With each passing year the imminent merger of the watch and jewelry industries becomes more and more apparent. Jewelry companies are launching lines of precious watches, while watch manufacturers, acting the other way round, are beginning to make jewelry.
Occupying a leading position in the world, Swiss manufacturer Swatch Group said it would continue to strengthen its presence in the global market and further invest in production facilities and staff training in order to maintain its strategy of "healthy and sustainable growth."
Even in the current difficult situation with the Swiss franc exchange rate greatly overvalued, the successful strategy will be maintained.
Continuing its strong growth in all segments and regions, the Swiss giant is ripe for new profitable investments. As it was recently announced, the company is interested in acquiring shares in a diamond mine, which will help it to develop its line of expensive diamond-graced watches in a more professional way.
Despite the increase in commodity prices and negative effects of currency exchange rates, Swatch Group’s operating profit went up 11.1% to CHF 621 million mainly due to the factors related to the company’s product range and higher production rate.
The Group managed to increase their cost efficiency in the first half of 2011 due to incentives offered to the employees.
The company's sales in the watch and jewelry sectors showed a strong growth of 27.4% at a constant exchange rate, or 13.3% at current rates, eventually reaching CHF 2,913 million.
Gross sales exceeded the 2010 half-year record by 24.2% and reached CHF 3,362 million.
The group cashed in a total operating income of CHF 362 million for the six-month period.
Its operating revenue rose 20.8% to CHF 756 million. The company’s net profit increased even more, by 24.5%, reaching CHF 579 million.
Even with the low sales in some areas as a result of such events as the disaster in Japan, or the economic crisis in Greece and other countries, the Group made up for these losses generating growth in other areas where it operates.
Being to a certain extent seasonal, the watch and jewelry segments predict an increase in their income in the second half of the year, from September to December, especially during the Christmas period.
The company's dividends in the 2010 fiscal year, as agreed at the annual general meeting of shareholders, amounted to CHF 1.00 per one registered share and CHF 5.00 per one share to bearer. The Group is going to pay out a total of CHF 270 million worth of dividends.
In the last reporting period, the Group redeemed its own shares for the amount of CHF 13 million.
Last May, Swatch Group acquired a 33.3% stake in Alzouman General Trading in Jeddah, Saudi Arabia, although the acquisition will be treated as a partnership.
Swatch is constantly expanding its production capacities. In the medium and long term, Swatch Group is planning to create up to 700 new jobs in Boncour (Jura Canton), where this fall it will start building a new plant on an area of 70 000 sq. m.
In 1982, businessman Nicolas George Hayek bought the two largest watch companies, ASUAG and SSIH, from Swiss banks and in 1983 he founded the Swatch Company, whose name came from the phrase “Second Watch,” meaning an everyday time piece. It is noteworthy that he chose the right time to create Swatch; it was the period when Japanese manufacturers were rapidly developing their inexpensive quartz wrist watches conquering the world market. Nicolas Hayek’s strategy was a success for the entire Swiss watch industry and instrumental to regaining its pace-setting position in the world.
Today, Swatch Group represents a union of 19 most famous watch brands: Breguet, Blancpain, Glashütte Original, Jaquet Droz, Léon Hatot, Tiffany & Co, Omega, Longines, Rado, Union Glashütte, Tissot, ck watch & jewelry, Balmain, Certina, Mido , Hamilton, Swatch, Flik Flak, Endura, and Tourbillon.
Veronica Novoselova, Rough&Polished correspondent in Italy
