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Industryweek 8212 Swatch

Swatch Sees 2014 Net Profit Plunge by a Quarter

Feb. 5, 2015
The news was not all bad though. Despite currency pressures, Swatch's sales swelled 4.6% to a record $9.95 billion.

ZURICH - The world's biggest watch group Swatch posted Thursday a 2014 net profit down 26.6% following massive investments, and said it was bracing for a 2015 marked by an overvalued Swiss franc.

Last year, the Swiss watchmaker saw its net profit plummet to 1.4 billion Swiss francs ($1.5 billion, 1.3 billion euros), a drop of more than a quarter which marked its weakest result in five years.

Its operating profit also slumped 24.3% to 1.7 billion Swiss francs.

Following the news, Swatch saw its share price drop 4.59% to 83.85 francs a piece in mid-morning trading, as the Swiss stock exchange's main SMI index slipped 0.79 percent.

The news was not all bad though. Despite currency pressures, Swatch's sales swelled 4.6% to a record 9.2 billion Swiss francs ($9.95 billion, 8.76 billion euros).

Analysts polled by the AWP news wire had expected the company to post a higher net profit, of 1.5 billion francs, but Swatch's sales figure narrowly beat expectations of 9.1 billion francs.

Swatch, which saw its share price plunge more than 16% on the day of the central bank announcement, said Wednesday the bank's move already begun taking its toll on the 2015 results, although it stressed its flexibility and ability to withstand currency pressures.

"With its 20 brands, its own production and its worldwide distribution network, the group is in a very strong position," the company said, pointing out that Harry Winston booked its costs in the United States and Rivoli in the Middle East in local currencies, which would "absorb part of the negative effect of the overvalued Swiss franc." 

Swatch also confirmed that some of its brands would raise prices by as much as seven percent in some markets to "compensate for the very unfavorable currency situation."

Despite the currency turbulence, the company said its board would propose maintaining a high dividend of 7.50 Swiss francs per bearer share and 1.50 francs per registered share.

Copyright Agence France-Presse, 2015

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