HALF-YEAR REPORT 2007:
Biel/Bienne, 14 August 2007
start into 2007, with highly promising outlook for the full year
With its 18 brands in all price categories, the Swatch Group continues to benefit from strong worldwide demand for watches and jewelry. Due to renewed growth surge in its core business, the Group gained significant market shares, with all geographical regions contributing to this considerable growth. Various innovative retail ideas were realized, including the opening of the N. G. Hayek Center in Tokyo, the first outlet shops with our US joint venture partner, and the acquisition of airport shops in France. The Group also opened additional boutiques in premier locations. All of this proved a key factor in boosting the Group's market position in key markets and strengthening the share accounted for by retail activities. Naturally, this resulted in a certain increase in finished product inventories.
The Production segment for watches, watch movements and components also posted record sales thanks to strong demand across all areas. Due to substantial expansion of capacities, the Production segment reported a strong growth in the period under review. This was boosted by increased demand from third-party customers as well as Group companies. Further expansion is planned in order to tackle existing production bottlenecks. There is still a shortage of skilled watchmakers, and the Group is heavily involved in setting up watchmaking schools to redress this deficiency.
Another highly cyclical trend is dictating the environment in which the Electronic Systems segment operates. Increasing pressure on component prices in the mobile telephony sector impacted the development of this segment in the first half of 2007.
Despite a very cautious investment policy, the financial result was substantially higher than in the prior-year period, due among other elements to gains on capital markets and investments. In spite of the weak US dollar and yen, the currency result was also positive as the Group profited from the strong euro.
In view of the fact that the favorable currency situation resulting from the strong euro enjoyed by the Group in the first half-year may weaken in the second half. Consequently, exposure in the major currencies has been appropriately hedged.