Swatch says first-half profit falls nearly 20%, outlook upbeat

[ZURICH] Swiss watchmaker Swatch Group said on Thursday first-half net profit fell nearly 20 per cent on a strong franc and negative interest rates, but was upbeat in its full-year outlook.

Switzerland's export-reliant economy is hamstrung by its strong currency, which is particularly painful for firms such as Swatch which produce almost exclusively in the alpine nation.

The Biel, Switzerland-based firm said net profit for the six months stood at 548 million Swiss francs (S$786.2 million), down from 680 million francs a year-ago.

Sales rose 2.2 per cent to 4.192 billion francs, hit by translating foreign sales back into Swiss francs, meaning Swatch sold more but earned less.

The firm said its strategy remained to manufacture in Switzerland, to gain market share, and to expand its retail network. It signalled it wouldn't hike prices swiftly in order to protect profits. "The group will maintain its long-term strategy of defensive price adjustment policy over short-term profit," Swatch said in a statement.

It said its outlook in all regions and segments remained "very good." "Despite the Swiss franc dilemma, group management expects a strong second half 2015," it added.

Swatch head Nick Hayek has been outspoken about the Swiss National Bank (SNB), which in January unexpectedly dropped a cap on the franc's value versus the euro, and has called for changes at the central bank.

REUTERS