Swatch first-half profit de­clines to low­est in seven years

The Pak Banker - - COMPANIES/BOSS -

BERN: Swatch Group AG, the maker of Omega and Tis­sot time­pieces, re­ported its low­est first-half profit in seven years as de­mand cratered in Hong Kong, France and Switzer­land. First-half op­er­at­ing profit de­clined 54 per­cent to 353 mil­lion francs ($359 mil­lion), the Biel, Switzer­land­based com­pany said in a state­ment Thurs­day. The com­pany said last week that earn­ings at that level prob­a­bly fell 50 per­cent to 60 per­cent, send­ing its shares plum­met­ing. The stock ad­vanced 1.8 per­cent in Zurich trad­ing Thurs­day.

Chief Ex­ec­u­tive Of­fi­cer Nick Hayek said July 15 that sales for the year may fall as much as 6 per­cent in Swiss franc terms, aban­don­ing a pre­vi­ous fore­cast for growth. Ter­ror­ist at­tacks in France are keep­ing tourists at bay, dent­ing sales. Swatch re­peated Thurs­day that sec­ond-half re­sults will show im­prove­ment as the com­par­i­son gets eas­ier, adding that ful­lyear re­sults will be close or equiv­a­lent to last year's.

"To achieve last year's re­sults for the full year would re­quire a big­ger mir­a­cle," said Pa­trik Sch­wendi­mann, an an­a­lyst at Zuercher Kan­ton­al­bank in Zurich.

Swiss watch ex­ports de­clined a record 11 per­cent in the first half, led by drops in pre­cious metal time­pieces, the Fed­er­a­tion of the Swiss Watch In­dus­try also said Thurs­day.

Swatch said it's see­ing signs of a re­vival in tourism in Italy, Spain and the U.K. The lat­ter mar­ket was a strong one for the watch­maker in July as the weak pound at­tracted more buy­ers and tourists. The first three weeks of this month showed good growth in main­land China, es­pe­cially for its lux­ury brands Breguet, Blanc­pain and Omega.

"The bullish out­look could be taken neg­a­tively by in­vestors con­cerned about Mr. Hayek's 'de­nial' of the dif­fi­cult sit­u­a­tion the in­dus­try is in," Zuzanna Pusz, an an­a­lyst at Beren­berg, wrote in a note. Hayek has said he wants to avoid cut­ting jobs as it's hard to find qual­i­fied staff when de­mand re­bounds. Swatch said Thurs­day the com­pany sees more op­por­tu­ni­ties than risks in the mid- and long-term.

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