* Gross sales up 9.1 pct to 8.82 bln Sfr, meets f'casts
* Says gained market share, sees double-digit 2014 growth
* Expects good 2013 net and operating profit
* CEO sees improvement in high-end segment in China
* Shares up more than 3 pct
(Adds CEO and analyst comments, updates shares)
By Silke Koltrowitz
ZURICH, Jan 10 Swatch Group SA, the
world's biggest watch maker, said it expects double-digit sales
growth this year on the back of stronger demand in China, easing
concerns of a downturn in this key export market.
Swiss watchmakers sold less in China last year after the
government cracked down on illegitimate gift-giving of luxury
items, but Swatch - whose brands range from the cheap plastic
watches which gave the group its name to pricey Omega and
Breguet timepieces - has fared better than rivals.
This reflects the fact that its mid-market Tissot and
Longines brands, which do not cost enough to be considered
possible bribes, sell well to China's rising middle classes.
"Swatch Group will have double-digit growth (next year) even
if mainland China is only growing single-digit. We are strong in
all regions of the world," Chief Executive Nick Hayek told
Reuters in a telephone interview on Friday.
He said the company, whose shares rose more than 3 percent,
was seeing good growth in mainland China in the entry and
mid-price segment, but also an improvement in the high-end
category as growth at its main brand, Omega, was about to turn
"There are still some problems in the luxury segment in
mainland China ... customers and retailers are uncertain what to
buy. There was a psychological shock, but the situation is
normalising," Hayek said.
However the CEO said Swatch did not wish to become a big
player in the new breed of "smart" watches being touted by tech
companies such as Sony, Samsung and
Qualcomm and which can replicate smartphones in making
calls, accessing the web and running apps.
"We have all the knowhow but we do not want to build up
stock of technology bombs people won't want to buy," Hayek said.
Swatch also posted a 9.1 percent rise in gross sales at
constant currencies to 8.817 billion Swiss francs ($9.7 billion)
last year, just short of estimates for 8.84 billion in a Reuters
This compares with a 1.7 percent rise in total Swiss watch
exports in the 11 months through November, a sign Swatch gained
market share. Swiss watch exports to Hong Kong and China, which
absorbed a quarter of total timepiece exports, fell 6 and 15
Analyst Luca Solca at brokerage Exane BNP Paribas said
Swatch's positive outlook for 2014 was important as it helped
ease investors anxiety on luxury demand.
Hayek said 2 to 3 percentage points of the more than 10
percent growth in the core watch and jewellery segment was
generated by jeweller Harry Winston, which Swatch bought last
year. The acquisition is seen diluting the group's full-year
Hayek said the company would have a "very good" net profit
in 2013, even without the 402 million francs in damages received
from U.S. jewellery Tiffany linked to the breakup of a
joint venture between the two groups.
He said the group's launch in Switzerland of a mechanical
watch at 150 francs, the Swatch Sistem51, was a huge success,
even though the international launch had to be postponed until
February or March due to capacity constraints.
Swatch shares rose 3.5 percent at 1046 GMT, outperforming a
1 percent rise in the European sector index and a 3.1
percent firmer rival Richemont.
Zurich-based traders said this was also due to
short-covering after the shares lost almost 7 percent since the
beginning of the year. Despite an above-average 28 percent rise
last year, they still trade at a small discount to Richemont.
Citi analyst Thomas Chauvet said he appreciated Swatch's
dominant market position and broad brand portfolio, but
preferred Richemont's superior earnings growth and pricing power
thanks to its high-end brands and its more balanced split
between watch and jewellery activities.
Swatch is expected to post full-year earnings in early
February, while Richemont will give an update on Jan. 20.
($1 = 0.9092 Swiss francs)
(Additional reporting by Rupert Pretterklieber. Editing by Matt
Driskill and David Holmes)