* FY net profit up to 1.61 bln Sfr vs 1.48 bln in poll
* Says 2013 started well, healthy growth in January
* Purchase of Harry Winston jewellery taps into high-end
* Sees healthy growth potential for watch industry
By Silke Koltrowitz
ZURICH, Feb 4 Swatch Group SA said 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 United States.
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
"The signals from the markets around the world clearly
indicate continued healthy growth potential for the Swiss watch
industry and the Swatch Group," said the group which makes more
than half of its turnover in Asia.
Looking ahead, it said it expected long-term growth in the
Swiss watch industry of 5-10 percent 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.
China has become the main engine of growth for luxury goods
makers thanks to the country's rising purchasing power while
Chinese tourists travelling in Europe have helped make up for
lacklustre demand from local consumers.
Swatch's positive outlook and forecast-beating results
helped lift the stock more than 3 percent, compared with an
unchanged European sector index.
The shares, which have risen more than 12 percent this year
after a 31 percent gain in 2012, were up 2.8 percent at 532
Swiss francs by 1205 GMT.
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.
The acquisition boosts Swatch's presence in the jewellery
market - which is set to enjoy solid growth this year - as well
as in the United States where it was not very present and where
luxury executives see a rebound.
The group underlined its optimism with a 17 percent increase
in its dividend to 6.75 Swiss francs ($7.48) per bearer share
from 5.75 francs in 2011, and 1.35 francs per registered share,
previously 1.15 francs.
"[This is a] Strong set of figures driven by improved
profitability in watches and production. I presume much of that
is down to upgrades in manufacturing, which makes the production
process more efficient," Kepler Capital Markets analyst Jon Cox
Full-year results from Swatch, which also makes Tissot
watches, showed net income rising 26 percent to 1.61 billion
Swiss francs ($1.78 billion), far ahead of expectations
according to analysts polled by Reuters.
The group's operating margin rose to 25.4 percent, versus
23.9 percent a year ago, which Vontobel analyst Rene Weber
contrasted to the decline reported last week by the world's
biggest luxury goods group LVMH.
"This margin increase will stand out in the luxury goods
industry," Weber said in a note, but added he expected no
improvement in margin in 2013 due to the consolidation of the
Harry Winston business.