Swatch 2012 Net Up 26%; Growth Expected to Continue This Year

By John Revill

ZURICH--Swatch Group AG (UHR.VX), the world's largest watchmaker, Monday reported a 26% increase in full-year net income in a "nervous economic environment," but said 2013 has begun well with healthy growth in January.

The Swiss owner of brands including Omega, Tissot and Longines said its annual profit grew last year by a quarter from 2011, to 1.61 billion Swiss francs ($1.77 billion).

The performance beat forecasts of CHF1.49 billion.

"The signals from the markets around the world clearly indicate continued healthy growth potential for the Swiss watch industry and the Swatch Group," Swatch said in a statement. "Against this backdrop, there is a realistic prospect of long-term growth in the Swiss watch industry of 5% to 10% per year," it said.

Like many other luxury companies, Swatch has been relatively unscathed by the shaky global economy, which has humbled other industries.

Sales of watches have been buoyed by strong growth in China, where luxury brands are opening luxurious boutiques to boost sales and enhance their reputation, as well as by Asian tourists buying souvenirs on European vacations.

Signs of a weakness, however, have recently emerged, with watch exports increasing at lower rates in recent months as China - the world's third largest market for Swiss watches - slows down.

The growth in exports of Swiss timepieces to China slowed to 4.4% in the first 11 months of 2012, according to figures from the Federations of the Swiss Watch Industry, down from a 49% rise in 2011.

Rival watchmaker Compagnie Financerie Richemont SA (CFR.VX) said its sales growth slowed during its third quarter, while Tiffany & Co. reported lower than expected sales for the two months to Dec. 31.

Last month Swatch, best known for its eponymous plastic watches, reported annual sales had risen 14% to CHF8.14 billion.

The company's shares closed Friday at CHF517.50, valuing it at CHF27.02 billion.

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