Swatch reports 54% plunge in profits

Swatch Group remains upbeat about the second half of the year, despite reporting a plunge in profits and sales in its first-half trading update. The Switzerland-based company, which owns brands such as Calvin Klein, Blancpain, Tissot, Longines, Omega and Breguet, reported a 54% fall in operating profit in the first half of the year to 353 million Swiss francs (£270m). The company says this was down to additional currency shifts, lower production utilisation and the long-term industrial strategy of continued investment in employees, new products and marketing. Sales were down from 4.2bn Swiss francs (£3.2bn) in the January to June period last year to 3.7bn Swiss francs (£2.8bn) this year - a decrease of 11.4% or 12.5% at constant exchange rates. Despite the results, the company is positive for the second half of the year. It said the UK reported a strong start to July in the group’s retail stores, due to the favorable pound sterling. It said there was a “clear improvement” in mainland China with the first three weeks of July showing a very positive development compared with last year, especially in the Luxury and Prestige segment, with brands such as Breguet, Blancpain, Glashütte Original, Omega and Longines performing well. Meanwhile, clear signs of tourism revival in parts of Europe, mainly in Spain and Italy, and Omega’s sponsorship of the upcoming Rio Olympics were cited as positives moving into the second half of the year. A statement from the group read: “Swatch Group anticipates clear growth in local currency in the second half of the year compared with the weaker second half of 2015, and thus an annual result closer or equivalent to the previous year. “The outlook for the Group, with its unique brand portfolio and its global retail and distribution network, remain good in all regions and segments in local currency. In the mid to long term, there are many more opportunities than risks.”