BIEL, Switzerland — Swatch Group AG, the biggest maker of Swiss watches, reported a 17 percent increase in 2013 earnings as it won compensation from Tiffany & Co. in a legal battle over a failed alliance.

Operating income rose to 2.31 billion Swiss francs ($2.6 billion), the Biel, Switzerland-based company said today in a statement. That beat the 2.07 billion-franc average estimate of 12 analysts surveyed by Bloomberg. Tiffany paid more than 400 million francs in compensation, Swatch said.

Chief Executive Officer Nick Hayek told Bloomberg Jan. 10 that sales could rise by a “double-digit” percentage figure in 2014 as revenue from China picks up, fueled by mid- and low- price brands, and a possible improvement in the luxury segment. He said exchange rates are his “only real headache.”

Swatch said it expects “healthy growth” this year after “very good” watch and jewelry sales in January.

The weakness of currencies against the Swiss franc and a crackdown on extravagant gifts in China has weighed on the luxury watch market. Exchange-rate swings cut more than 100 million francs from second-half sales, Swatch reported earlier.

By  Morgane Lapeyre; Editors: Thomas Mulier, Kim McLaughlin.