Swatch sees continued growth

Swatch said yesterday it was optimistic about 2013 as it reported higher margins, providing further evidence the luxury goods sector was set to benefit from improved demand in major markets such as China and the US.

The group, which makes colourful plastic watches as well as Omega and Breguet timepieces, is targeting double-digit growth this year after having enjoyed “continued healthy growth in January”.

Looking ahead, it said it expected long-term growth in the Swiss watch industry of 5-10 per cent per year.

Swatch’s comments come after sector peers such as LVMH and Burberry said last month they expected good trading conditions in China, helped by improved consumer confidence after the regime change.

Luxury goods sales at the end of 2012 have been affected by the timing of the Chinese new year which falls in February this year as opposed to January last year, leading to expectations of pent-up demand this month.

Richemont, which makes Cartier watches and Montblanc pens, said sales had ground to a halt in the Asia-Pacific region in the fourth quarter. But industry analysts said they believed the lull was momentary.

Swatch’s positive outlook and forecast-beating results helped lift the stock more than 5 per cent, compared with an unchanged European sector index.

The shares, which have risen more than 12 per cent this year after a 31 per cent gain in 2012, closed over 5 per cent ahead at 543.20 Swiss francs.

Swatch said it expected growth to come as well from the high-end jewellery arm of Harry Winston which it acquired last month and which analysts expect to start lifting sales and profit in second half of this year.

Full-year results from Swatch, which also makes Tissot watches, showed net income rising 26 per cent to 1.61 billion Swiss francs, far ahead of expectations. – (Reuters)