Press release
Swatch Group:
Improved sales development
in the second half 2002 as compared to first six months in spite of weaker
currency ratios;
Group sales 2002:
CHF 4,062 million after CHF 166 million currency exchange losses; CHF
4,228 million in local currency terms;
Unit sales of watches
and watch movements sales +3.0%;
Substantial market
share gains in a difficult year
Biel, February 5, 2003
- 2002 sales for the entire Group expressed in local currency terms
rose +2.6 % in the second half and +1.1 % for the year as a whole
- Growth of the watch division in local currency terms was +5.1% in
the 2nd half of 2002 and +3.2% for the year as a whole
- Higher market shares were achieved in all watch segments
- Group sales in Swiss francs were lower by –1.9% in the second half
and –2.87% for the year as a whole
- Favorable impact of the improvement in sales in the second half 2002
on the expected operating and net result for the full year.
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For The Swatch Group
Ltd., 2002 proved to be a very exacting and challenging year, as it was
for other companies. The universally hoped-for recovery of the global
economy did not materialize as expected in the second half of the year;
on the contrary, the general conditions became still more difficult as
the year 2002 progressed.
Despite global political instability, uncertain prospects for the future,
subdued consumer sentiment and a Swiss franc whose value rose constantly,
leading to currency exchange losses of CHF 166 million, the Swatch Group
achieved organic growth of +1.1% in the year 2002 in local currency terms.
This clearly reflects the Group’s ability to adapt quickly and flexibly
to changed external economic conditions
Sustained market share growth in all segments and ongoing cost control
had a determining influence on this positive business trend. New product
launches and technical innovations were important features of the good
development in the year 2002. The very solid balance sheet numbers and
high liquid funds give the Group the necessary freedom to focus fully
on its operational business and on its unchanged development strategy
in future years.
Overview of the whole
Group
Sales in CHF millions |
2002 |
2001 |
% variance |
|
|
|
In local currency
|
Currency effect
|
Total
|
Watches
|
2’980
|
3’034
|
+ 3,2 %
|
- 5,0 %
|
- 1,8 %
|
Watch production
|
1’408
|
1’392
|
+ 1,9 %
|
- 0,8 %
|
+ 1,2 %
|
Electronic systems |
375
|
422
|
- 10,2 %
|
- 0,9 %
|
- 11,1 %
|
Central services
|
33
|
14
|
|
|
|
Consolidation |
(734)
|
(680)
|
|
|
|
Total |
4’062
|
4’182
|
+ 1,1 %
|
- 4,0 %
|
- 2,9 %
|
Sales of watches, movements and stepping motors (in
million units) |
116,8
|
113,4
|
|
|
+3 %
|
One particularly positive indicator for the new year 2003 is the fact
that the development of the Group in the second half of 2002 was much
stronger than at the beginning of the period. This acceleration of growth
included all segments, but in particular finished watches, for which currency-adjusted
growth of +5.1% was achieved in the second half.
However, further massive strengthening of the Swiss franc and prevailing
geopolitical uncertainties merit a cautionary note.
Watches
Sales 2002 (prior year CHF 3,034 million)
|
CHF 2’980 millions |
Variance against prior year
- in local currencies
- with currency effect
|
+ 3,2 %
- 1,8 %
|
The portfolio of Swatch Group watch brands achieved a very balanced,
positive trend in 2002. As already indicated in our half-year results,
all the important brands showed growth in local currency terms.
Growth of the brands in the top price category was particularly strong,
bringing a growing return on the Group’s strategy of expansion in the
luxury segment. The Group’s best-selling brand, Omega, is performing on
a high level and reported further growth in local currency terms last
year.
All the other brands also made their contribution to a successful year
2002. After a difficult 2001, the Swatch brand was back on the path to
growth. Proprietary retail stores played an important role.
Organic sales growth of +3.2 % in the watch segment was adversely affected
by a negative currency effect of CHF 152 million or –5.0 %.
The regional trend in the finished watch segment continues to show a very
balanced picture, as already reported at the half year. However, within
the individual regions, some countries such as Germany reported somewhat
disappointing results in 2002 because of high consumer uncertainty and
the economic recession.
Watch, watch movement and component production
Sales 2002
(prior year CHF 1’392 million) |
CHF 1’408 millions
|
Variance against prior year
- in local currencies
- with currency effect |
+ 1,9 %
+ 1,2 % |
|
|
of which third parties
(prior year CHF 767 million) |
CHF 740 millions
- 3,5 %
|
Sales growth in this segment was marked by continuing very solid demand
for watch movements. In 2002, Group investments in this segment were focused
mainly on the expansion of production facilities in the top price segment
and on rationalization of the medium-range and basic segments.
Movements in the lowest price category sold in the Far East recorded a
slightly negative impact. The adverse currency influence and continuing
sustained pressure on prices inhibited positive sales progression in this
particular segment.
As in the watch segment, the Group also takes an optimistic view of the
future for watch movement and component production. This is reflected
in the order books and further growth in demand for both complex mechanical
watches and products in the medium and basic price category will have
a positive impact on deliveries of watch movements and exterior parts.
Electronic systems
Sales 2002
(prior year CHF 422 million) |
CHF 375 millions |
Variance against prior year
- in local currencies
- with currency effect |
- 10,2 %
- 11,1 % |
of which third parties
(prior year CHF 374 million) |
CHF 322 millions
- 13,9 % |
The anticipated
recovery in the electronic systems segment only materialized to a limited
extent in the second half of the year. Especially in the chip industry,
pressure on prices remains strong, although a moderate increase in demand
is observed in the area of low-frequency crystals.
The performance reported by individual companies in the electronic systems
segment varied in the year 2002. EM Marin still had to contend with pressure
on prices in the microchip industry but achieved good results, even if
they were lower than in 2001. On the other hand, Micro Crystal was even
able to increase sales slightly against the previous year by gaining further
market shares in the area of low frequency crystals.
Future prospects in this segment continue to be viewed with moderate optimism.
The strong market position of individual companies as niche product suppliers
and the relatively low stock inventories on the client side give grounds
for confidence for the year 2003. Demand for miniaturized products with
very low current consumption is set to grow in the medium to long term
after a period of stagnation which lasted for nearly two years. The companies
which operate in this field will benefit considerably because of their
strong market position. The acquisition of SID Sokymat Identifikations-Komponenten
GmbH holds further promising prospects.
Profit
forecast for 2002
The results with details for each Group division and the balance sheet
are due to be published on March 27, 2003. It is expected that the favorable
sales development in the second half as compared to the first half of
2002 will have a positive impact on the expected operating and net result
for the full year 2002. This indication can be taken as evidence that
the Swatch Group is continuing to develop on target in a difficult environment
and is solidly positioned in its business area.
Contacts
Edgar Geiser,
CFO, et Thomas Dürr, Corporate Treasurer
The Swatch Group SA, Biel-Bienne
Tél. : +41 32 343 68 11, Fax +41 32 343 69 16
e-mail : investor.relations@swatchgroup.com
Béatrice
Howald, PR & Press Office
The Swatch Group SA, Biel-Bienne
Tél. : +42 32 343 68 33, Fax +41 32 343 69 22
e-mail : presse@swatchgroup.co
|