Swatch enjoys another record year

The inexpensive Swatch is one of the company's leading brands (imagepoint)

The world's largest watchmaking company, Swatch, has reported record results for 2006, with a net income rise of 34 per cent to SFr830 million ($686 million).

The Swiss company said in a statement that sales in its watch and jewellery division soared last year, and that it was off to an “excellent start” in 2007.

The results soundly beat expectations. Swatch reported an above-average increase in operating profit to SFr973 million (previous year CHF 735 million).

A poll of analysts by the Reuters news agency had forecast a 27 per cent increase in full-year net profit to SFr788 million.

And with an increase of 12.3 per cent, gross sales rose above SFr5 billion for the first time.

“Swatch did it again,” commented René Weber, an analyst at Bank Vontobel in Zurich. “They are profiting from strong demand for luxury goods in general and keep delivering very impressive figures.”

The Biel-based company, which includes such luxury brands as Blancpain, Omega and Longines and the inexpensive wristwatch, Swatch, also reported the highest sales growth, 13.8 per cent, in its core watches and jewellery business.

Demand for luxury items soared in 2006, particularly in Asia, as global markets rallied, making the rich richer and sparking interest in high-priced jewellery and hand-crafted watches.

Swatch announced a dividend increase of 40 per cent per bearer share to SFr 3.50 from SFr2.50, and a new share buyback program for a total value of SFr400 million.

The company said that price increases would have their full impact on 2007 results, compensating for some rising costs, after negative currency effects, high gold prices and a luxury tax introduced in China one year ago put pressure on margins.

swissinfo with agencies

In brief

The Swatch Group is the world’s largest manufacturer and distributor of finished watches, and also produces watch movements and electrical systems.

It owns 18 major watch brands and employs more than 20,000 people in over 50 countries.

At the top end of the market, the brands include Breguet, Blancpain and Omega.

Total Swiss watchmaking exports reached a record SFr13.7 billion last year, 10.9% up on 2005.