Swatch profits slide 45% in 2016

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Swatch Group, makers of the eponymous wristwatch, said it expects healthy growth in 2017 despite reporting a 45 per cent fall in operating profit for last year and cut to its dividend.

Switzerland’s largest watchmaker signalled it was calling time on the slowdown, reporting “very good growth” particularly in mainland China for its watches and jewelry range, leading to “substantial” improvements in profitability.

“Based on the positive development of the last three months, healthy growth is expected for the year 2017,” it said in a statement announcing its annual results.

The company, which also owns Omega and Longines luxury brands, said operating profits in 2016 were down 44.5 per cent on 2015 at SFr805m (£812m). Sales declined 10.6 per cent to SFr 7.5bn.

The dividend was cut 10 per cent from SFr 7.50 to SFr 6.75

Patrik Schwendimann, an analyst at Zuercher Kantonalbank, said the Swatch chief executive Nick Hayek had a habit of being optimistic at the beginning of the year, but said “there are positive signs that give his optimism some ground.”

Richemont, which makes Cartier and Piaget timepieces, said in January watch sales rebounded in its own store network in the final months of 2016.

The sector was hit last year by slowing Asian sales with Swiss watch exports to Hong Kong, its largest market, down 40 per cent in the year to September according to the Federation of Swiss Watch Industry.

Swiss watch sales in Europe have suffered with lower tourist numbers in the wake of terrorist attacks and the general slowdown in the global economy.

Image via Bloomberg

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