NEW YORK, United States — Swatch Group AG forecast a strong end to the year after first-half profit beat analysts’ estimates on higher prices in Europe to compensate for the strength of the Swiss franc.
Sales growth accelerated in May and June and consumer demand for Swiss watches remains high, the Biel, Switzerland- based company, which makes Omega and Longines timepieces, said in a statement Thursday.
“Despite the Swiss franc dilemma, group management expects a strong second half,” the company said. “Further positive growth in local currency is expected.”
First-half operating profit declined 8.3 percent to 761 million francs ($798 million) as the franc’s surge and weak demand in Hong Kong eroded sales. The results beat analysts’ estimates for 741.7 million francs. In the euro region, revenue increased by a double-digit percentage in euro terms, Swatch said, without being more specific.
Swiss watchmakers have made price adjustments around the world after the Swiss National Bank in January stopped trying to limit gains in the franc, sending the currency surging to record levels against the euro. The country’s watch exports declined in May by the most since 2009, with a 34 percent plunge to Hong Kong, where weak demand has persisted since political protests broke out last year.
The company said revenue in the rest of the year will be boosted by new products such as a namesake timepiece that can make mobile payments and a James Bond model of Omega watches.
By Corinne Gretler, Thomas Mulier; editors: Matthew Boyle, Phil Serafino, Paul Jarvis.