Swiss watch maker Swatch Group (SWGNF.PK,SWGAF.PK) reported Tuesday an 11 percent rise in gross sales for the year 2011 on the strength of Watches & Jewelry and Production segments, despite massive negative currency impact. The company also expects 'good' operating profit and net income.
Biel, Switzerland-based manufacturer of finished watches, jewelry, watch movements and components said its sales reached the seven billion milestone for the first time. The company generated annual gross sales of 7.14 billion Swiss francs, 10.9 percent higher than last year's 6.44 billion francs.
The ongoing overvaluation of the Swiss Franc, particularly against the US Dollar and the Euro, had a negative impact of 696 million francs or 10.8 percent on total sales. At constant rates, gross sales climbed 21.7 percent, despite a difficult economic environment.
The company noted that December 2011 was the strongest month in turnover in its history.
Gross sales in the Watches & Jewelry segment rose 14.1 percent year-over-year to 6.31 billion francs, and sales at constant rates increased 26.1 percent driven by double-digit growth rates for almost all brands in Greater China as well as in all other regions and all price segments.
"Investment in retail activities as well as numerous marketing offensives throughout the world contributed to these gratifying sales figures," the company said in its statement.
Production segment recorded markedly higher performance in the year with an enormous increase in demand for all types of components, resulting in 32.6 percent rise in gross sales to 2.02 billion francs. Despite further expansion of production capacity, there were and still are major production bottlenecks, the company said.
The Electronics Systems segment's sales fell 23.6 percent to 336 million francs mainly due to the effects of the overvalued Swiss Franc against the US Dollar and the downtrend in certain key markets.
Swatch added that it expects good results for operating profit and net income in the year, despite the strongly negative currency impact during the course of the year and its traditionally defensive policy concerning price increases.
Swatch will publish its key figures for the year at the latest on February 23, and the annual report at a media and analysts' conference on March 1.
Regarding the current trading, the company noted that it has recorded positive start in January in all regions and price segments.
"2012 will be a major challenge, however, the Swatch Group is confident of again generating qualitative growth in 2012, despite the ever more challenging comparison basis," the company said.
In Zurich, Swatch shares closed Monday's trading at 363.80 francs, up 3.40 francs or 0.94 percent.
In the U.S., SWGAF.PK settled on Monday at $381, down $0.50 or 0.13 percent, and SWGNF.PK last traded on January 4 at $67.55.
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