Swatch: the slowdown in China do not have to worry too much
Swiss watchmaker Swatch Group (Swatch Group) prove their own performance, decreased demand for luxury goods concern is misplaced. The company realized a 25% increase in the profits, and said the outlook for the second half of “optimistic”.
Asia’s economic prosperity has created a number of new rich people, and Swatch in 2011, has been able to achieve the best ever performance, the strong demand of such groups is one of the main driving factor.
Although Swatch pointed out that “part of the Greater China region, high-end business to show some weakness, but it said, thanks to the expansion of the distribution and retail network, combined with its Omega (Omega), Breguet (Breguet), etc. the brand’s outstanding performance in the six months ended June, the company’s revenue grew 14 percent to 3.85 billion Swiss francs ($ 3.87 billion).
Therefore, the company reiterated its annual sales target of 8 billion Swiss francs, however, it is also aware of the risk of euro crisis has not yet lifted, and the Swiss franc strengthened to bring.
Although the price of gold and diamonds (the raw materials needed) for high-end watchmakers continue to rise, but due to improved operating efficiency, Swatch’s operating profit margin remained growth. Affected the net income of 579 million Swiss francs from a year earlier to 724 million Swiss francs.
Jon Cox (Jon Cox) said, an analyst at Kepler Capital Market (Kepler Capital Markets), Swatch’s performance “very strong”, he also pointed out that profit margins still further room for improvement.
He said: “Swatch has said that in terms of price, they need to remain competitive, such a view, they are unlikely to raise prices, but in view of the company is still expanding its own distribution network, so the next few years they should be able to continue to maintain current profit margins, or even improved. ”
As usual, the the Swatch main source of profit is the company’s watches and jewelry business, this business’s operating profit increased by 15.6%. The increase in operating profit of the sale of spare parts to smaller independent Swiss watch company in the manufacturing sector is even greater, up to 49%.
Through its subsidiary, ETA and Nivarox Swatch actually become the exclusive supplier of the movement, and calibration devices. Swatch has always been to seek the permission of the Swiss competition authorities hope to reduce the number of such components to other watchmakers, because in its view, these watchmakers Swatch as a “supermarket” to use, rather than think of ways to improve its ability to create their own these parts.
Although competition authorities have allowed the Swatch moderate this year to cut supply, but Swatch restrict supply in the long period of time, and it is allowed to specific cuts extent of regulatory authorities is not yet made a final decision on. The company said on Tuesday it expected a final decision will be made before the end of this year.
Swatch shares in Zurich trading, its shares rose 2.3 percent to 370.00 francs.
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