Swatch Group: Key Figures 2011

(Press Release | Biel/Bienne, February 7th, 2012)
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• Gross sales exceed CHF 7 billion for the first time to CHF 7 143 million, an increase of +21.7% over 2010 at constant exchange rates.
• More than 2 800 new jobs created in 2011 alone.
• Operating profit of CHF 1 614 million, an increase of +12.4% on 2010. Operating margin increases from 23.5% to a strong 23.9% despite the negative currency environment and the sharp rise in commodity prices.
• Net income up +18.1% to CHF 1 276 million.
• Equity over CHF 8 billion for the first time, equal to an equity ratio of 82.3%.
• Proposed dividend increase of 15%, CHF 5.75 per bearer share (2010: CHF 5.00) and CHF 1.15 per registered share (2010: CHF 1.00).
• Another successful start in January 2012 with double-digit growth in the Watches & Jewelry segment despite the high benchmark from the previous year.

Following publication of sales figures on 10 January 2012, we now present the Group key figures. This advance information will be followed by the distribution and discussion of the detailed annual report at the press conference scheduled for 1 March 2012.






Group Overview

For 2011, the Swatch Group has record numbers at all levels to post once again. Despite the ongoing difficult currency environment, gross sales were up 21.7% on a currency-adjusted basis to CHF 7 143 million. The continued weakness in the euro and the dollar during the year had a major negative impact on sales of about CHF 700 million.

Improvements in efficiency and the Group’s traditionally strong cost controls helped increase its operating profit for the year under review by 12.4% to CHF 1 614 million, despite an unfavorable trend in foreign exchange rates and the sharp rise in the price of gold and diamonds, two important commodities for us. The operating margin of 23.9% was able to beat the good level from the prior year. Overall, the Group posted record results, with its net income up 18.1% over the prior year to CHF 1 276 million.

Equity of CHF 8 071 million, with an equity ratio of 82.3%, confirms the continuity of the Group’s extremely solid financing. The average return on equity was a considerable 16.8% (previous year: 16.5%). The Swatch Group generated an operating cash flow of CHF 705 million despite an increase in inventories, for the expansion of the own distribution network on the one hand, and for strategic commodities such as precious metals and diamonds on the other hand. Furthermore, approximately CHF 580 million were used for investing activities. During the year under review, the Swatch Group created more than 2 800 new jobs, which raised the number of employees worldwide to over 28 000.

The Board of Directors of the Swatch Group will propose the following dividend for 2011 to the Annual General Meeting on 16 May 2012: CHF 5.75 per bearer share and CHF 1.15 per registered share. This increase in the dividend payment to shareholders of 15% versus the previous year is a result of the record results achieved in 2011 and underscores the optimistic outlook for business performance going forward in 2012.





The Swatch Group’s core Watches & Jewelry segment was up again strongly in 2011. Gross sales reached CHF 6 312 million, an increase at constant exchange rates of 26.1% over 2010. The strength of the Group’s brands was noticeable not only in Greater China, but in all other regions as well, and in the very strong growth rates across all price segments, which have been leading to major capacity bottlenecks at times.

In addition to the very difficult currency environment, the rise in prices for commodities important to us, such as gold and diamonds, had a negative impact on margins. Despite this situation, the Swatch Group has maintained, in the interest of expanding market share, its long-term policy of not implementing short-term price increases. For the same reason marketing activities have been intensified in all price segments and brands. Despite this, the segment’s operating profit increased by 8.4% to CHF 1 352 million, which represents an operating margin of 22.7%.





The huge increase in demand for various components during the year under review boosted gross sales in the Production segment by 32.6% over the prior year to CHF 2 015 million. Production capacities were expanded further. However, because of the constantly increasing demand for components in certain production sectors, it was not possible to eliminate bottlenecks.

Thanks to high utilization and the traditionally strict cost controls, the segment’s profitability was increased. Operating profit increased by 64.3% to CHF 322 million, corresponding to an operating margin of 16.3% (versus 13.4% in 2010). The increase came despite sharp price increases for many commodities.

We expect growth to continue in 2012. To meet this growth, the Swatch Group will continue to invest heavily in its production capacities in Switzerland.





The market environment for the Electronic Systems segment in 2011 was characterized by the strong overvaluation of the Swiss franc and the weakening in certain key markets. International competitors had a clear USD cost advantage, which we were not able to make up for through higher production volume. Nevertheless, the segment finished the year with gross sales of CHF 336 million, which represents a decrease of 16.3% at constant exchange rates.

Profitability suffered under the difficult economic environment. The segment’s operating profit reached CHF 13 million in the year under review, which represents an operating margin of 3.9% (versus 14% in 2010). The segment should return to a growth path soon thanks to the currently positive order entries and a modest rebound in the USD.


Outlook for 2012

The Swatch Group is well prepared for the future and is maintaining its clear and healthy long-term growth strategy. We expect growth to continue in 2012, although this is more and more challenging due to the high benchmark. The Swatch Group will also continue to make targeted investments in 2012 in its worldwide distribution network and in its production capacities in Switzerland across all segments, despite the strong Swiss franc.

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