Swatch CEO Upbeat on 2008, Despite Gold, Currencies
Watchmaker Swatch Group gave an upbeat outlook for 2008 on Friday, helped by the Olympic Games, despite headwinds from currency swings and soaring raw material prices.
"The sharp weakening of foreign currencies, in particular the U.S. dollar, the yen, and to a certain extent the euro, against the Swiss franc, coupled with the marked increases in gold, diamond and raw materials prices, create new challenges for the group in 2008," Swatch Group said in a statement.
The world's largest maker of watches said it would have to implement cost-cutting measures.
But it remained positive about the growth potential in some markets and expects sales growth as well as a rise in profitability in 2008 as it benefits from the Olympic Games in China, where its Omega brand is the official timekeeper.
Swatch Group, which is best known for its colorful plastic watches and also owns higher-end brands such as Breguet and Blancpain, posted an 22 percent rise in 2007 net profit to 1.015 billion Swiss francs ($1.01 billion).
Net profit had been expected to jump to 1.017 billion francs, according to a Reuters survey of seven analysts.
The group also proposed a dividend increase of 21.4 percent per bearer share to 4.25 francs and to 0.85 francs per registered share.
The company has benefited from rising demand for its top-range watches as part of a worldwide boom for luxury goods, including new consumers from China.
The group posted a forecast-beating 18 percent rise in full-year sales to 5.94 billion francs and said it would gain market share and beat its sales and profit record in 2008.