Swatch Group presents strong first-half results

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Sales & profits up but worries about exchange rates on the horizon.

Swatch Group has presented a strong set of half-year results with sales at its watch and jewellery division up 27.4% at constant exchange rates despite what it is calling “capacity bottlenecks”.

Sales at Swatch’s watch and jewellery division hit CHF2.91bn (£2.23bn) in the six months of 2011. Swatch said that gross sales for the group of CHF3.36bn (£2.57bn) exceeded its previously record half year in 2010 by 24.2% at constant rates.

The strongly overvalued Swiss franc led to a negative currency impact on sales of CHF387m (£295.9m) at 2010 rates, but the group still delivered record operating profits of CHF756m (£295.9m) – a boost of more than 20% – with an operating margin of 23.7%, up from 21.8% in 2010.

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Swatch Group said that sales in July have continued to conform to the positive trends experienced in the first half of the year and that the outlook for the second half of the year “remains promising”.

The Swiss watch giant said that it will continue to consolidate its global market presence and invest further in production capacities and staff training in order to maintain its strategy of “healthy and sustainable growth”. However, it admitted that its performance going forward will be hampered by uncurbed speculation in the Swiss franc that will negatively impact sales growth as well as operating profit and net income, but added that this will not stop it from aiming to increase its market share.

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