Positive Forecasts for Swatch
Positive outlook for the second half of 2017 with many new product launches.
Sales performance in Watches & Jewelry was very positive, although it was dampened by the ongoing unfavorable exchange rate situation and lower Production sales to third parties. The entire segment achieved net sales of CHF 3 576 million. Compared to the previous year, this is a decrease of 0.3% at current exchange rates, however, an increase of 1.2% at constant rates. Sales performance in local currency varied, depending on the region. Mainland China recorded significant growth.
Sales in Hong Kong have stabilized. Japan showed a mixed picture. Sales to local consumers were very positive, while sales to Chinese tourists decreased due to the negative currency situation. Swatch Group recorded very positive sales in the Middle East. In Europe, sales of the brands increased compared to the first half of the previous year, this in Great Britain, Spain, Italy, and also again in Switzerland. The North American markets showed growth in local currencies, especially in the Group’s own retail. With conversion of sales at the weak USD rate, no growth remains in CHF.
Wholesale has started to regain trust in many regions, thanks to the good consumer mood and the positive results achieved in the Group’s retail business. Production, which is integrated into the Watches & Jewelry segment, recorded lower capacity utilization than in the prior-year comparative period. Particularly third-party brands are very insecure and delay orders. Conversely, Group brands increased orders compared to the previous year. Production of certain components, particularly watch cases, was again ramped up. Also, integrated gold production, from foundry to production of semi-finished goods, was centralized in one production site in Switzerland, which not only led to synergies but also optimized the entire production flow.
The Electronic Systems segment generated net sales of CHF 133 million in the first half of the year, corresponding to a slight decrease of 2.2%. Sales are very sensitive to the strength of the Swiss franc versus the USD and JPY, which did not favor this industrial area in the first half of the year. It can be stated that industry could not compensate for the Swiss franc shock. The operating profit in the Electronic Systems segment closed at break even.