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Swatch Group Profit Grows 67 Percent in the First Half of 2018

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The situation of the Swiss watch industry seems to rebound post multiyear dooms. Swatch Group reported Wednesday a 66.5 percent increase in net income accounted for the first half of 2018. The Group credited the escalation to demand boost in Asian and American regions along with the quest for authentic products among millennial.

“The month of July continues the very positive trend. The second half of the year offers excellent opportunities for continued strong growth and further expansion of market share,” the company said in a statement.

The owner of 18 legendary watch brands comprising of Breguet, Harry Winston, Blancpain, Omega, Longines and Tissot, Swatch Group is suffering a tough competition from Apple Watch and Android watches. In fact, as per market research firm Canalys, people purchased more Apple Watch than combined Swiss timepieces during the holiday season, that is, fourth quarter of 2017.

The Return of Swatch Group

This year, Swatch Group’s first-half performance is strikingly impressive compared to previous years’ annual results. The leading watchmaker reported “annual net income” of CHF 593 million (Swiss Franc) and CHF 755 million during 2016 and 2017 respectively.

In contrast, the net profit accelerated by 66.5 percent from CHF 281 million ($280.24 million) to CHF 468 million ($467.44 million) in the first-half of 2017 and 2018, respectively. At the same time, the account book reflected the net margin of 11 percent, against the last year’s 7.6 percent.

In the era of “I watch time in my Smartphone”, the leading Swiss timepiece maker also posted record half-year sales in its 250-year old history. The net sales jumped by 14.7 percent to CHF 4,266 million ($4,254.51 million) in the first semester of 2018 from CHF 3,718 million ($3,707.99 million) credited during the same period last year.

Similarly, the operating margin progressed from 10 percent to 14.7 percent in a year difference, along with 69.5 percent increment in operating result achieving CHF 629 million ($627.31 million) in 2018 first-half.

Nick Hayek Jr. CEO pointed out that the entire portfolio of Swatch Group, spanning across all price segments, is on the rise this year. The collection comprises low-end watches that usually run on batteries and luxury watches which are typically mechanical, powered by the motion of the wearer’s wrist. The consumer trend is more inclined towards non-battery watches.

Meanwhile, in view of the strong first-half performance of 2018, the company announced to launch plenty of luxury timepieces in the second half, design separate identity for each brand and enable consumer access to production facilities of the individual brands in a beautiful manner.

Swiss Watch Industry Progressing

The Swiss watch industry growth rate is trending in 2018 post a drastic bad show throughout the previous year. According to Federation of the Swiss Watch Industry report, the hub of luxury watchmakers is growing because of the contributions from Hong Kong, USA, and China. In May 2018, the Swiss wristwatch volumes gained 5.6 percent to CHF 1,702.5 million against May 2017. Overall the Swiss watch market is growing at a rate of 8.9 percent presently.

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