Press
release
Press Release
Swatch
Group: Key Figures 2004
Biel, March
23, 2005
• Marked
increase of 9.6% in operating result from 15.0% in previous year to 15.7%
• Net income 2004 of CHF 512 million (+ 4.1%) despite adverse currency
movements of CHF 33 million
• Dividend increase of + 21% i.e., CHF 1.75 (previous year CHF 1.45) per
bearer share and CHF 0.35 (previous year CHF 0.29) per registered share
• Share buyback program for a volume of CHF 250 million via the second
trading line
• Very positive, encouraging start to 2005 with record sales and results
for the months of January and February – the highest since the inception
of the Group
Following
the publication of sales figures on February 2, 2005, we now present the
consolidated key figures for the Group:
Overview Group
CHF million |
2004 |
2003* |
Change in % |
|
|
|
at constant
exch. rates |
currency
effect |
at current
exch. rates |
Sales |
4.142 |
3.966 |
+6.2% |
-1.5% |
+4.7 % |
Operating result before depreciation
& amortization (EBITDA)
- as % of sales
|
869
20.9%
|
805
20.3 %
|
|
|
+8.0 % |
Operating result (EBIT)
- as % of sales
|
651
15.7% |
594
15.0 % |
|
|
+9.6 % |
Net incom
- as % of sales |
512
12.3% |
492
12.4 % |
|
|
+4.1 % |
Shareholders’ equity
- as % of balance sheet total
|
4.261
70.9% |
4.006
71.3 % |
|
|
+6.4% |
Average return on equity (ROE) |
12.4% |
13.0 % |
|
|
|
*After restatement related to the accounting treatment
of Olympic Games activity and key money for retail shops in various
locations, |
Distribution
of profits
At its meeting on March 22, 2005, the Board of Directors proposed a dividend
increase of 21% to CHF 1.75 per bearer share (previous year CHF 1.45)
and CHF 0.35 per registered share (previous year CHF 0.29) for approval
at the annual general meeting on May 18, 2005.
In addition, shares in the amount of CHF 250 million will be bought back
via a second trading line.
The exact date for the resumption of the share buyback program will be
announced in a separate stock exchange notification.
With these two pro-shareholder moves the Group is clearly demonstrating
its intention to repay to shareholders any funds which are surplus to
operating requirements.
Watches
CHF million |
2004 |
2003 |
% Change |
|
|
|
at constant
exch. rates |
currency
effect |
at current
exch. rates |
Sales |
3.135 |
2.921 |
+ 9.1% |
- 1.8 % |
+7.3 % |
Operating result before depreciation
& amortization (EBITDA)
- as % of sales
|
598
19.1%
|
558
19.1 %
|
|
|
+7.2 % |
Operating result (EBIT)
- as % of sales
|
555
17.7% |
516
17.7% |
|
|
+7.6 % |
Growth in
the Watch segment showed another above-average increase of +9.1% in local
currencies and +7.3% in Swiss francs.
The pace of growth in the second half of the year did not quite sustain
the performance of the first six months, due particularly to major negative
currency effects and a significantly higher comparison base.
Despite the adverse currency impact and marketing investments in connection
with the Olympic Games, the Group succeeded in maintaining the operating
margin at a high level. This is also related to the above-average growth
in the luxury watch segment where margins were highest.
The Group aims to raise the operating margin further, specifically through
a continued shift in the product mix towards the luxury goods segment.
However, the other watch segments all continue to exhibit sales and earnings
potential.
Given the strong presence of the Group and its watch brands in growth
markets and the unbroken buoyancy of demand for watches in all segments,
the Board of Directors and Executive Group Management Board are very confident
for the current year and for the future in general.
Watches,
watch movements and component production
CHF million |
2004 |
2003 |
% Change
|
|
|
|
at constant
exch. rates |
currency
effect |
at current
exch. rates |
|
|
|
|
|
|
Gross sales
- third party
- Group
- total
|
514
770
1.284
|
562
677
1.239
|
+4.1%
|
-0.5%
|
+3.6%
|
Operating result before depreciation & amortization
(EBITDA)
- As a percentage of gross sales |
166
12.9%
|
152
12.3%
|
|
|
+9.2%
|
Operating result(EBIT)
- As a percentage of gross sales |
50
3.9%
|
33
2.7%
|
|
|
+51.1%
|
|
Following
the difficult trend in the first half of the year 2004, this segment expected
a rebound in the second half, which materialized very impressively.
Both sales and profitability were largely on target in the second half.
At 3.9%, the operating margin still has room for improvement, which the
Group will seek to drive forward vigorously with further programs to enhance
efficiency.
As in the Watch segment, the positive development of the product mix will
help to gradually raise productivity on a sustained basis in the watches,
watch movements and component production segment as well.
The current level of orders received at the individual production companies
looks very promising and a clear improvement in the trend is noticeable.
Electronic
systems
CHF million |
2004 |
2003 |
% Change
|
|
|
|
at constant
exch. rates |
currency
effect |
at current
exch. rates |
|
|
|
|
|
|
Gross sales
- third party
- Group
- total
|
494
49
543
|
468
43
511
|
|
-0.2%
|
+6.3%
|
Operating result before depreciation & amortization
(EBITDA)
- As a percentage of gross sales |
125
23.0%
|
109
21.3%
|
|
|
+14.7%
|
Operating result(EBIT)
- As a percentage of gross sales |
74
13.6%
|
64
12.5%
|
|
|
+15.6%
|
|
The operating
margin increased in 2004, despite a difficult and volatile environment
in the semiconductor industry. The rapidly changing cycles in these areas
of business will continue to fuel volatility, but the outlook remains
optimistic.
Thanks to the niche position held by the products in this segment and
the ongoing cost controls and rationalization efforts within the Group
it should be possible to continue defending prices against ongoing pressure
and achieve further increases in the operating margin.
The strengths of the individual companies in the Electronic Systems segment
– such as the miniaturization of products and the reduction of their energy
consumption – will continue to generate sales growth in the future as
well.
Outlook
for 2005
The initial
months of the current year have been very successful for the Group. Despite
the high comparison base, sales were up noticeably both in local currencies
and in Swiss francs, despite a negative currency impact in the tens of
millions. January and February of the new year have been absolute record
months, with the highest figures for this period of the year since the
inception of the Group. In line with the trend in sales, the Group's operating
profit and net income for this period were also significantly higher.
The Group’s geographic positioning has also been strengthened, with gains
in market share in all regions.
The watch and jewellery show in Basel next week will certainly give an
additional, more reliable indication of what we can expect over the rest
of the year.
The Group is primed to defend and extend its world market leadership position.
This will also entail a further increase in profitability.
The extremely solid state of the Group balance sheet and strong cash flow
will enable it to expand and invest further and the dividend increase
and resumption of the share buyback program demonstrate very clearly that
the Group also attaches great importance to an optimal asset and liability
management.
Contacts
Edgar Geiser, CFO, and Thomas Dürr, Corporate Treasurer
The Swatch Group Ltd., Biel/Bienne
Tel +41 32 343 68 11, fax +41 32 343 69 16 e-mail: investor.relations@swatchgroup.com
Béatrice Howald, Head of Media Relations,
The Swatch Group Ltd., Biel/Bienne
+41 32 343 68 33, Fax +41 32 343 69 22
E-Mail: press@swatchgroup.com
|