the last few months. The half year results of the Swatch Group have also been positive. The watch group was able to increase its sales over the last six months by 14.7% to 4.3 billion francs. At constant exchange rate, the most was 12.6%. In turn, it should have gained market share, all the more so as the increase in watch exports in the first five months of the current year (the June figures are not still available) was about 10%. According to the press release, all market and price segments recorded faster growth. This has led to a sharp increase in production, with capacity already achieved in some areas. Sales in Asia and America have risen sharply in recent months. Sales volumes increased at double digits in both regions. The domestic market of Switzerland is also well developed.

Above all, the increase in profits was impressive: the operating profit of the Swatch Group rose by 70% to CHF 629 million in the first half of 2010. The EBIT margin rose by 10% the previous year at 14%. Overall, the group outperformed most analysts.

However, the Group also benefited from the relatively weak base of the previous year, which it has significantly outperformed. For example, Swatch Group's sales in the first half of 2017 were more or less stagnant and the production division was losing money at that time. While the luxury sector had already begun to recover in the second half of 2016, the Swatch Group has only recovered about a year later, in the second half of 2017. For the coming months the basis of comparison should be less favorable.

At the same time, the optimistic Swatch Group is confident for the future once again. In July, the positive trend continued and the second half of the year offers great opportunities to continue its strong growth and expansion of market shares, according to the press release. According to earlier data, Swatch Group CEO Nick Hayek expects high single digit growth for the current year (excluding currency effects).