Swatch Says Full-Year Promising Despite Slowing China Growth

--Swatch posts double-digit growth in first-half profit and sales

--Full-year prospects look promising

--Sales growth robust despite strong Swiss franc and weaker high-end demand in China

 
   By Marta Falconi and John Revill 
 

ZURICH--Swatch Group AG (UHR.VX), the world's biggest watch maker, Tuesday reported a strong rise in first-half profit and sales and said the rest of the year looks promising, despite a strong Swiss franc and weakening demand in the high-end segment in China.

The company behind brands such as Omega, Tissot and the eponymous plastic watches has been riding high on buoyant demand in the Asian country, driven by rising incomes and the growing popularity of Western brands.

But some European luxury goods manufacturers have begun to feel the effects of an increasingly difficult business environment, particularly as economic growth in China is slowing.

Swatch posted first-half net profit of 724 million Swiss francs ($731 million), up 25% from CHF579 million a year earlier, beating expectations. Net sales rose more than 15% compared with a year earlier to CHF3.68 billion.

The company reiterated its goal to reach a record CHF8 billion sales this year, which would represent a 12% rise from last year. Prospects for the second half of 2012 are "promising" despite some currency and macroeconomic woes and "a certain weakening in the high-end segment in parts of Greater China," it said.

U.K.-based Burberry Group PLC (BRBY.LN) recently posted a significant slowdown in sales for the quarter through June, while France's LVMH Moet Hennessy Louis Vuitton SA (MC.FR) had already posted a deceleration in revenue growth in the first quarter.

Swatch shares closed Monday at CHF361.70 for a year-to-date gain of almost 5%.

-Write to Marta Falconi at [e-mail]

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