Swatch records higher annual results, China weighs

Swatch records higher annual results, China weighs

In the 2022 financial year, revenue increased by 2.5% to 7.45 billion francs and net profit increased by 6.3% to 838 million. The action ends with a jump of 5.1%.

The Swatch watch group recorded higher results for the 2022 financial year, but the owner of the Moonswatch was held back by China where the wave of Covid still weighed on its activities. The optimistic Bienne, however, says he is well positioned to take advantage of the reopening of the Middle Kingdom and reach record figures in 2023.

Over the past financial year, revenue increased by 2.5% to 7.45 billion francs. Excluding currency effects, growth reached 4.6%. The Middle Kingdom affected sales to the tune of 700 million. The fourth quarter suffered in particular from the pandemic in China and in December alone, turnover there fell by 50%.

After the lifting of the Covid-related restriction measures at the end of last year, the owner of the Omega, Longines and Tissot brands, among others, is currently seeing an improvement in business.

“China is recovering very quickly. Over the first 23 days of the current month, the results are higher than the very strong month of January 2022,” a spokesperson for the group told the AWP agency on Tuesday.

“Almost all of our points of sale are open again and welcome a lot of consumers,” said the manager, referring to the Middle Kingdom.

Moonswatch takes off

In terms of profitability, net profit increased by 6.3% to 838 million francs, while operating profit increased by 13.4% to 1.16 billion. The related margin was 15.4%, an improvement of 1.4 percentage points.

The results are however lower than the consensus of the AWP agency. On average, analysts surveyed expected revenue of 7.75 billion and net profit of 852 million.

The dividend will be discussed at the next session of the general meeting.

The Moonswatch watches, qualified as a worldwide success, have strongly contributed to the results: more than a million pieces have been sold, according to the company, which specifies that the enthusiasm remains strong for this timepiece resulting from the collaboration between the brands. Swatch and Omega. The latter as well as the high-end brands Harry Winston, Breguet also stood out positively.

Swatch declares itself well positioned to record a record year in 2023, in particular thanks to the reopening of China and the return of Chinese people to tourist destinations. “This leads to double-digit group sales growth in local currencies,” the spokesperson also told AWP.

Most analysts, while noting that sales have missed the mark, point out that the effect of Covid-19 is only temporary and that business is expected to pick up again in 2023, Beijing’s zero Covid policy does not being more topical.

Investors seemed to be focused on the growth opportunities that the restart of the country led by Xi Jinping suggests. On the stock market, the Swatch bearer share ended up 5.1% at 321.90 francs, in an SLI up 0.19%.

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