Swatch Group Dashes Dividend Expectations, Shares Tick Lower

Swatch Group on Tuesday missed revenue forecasts for 2023 and proposed a a lot smaller than anticipated dividend enhance — placing stress on the world’s largest watchmaker’s inventory.

The maker of Omega, Tissot and Longines watches as properly its eponymous mass-market plastic watches posted gross sales rising by 5.2 % final yr to 7.88 billion Swiss francs ($9.10 billion).

Though the determine was in keeping with market expectations, earnings fell quick, with working revenue of 1.19 billion francs lacking forecasts for 1.32 billion francs, in accordance with LSEG information.

The proposed 8.3 % dividend enhance in dividend additionally missed expectations for a 19 % enhance, serving to to ship Swatch shares 3.2 % decrease in early buying and selling.

“Swatch Group’s profitability was far worse than anticipated amid a mixture of ramped investments, retail growth and Swiss franc power,” mentioned Kepler Cheuvreux analyst Jon Cox.

“Gross sales have been sturdy and the group is profitable market share however free money circulate was really unfavourable regardless of a close to 13 % rise in fixed foreign money gross sales in 2023.”

Bernstein analyst Luca Solca mentioned Swatch was a sufferer of moderating client demand hitting second stage manufacturers. He highlighted a deceleration in Swatch’s natural progress to six.4 % within the second six months of the yr from an 18 % within the first half.

Uncertainty in regards to the financial outlook, persistent inflation and China’s cooling financial system have weighed on the posh sector as an entire.

Swatch — recognized for its bullish outlooks — was nonetheless assured on the premise of its decrease and mid-priced segments, in addition to the publicity of its Omega model because the timekeeper at this yr’s Paris Olympics.

“The group anticipates glorious alternatives for additional progress in native currencies in 2024,” the corporate mentioned.

By John Revill; Enhancing by Linda Pasquini and Barbara Lewis

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