Sales dropped 11.4 per cent to CHF3.72 billion (AU$4.31 b) for the six months ending 30 June 2016, while net income more than halved from CHF548 million (AU$744 m) to CHF263 million (AU$357 m) over the same period.
“Unfortunately, worldwide turbulence did not decrease in the first half of 2016, characterised to no small extent by the unexpected Brexit decision on 24 June,” a company statement read.
It went on to state: “The exchange rate situation as well as the volatility of the strongly overvalued Swiss franc has not really improved since the euro minimum rate was abolished on 15 January 2015, despite the considerable efforts and interventions of the Swiss National Bank.”
Despite volatility elsewhere in the world, Swatch Group, which owns 18 brands including Swatch, Omega, Tissot and Harry Winston, was buoyed by a “double digit” retail sales increase in China and Hong Kong and Southeast Asia. A downturn in Hong Kong appeared to have “bottomed out”.
Sales in Europe and Switzerland were hampered by restrictions to Chinese and Russian tourism, according to the half-year report, while terrorism in France and Belgium had a further negative impact on overseas buyers.
Watches and jewellery
Swatch’s watches and jewellery segment – including production – recorded a decrease of 11.3 per cent at current exchange rates compared with the same period in 2015.
It was noted, however, the Harry Winston brand achieved comparatively good results.
“Among the brands, Harry Winston increased net sales in the area of high jewellery, thanks to its wider retail network, which now totals 36 salons, and to its extensive range of the most beautiful diamond jewellery and noble watches,” the statement read.
Despite the gloomy start to 2016, Swatch remained upbeat about the rest of the year.
“The outlook for the group, with its unique brand portfolio and its global retail and distribution network, remain good in all regions and segments in local currency,” the statement added. “In the mid to long term, there are many more opportunities than risks.”
Sponsorship of the Olympic Games in Rio de Janeiro, Brazil, was anticipated to give the Omega brand, which is the official timekeeper of the event, a boost worldwide.
Swatch Group is involved in the design, manufacture and sale of finished watches and jewellery. It also supplies watch movements and components to its 18 brands as well as third-party watchmakers.
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