ZURICH: Swatch Group, the world's biggest watchmaker, reported a steep drop in first half sales and earnings on Monday (Jul 15) as demand for luxury goods in China remained weak, but forecast business would improve significantly later in 2024. The Swiss maker of Tissot, Longines and Omega watches, as well as the eponymous plastic Swatch watches, said net sales at current exchange rates dropped 14.3 per cent to 3.
45 billion Swiss francs (US$3.85 billion) in the January-June period. The company's shares plunged more than 11.
5 per cent, on track for their worst day in more than four years. Sales were well below the 3.75 billion franc consensus forecast gathered by Visible Alpha, with the company also pointing to a negative currency impact of 145 million francs.
Operating profit fell to 204 million francs from 686 million a year earlier, with the operating margin contracting to 5.9 per cent from 17.1 per cent.
Net profit tumbled to 147 million francs from 498 million. "An ugly half year for Swatch Group in all respects," said Vontobel analyst Jean-Philippe Bertschy. The group attributed the lower turnover to a slump in demand for luxury goods in China, with only the Swatch brand bucking the trend with a 10 per cent rise in sales in the country.
China would likely remain challenging for the entire luxury goods industry until the end of 2024, Swatch said, but added that there are currently "excellent opportunities" for the Group's brands in the lower price segment. The company expe.