Swatch Caps Tough Year for Swiss Watchmakers With Plunge in Profit -- Update

By Brian Blackstone 

ZURICH-- Swatch Group on Thursday reported a plunge in profit for 2016 and slashed its dividend, underscoring how shaky consumer confidence around the world and weakness in important markets such as Hong Kong have taken their toll on the Swiss watch industry.

The company, known for its inexpensive plastic watches but also owner of luxury brands including Omega, Blancpain and Breguet, did however offer a brighter outlook for the year ahead saying its performance in recent months had improved.

Switzerland's luxury watchmakers endured a tough 2016 as exports plunged in part because of weaker demand from Asia and concerns about terrorism reduced tourism to Europe. However, analysts have flagged a more stable year in 2017 partly thanks to better economic growth.

Swatch's full-year figures reflected the troubles of 2016, with net profit tumbling 47% to 593 million Swiss francs ($597.1 million) on revenue down 11% to 7.55 billion francs. Swatch cut its dividend to 6.75 francs a share from 7.50 francs in 2015.

Shares in the company fell 3% in early trading.

Last year "was not a winning year for Swatch on all the numerical metrics," said analysts at Bernstein, noting that Swatch undershot the earnings-per-share consensus by about 12%.

Still, the company forecasts "healthy growth" for 2017 based on a positive end to last year.

"The months of November, December and January showed, particularly in mainland China, very good growth in the watches and jewelry segment, with a substantial improvement in operating margin," Swatch said.

Write to Brian Blackstone at [e-mail]

(END) Dow Jones Newswires

February 02, 2017 03:54 ET (08:54 GMT)

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