Shares in Swatch Group saw a rise in opening trade on Thursday as the Swiss watchmaker announced that resurgent travel in Asia had significantly bolstered its sales and earnings for the first half of the year. The company also expressed confidence in continued good performance for the remainder of 2021.
At 0723 GMT, shares traded 5.5% higher at CHF286.
Swatch Group, known for its diverse range of watch brands including Swatch, Blancpain, and Omega, reported a net profit increase of over 50% in the first six months, reaching nearly 500 million Swiss francs ($576.3 million.) Sales grew by 18% at constant currency, with the operating margin expanding to 17.1%, according to Swatch.
The easing of travel restrictions in Asia following the decline of the global Covid-19 pandemic played a significant role in the company’s positive performance. Swatch highlighted an anticipated recovery in mainland China, a vital market for the group, as well as increased sales in popular tourist destinations such as Thailand and Macao. Additionally, revenue experienced substantial growth in European markets including Switzerland, France, Spain, and Italy.
The company expects growth to continue throughout the second half of the year, citing new product launches in the lower and mid-range segments.
Despite these positive developments, Swatch emphasized that an unfavorable currency environment remains a concern, resulting in a negative impact on its financials in the millions of francs during the first half.
Industry analysts Luca Solca and Clementine Flinois at Bernstein acknowledged Swatch Group’s improved performance across various aspects, including brand support and cost efficiency. They also noted that the market seems to have overlooked the company’s recent progress.
In conclusion, Swatch Group’s strong first-half sales and earnings are expected to lead to consensus upgrades for the full year.