Swatch upbeat about 2017 as China improves

[ZURICH] Swatch Group on Friday painted a brighter outlook for rest of the year as the world's largest watchmaker said conditions for Swiss timepieces in China and Europe were improving.

The maker of Longines, Tissot and Omega watches said it expected "very positive growth in local currency" for the rest of 2017 after net profit rose 7.2 per cent in the first six months of the year.

Net profit attributable to shareholders rose to 269 million Swiss francs (S$385.654 million) from 251 million, but fell short of the 285 million expected by analysts polled by Reuters.

Swatch highlighted "significant growth" in mainland China, one of its most important markets, adding that Hong Kong sales had stabilised after a long decline.

There was also improvement in Europe, a market hit last year by extremist attacks which deterred many visitors from destinations such as Paris.

"The Swatch Group anticipates very positive growth in local currency in the second half of the year," Swatch said in a statement.

"In addition to its already strong own retail business, wholesale should also develop positively, due to the gradual dissolution of uncertainty among individual distributors."

Total Swiss watch exports rose by 5.3 per cent in June while half-year shipments were up 0.1 per cent, Swiss customs office data showed on Thursday.

Swatch said sales of watches and jewellery had been "very positive" in the first half, despite the highly valued Swiss franc taking a bite out of the figures.

Sales fell 0.3 per cent to 3.71 billion francs versus the 3.73 billion forecast by analysts. With currency effects removed sales rose 1.2 per cent.

Swatch Group shares, weakened after Richemont reported disappointing results in May, were indicated nearly 0.5 per cent lower in the premarket at 0622 GMT.

REUTERS