Half-Year Report 2017

21 July 2017

Biel / Bienne (Switzerland), 21 July 2017 – Half-Year Report 2017

Group net sales, +1.2% at constant exchange rates, of CHF 3 759 million, or CHF 3 705 million, -0.3% at current exchange rates.
Sales growth of +2.9% at constant rates in the Watches & Jewelry segment (excluding Production). Sales for the whole segment, including Production +1.2%, adversely affected by low Production sales to third parties.
Operating margin in the Watches & Jewelry segment (excluding Production) increases by almost 25%, from 10.7% to 13.2%, despite negative currency impact. The Watches & Jewelry segment, including Production, achieved an operating margin of 11.8% (previous year: 11.2%).
Operating result increases by 5.1% to CHF 371 million, despite retention of production capacities for third parties and workforce. Operating margin grows from 9.5% in the previous year to 10.0%.
Net income increases by 6.8% to CHF 281 million with a net margin of 7.6%
(previous year: 7.1%).
Accelerated growth of all brands in local currency in June and the first weeks of July, most pronounced in the Prestige and Luxury segment. The retained production capacities allow quick response to the positive development.
Strong growth in local currency in the Group’s own retail network.
Positive outlook for the second half of 2017 with many new product launches. Good development in Production, which will mainly profit from the growth of the own brands, not only in value but also in volumes

Outlook second half-year 2017

The Swatch Group anticipates very positive growth in local currency in the second half of the year. In addition to its already strong own retail business, wholesale should also develop positively, due to the gradual dissolution of uncertainty among individual distributors. In addition, further growth will generate improved capacity utilization in all production areas.

Omega and the IOC have extended their timekeeping contract for the Olympic Games by an additional 10 years, up to and including the Olympic Games 2032, so that Omega’s term as official timekeeper of the Olympic Games will now total 100 years. In the second half of the year, Omega will launch new products such as the Seamaster Planet Ocean Big Blue, the Speedmaster Racing Co-Axial Chronometer and the Speedmaster 38 mm Collection onto the market. Blancpain with the new Bathyscaphe 38 mm and the Villeret 6104 ladies’ watch, as well as Breguet with the Tradition Dame and the Classique Phase de Lune will support growth. Together with the new Harry Winston collections, the entire Prestige and Luxury brand sector will further accelerate growth in the second half of the year. Longines will cause a sensation and add further momentum with the Conquest V.H.P. (very high precision quartz movement with an almost infinite calender), as well as Tissot, with the launch of the Chrono XL NBA and Every Time Swissmatic. This Tuesday, Swatch launched the unique Swatch Pay with its full credit card function in Shanghai, in partnership with UnionPay and 11 Chinese banks.

Incoming orders have further increased in the last months in the technology companies, thanks to a significant technological advantage in the area of Dual Frequency RFID technology (NFC and UHF), the smallest integrated circuits with minimum power consumption (lowest power ICs), and the new Real Time Clock (RTC) modules.