Swatch Group said on Thursday that it still expects 2009 revenue to rise modestly, despite posting weaker-than-expected full-year sales, as demand picks up in the second half. Gross sales at the world's largest watchmaker rose 4.3 percent to 6.0 billion Swiss francs ($5.2 billion), below the average estimate of 6.1 billion francs in a Reuters poll of 11 analysts.
Sales increased nearly 14 percent in the first half of the year. "Figures are below consensus. I expect (the company) to lose half of yesterday's share price gain of 6 percent," said an equity market advisor at Julius Baer. Swatch Group's outlook was more upbeat than that of rival Richemont, which said it saw no signs of a recovery after its third-quarter sales missed forecasts. Tiffany & Co also cut its profit forecast. Shares in Swatch Group, which lost more than one-half of their value in 2008, had fallen 3 percent to 131.40 francs by 0856 GMT, underperforming a 0.8 percent fall in the Dow Jones personal and household goods index.
At current exchange rates, the rise in gross sales was just 0.4 percent, as the Swiss currency strengthened over the year. Swatch Group said it faced a "manageable recession" as demand was likely to be weak in the first three to four months, but it expected sales to rise slightly in 2009 as consumption picks up in the second half of the year. Analyst Jon Cox at Kepler Capital Markets said their outlook was rather optimistic.
"The figures are worse than expected and are at the lower end of the consensus. We assumed that there would be a downturn, but maybe this is happening faster than we had expected," Cox said.
Swatch Group is best known for its colourful plastic Swatch watches and also owns such high-end brands as Breguet, Blancpain and Omega. The company said most of its brands had been hit by waning demand at the end of 2008. "Even the luxury brands could not entirely escape this unfavourable trend," the group said.
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