Swatch records higher annual results, China weighs

Swatch slowed by China in the first half

The turnover increased by 7.4% to 3.61 billion francs, indicates the company. Last year, growth exceeded 30%.

Swatch Group confirmed on Thursday the marked slowdown expected in its growth over the first six months of the year. The Biel-based watchmaker suffered in particular from a shortfall linked to the imposed closures of stores in China as part of the zero Covid policy. The impact of the war in Ukraine, on the other hand, is considered negligible.

Management confirms that it is aiming for growth of at least 10% in 2022, at constant exchange rates.

Turnover fell by 6.5% or 7.4% excluding currency effects to 3.61 billion francs, the company indicates in its mid-term report. The shortfall attributed to the Chinese health straitjacket is estimated at 400 million. Last year, growth exceeded 30%.

In terms of profitability, the group, which notably owns the Omega, Longines and Swatch brands, saw its operating profit (Ebit) rebound by a quarter to 503 million, the related margin shrinking by almost a percentage point to 8.9%. Net profit for its part reached 320 million, up 18.5% compared to the first half of 2021.

The performance corresponds more or less to the expectations of the analysts consulted by AWP. The consensus was a little lower for revenue, a little higher for profit.

The recovery in profitability was largely fueled by the main Watches and Jewelry segment, whose operating margin swelled by 1.5 pp to 15.7%. The modest Electronic Systems division posted a spectacular rebound of 11.8 pp, to 13.8%, for a related contribution increased from 3 to 25 million.

The achievement of growth ambitions for the second half of the year should be fueled primarily by the Americas, Asia and mainland China.

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