Swatch Group back in the black on sales recovery
Swatch Group had good news on Tuesday as it made a 2021 profit on the back of rising sales. And it expects double-digit local currency sales growth this year too.
It meant the company made a net profit of CHF774 million (€747m/£627m/$845m) last year, after a loss of CHF53 million in 2020. Currency-neutral sales rose almost 30% to CHF7.31 billion.
Net sales rose 30.7%, or 29.6% currency-neutral, to reach CHF7.313 billion. That still doesn’t put its sales back the pre-pandemic levels, however. In 2019, the company's global sales were CHF8.2 billion. However, a double-digit rise this year would either put it close to that figure or exceed it.
Last year, operating profit rose to CHF1.021 billion from CHF52 million. And the company said its operating margin surged to 14% from 0.9% a year ago and was even higher than the pre-pandemic 12.9%.
The Watches & Jewelry segment (excluding Production) had an even stronger operating margin of 17.7% for the entire year and clearly turned in an even better performance as the year progressed as the figure was 18.4% in the second half.
The company, which operates the eponymous Swatch brand, as well as making watch and jewellery brands such as Longines, Balmain, Harry Winston, Tissot and Omega, benefited from a wider recovery in the Swiss watches sector as Covid-linked lockdowns were eased.
That said, it still faces pressures, including market share that’s being lost to luxury rivals such as Rolex and smartwatches like those made — and heavily marketed — by tech giants like Apple.
But Swatch Group was upbeat and said its prediction of double-digit sales growth in the current year will be “ensured by numerous, and in some cases, spectacular new products from the brands in all segments. Omega, as timekeeper for the Olympic Winter Games in Beijing, will be present worldwide in the media in February, and in September, Tissot, as timekeeper for the Asian Games in Hangzhou, will be visible far beyond the Chinese market”.
Additionally, at the end of 2021, order books in the Electronic Systems segment were twice as high as at the end of 2019, which will lead to sales growth there in the current year.
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