Swatch profits go backwards as Hong Kong protests bite

Swiss watchmaker Swatch Group said Thursday
profits dwindled last year as sales in one of its biggest markets Hong Kong
took a beating amid months of sometimes violent pro democracy protests.

Swatch, which is best known for its brightly coloured plastic-cased watches
but also owns several luxury brands including Breguet and Omega, posted a 2019
net profit of 748 million Swiss francs ($770 million, 699 million euros),
marking a decline of 13.7 percent from 2018.

The company’s global sales meanwhile shrank 2.7 percent year-on-year to 8.2
billion Swiss francs, it said in a statement.

While sales were in line with expectations, the net profit figure was well
below the 801 million francs analysts polled by Swiss financial news agency
AWP had anticipated.

Swatch said results had been hit by a range of “political uncertainties”,
while a “negative currency situation” in which the Swiss franc strengthened
against a range of currencies had made a 76-million-franc dent in its sales.

But it was especially the situation in Hong Kong that had taken a toll, the
company said.

The drop in sales in the former British colony, where Swatch operates more
than 90 retail stores, amounted to around 200 million francs in the second
half of 2019 alone, it said.

Excluding Hong Kong, the company said its overall sales figure actually
grew by five percent during the second half of the year.

Looking forward, Swatch said it expected to see healthy growth across all
markets, except Hong Kong.

The company meanwhile did not mention the situation in China, one of its
biggest markets, which is currently paralysed by the outbreak of the deadly
novel coronavirus.

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Following publication of the results, Swatch saw its share price tumble
3.86 percent to 244.10 Swiss francs a piece in late morning trading, as the
Swiss stock exchange’s main SMI index slipped 0.52 percent.

Swatch was not the only Swiss watchmaker hit by the situation in Hong Kong
last year.

On Tuesday, the Swiss watch industry federation said Swiss watch exports
overall to Hong Kong had fallen 11.4 percent in 2019.(AFP)


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