The world's biggest watchmaker Swatch Group said it was confident about the second half of the year after its first-half net profit shrugged off a crackdown on traditional gift-giving in China to rise more than expected. Net profit was up 6.1 percent to 768 million Swiss francs ($821.2 million), ahead of a 728 million estimate in a Reuters poll. Gross sales increased a slightly better-than-expected 8.7 percent to 4.181 billion francs.
During the first half of the year, watchmakers have been grappling with double-digit percentage declines in Swiss watch exports to Greater China, which absorbed about a quarter of the timepieces that left Switzerland between January and June.
"The outlook for the Group remains very promising, and a strong second half-year is expected," the maker of Omega, Longines and Swatch watches said in a statement on July 23.
French luxury goods maker Hermes said recently the market for its timepieces in China was suffering from a crackdown on the tradition of gift-giving to party officials and business leaders to facilitate transactions.
Swatch's operating margin declined to 22.7 percent from 24.5 percent a year ago due to integration costs for jewellery maker Harry Winston that Swatch bought for $1 billion this year and higher marketing expenses.
Shares in Swatch have fallen some 12 percent from May's all-time high of 602 Swiss francs as Chief Executive Nick Hayek flagged the first half would be weak. Peer Richemont, which also hit a peak in May, has only shed 5 percent since.
They trade at about 15.1 times forward earnings, according to Reuters data, at a discount to Richemont at 16.8 times and LVMH at 16.9 times.