Annual profits of £761m (CHF 1.12bn) in 2015 might sound impressive but Swatch Group management won’t be impressed with the 21% slide that represents on the previous year.
The group, which owns some 18 brands including Omega, Breguet and Calvin Klein, attributed the fall to “the strong negative impact of foreign exchange losses and the negative development of interest rates”.
Net sales in 2015 – worth CHF 8.45bn (£5.74bn) – dipped by 3%. If the sales figures had been converted using 2014 exchange rates the dip would have been just 0.9% and if calculated in Euros would have actually resulted in a rise of 10.3%. Watch and jewellery sales (including production) at Swatch Group accounted for CHF 8.17bn (£5.55bn).
Total Swiss watch exports (including movements) declined by 3.3% during 2015.
While Swatch Group’s operating margin slid 17% to 17.2%. Operating profit for watches and Jewellery (including production) was slightly healthier at 18.8%.
Despite the negative results group equity increased to CHF 11.2bn with equity ratio reaching 84.7%, signalling strong shareholder financing of assets.
As such Swatch Group announced its intention to buy back shares up to a value of CHF 1bn for either a reduction of capital or to hold in treasury for six years at which point they could be used for reduction of capital or for ” acquisitions, equity-linked transactions, for other purposes or to resell the shares”.
The buy-back will begin on 5 February and last until 4 Feb 2019.
But Swatch Group is predicting a much healthier 2016 with growth of ‘well over 5% for the entire year in local currency’ based on positive year-on-year growth in January, especially in mainland China.