WEEHAWKEN, N.J., Feb. 9 /PRNewswire/ --
- Group gross sales of CHF 5 421 million, on comparable basis (excluding 2008 divestments of Sokymat and Michel) -6.3% at constant exchange rates and -8.1% in total lower than in the record year 2008.
- Watch segment sales with a decrease at constant rates of -5.5% largely outperform Swiss Watch Federation export sales (-22.3% in 2009), gaining market shares for the Group in practically all price segments and markets.
- Operating profit reaches CHF 903 million or 17.6% on net sales (versus 21.2% in 2008), with a very strong performance in the second half-year (EBIT margin of over 20%) despite currency losses of CHF 105 million versus 2008.
- Net income amounts to CHF 763 million, -8.9% less than in 2008, with 14.8% of net sales exactly the same as in the previous year.
- Substantial equity of CHF 6 billion or 77.6% of total balance sheet (versus 75.3% in the prior year).
- Dividend 2009 proposed: CHF 0.80 per registered share and CHF 4.00 per bearer share.
- At the Annual General Meeting, the Board of Directors will propose reelection of its current members and in addition the election of Jean-Pierre Roth and Georges Nicolas Hayek as new Board members.
- A good start so far in 2010, January sales representing the second-best month of January in the history of the Group, with an excellent outlook for the Group for the rest of this year.
Following publication of sales figures on January 20, 2010, we now present the unaudited 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 March 11, 2010.
Group Key Figures
(CHF million) 2009 2008 Change in %
-------------------------------------------------------------------------
at constant currency Total
rates effect
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Gross sales, adjusted(1) 5 421 5 900 –6.3% –1.8% –8.1%
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Gross sales, as disclosed 5 421 5 966 –7.3% –1.8% –9.1%
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Net sales 5 142 5 677 –9.4%
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Operating profit 903 1 202 –24.9%
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– in % of net sales 17.6% 21.2%
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Net income 763 838 –8.9%
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– in % of net sales 14.8% 14.8%
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Equity 5 981 5 451 +9.7%
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– as % of total assets 77.6% 75.3%
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Average return on equity
(ROE) 13.3% 15.5%
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(1) excluding 2008 divestments of Sokymat and Michel
Group Overview
In a very challenging year 2009 with a worldwide recession, the Swatch Group recorded gross sales of CHF 5 421 million, a decrease of -6.3% on a comparable basis (at constant exchange rates and excluding 2008 divestments of Sokymat and Michel) compared to the record year 2008. This performance is substantially better than the export figures published by the Swiss Watch Federation (-22.3% in 2009), which means that the Group has once again increased its market shares in practically all price segments and markets. Foreign currencies negatively impacted sales by CHF 105 million or -1.8%, mainly in the second half of 2009. The month of December 2009 showed a very positive sales trend in the watch segment (+28.8% versus December 2008), with clear signs of market normalization.
After a temporary setback in the first half of 2009, the Group's operating margin improved considerably in the second half year and achieved 17.6% (21.2% in 2008) for the full year. The main driving force was the watch segment, with a very convincing operating margin. Taking into account that foreign currencies as well as the gold price, an important raw material for the Group's watches, did not develop in our favor, this represents a very positive achievement. In addition, the Group preserved jobs for its employees, maintained strong marketing activities and kept investment at a very high level.
Net income decreased by 8.9% to CHF 763 million compared to CHF 838 million in the previous year, and, at 14.8%, the net margin remained at the same level as in 2008. The Group's balance sheet is still solid, with an improved equity ratio of 77.6% as at December 31, 2009 compared to 75.3% in the previous year, and also a much higher cash position. The average return on equity was a remarkable 13.3%.
The Board of Directors of the Swatch Group will propose the following dividend for 2009 to the Annual General Meeting on May 12, 2010: CHF 0.80 per registered share and CHF 4.00 per bearer share. Furthermore, besides the planned reelection of the current Board members, Jean-Pierre Roth, former Chairman of the Governing Board of the Swiss National Bank, and Georges Nicolas Hayek, Group CEO, will be proposed for election as additional Board members at the Annual General Meeting.
Watches & Jewelry
(CHF million) 2009 2008 Change in %
-------------------------------------------------------------------------
at constant currency Total
rates effect
-------------------------------------------------------------------------
Gross sales
-------------------------------------------------------------------------
– Third parties 4 426 4 794
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– Group 3 2
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– Total 4 429 4 796 –5.5% –2.2% –7.7%
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Net sales 4 187 4 547 –7.9%
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Operating profit 804 828 –2.9%
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– in % of net sales 19.2% 18.2%
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In 2009, the segment Watches & Jewelry recorded gross sales of CHF 4 429 million, a decrease of only -5.5% at constant rates compared to the record year 2008 (-7.7% in CHF). This sales performance is substantially better than the export figures published by the Swiss Watch Federation, which means that the Group has once again increased its market shares in several price segments. Sales improved strongly in the second half of 2009.
The segment's operating margin improved to 19.2% in 2009 (compared to 18.2% in 2008). This increase, achieved in a difficult year 2009, once again shows the Group's strength and dynamics. The higher margins came mainly from improvements by the important brands. Further efficiency increases in logistics and distribution also contributed to this strong increase in profitability.
In order to encourage the Group's long-term growth, retail activities were further expanded in strategic key locations.
Production
(CHF million) 2009 2008 Change in %
-------------------------------------------------------------------------
at constant currency Total
rates effect
-------------------------------------------------------------------------
Gross sales
-------------------------------------------------------------------------
– Third parties 608 659 –7.6% –0.1% –7.7%
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– Group 881 1 151 –23.5% –23.5%
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– Total 1 489 1 810 –17.6% –0.1% –17.7%
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Net sales 1 429 1 742 –18.0%
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Operating profit 94 281 –66.5%
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– in % of net sales 6.6% 16.1%
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The Production segment posted gross sales of CHF 1 489 million in 2009, a decrease of -17.7% versus the strong previous year. This slowdown manifested itself in the second half of 2009.
Segment profitability suffered especially in the second half of 2009, due to lower volumes, a change in product mix and by keeping the cost structure at constant levels. In connection with the clear commitment to preserve jobs for its employees in these difficult economic circumstances, Group management accepted a lower capacity utilization and a temporary decrease of operating margins.
Current order entries picked up in December 2009, which is an encouraging sign for the Production segment mid to long term. The overall improvement in terms of consumer confidence will lead to higher demand, with a certain delay compared to the watch segment. While maintaining the cost structure decreased the short-term profitability, it will pay off in the future. With the anticipated rebound of production volumes, the Group will not be obliged to make further adjustments.
Electronic Systems
(CHF million) 2009 2008 Change in %
-------------------------------------------------------------------------
at constant currency Total
rates effect
-------------------------------------------------------------------------
Gross sales, adjusted(1) 394 462 –14.5% –0.2% –14.7%
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Gross sales, as disclosed
-------------------------------------------------------------------------
– Third parties 380 505 –24.6% –0.2% –24.8%
-------------------------------------------------------------------------
– Group 14 25 –44.0% –44.0%
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– Total 394 530 –25.5% –0.2% –25.7%
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Net sales 391 526 –25.7%
-------------------------------------------------------------------------
Operating profit 24 104 –76.9%
-------------------------------------------------------------------------
– in % of net sales 6.1% 19.8%
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(1) excluding 2008 divestments of Sokymat and Michel
The market environment for the Electronic Systems segment remained very challenging in 2009. On a comparable basis (at constant rates and excluding previous year divestments of Group companies Sokymat and Michel), segment gross sales decreased by -14.5% to CHF 394 million.
The segment's operating profit reached CHF 24 million in the year under review, which represents an operating margin of 6.1%. In 2008, operating profit included the gains on disposal of Sokymat and Michel amounting to CHF 45 million. In the second half year, the segment's operating margin rose to 10.7%. In early 2010, order entries signal a significantly improving trend in the markets.
Outlook for 2010
The Board of Directors and the Executive Group Management Board are very confident of achieving further organic sales growth and improved margins in 2010. The main reasons for this positive outlook are the excellent start in 2010, increasing order entries as well as the improving economic environment and market confidence worldwide. In addition, the Group's positioning in all market segments and its broad geographical presence represent important success factors in the watch industry. The solid balance sheet and the improved capability to generate cash flow will bring the Group in an even stronger position than before the financial crisis.
Omega's mission as official timekeeper at the Winter Olympics 2010 in Vancouver, starting at the end of this week, is one of many positive factors that will improve sales in 2010. Furthermore, the opening of the Swatch Art Peace Hotel mid 2010, during the World Exhibition in Shanghai, will represent another milestone for the Group. In order to gain further market share and strengthen its worldwide presence, the Group will also take advantage of interesting opportunities in the different markets.
Consolidated Income Statement (Condensed)
2009 2008
-------------------------------------------------------------------------
CHF million % CHF million %
-------------------------------------------------------------------------
Gross sales 5 421 105.4 5 966 105.1
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Sales reductions –279 –5.4 –289 –5.1
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Net sales 5 142 100.0 5 677 100.0
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Other operating income 104 2.0 231 4.1
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Changes in inventories 9 0.2 513 9.0
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Operating expenses –4 132 –80.3 –4 999 –88.0
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Depreciation, amortization and
impairment charges –220 –4.3 –220 –3.9
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Operating profit 903 17.6 1 202 21.2
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Net financial result 46 0.9 –196 –3.5
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Result before taxes 949 18.5 1 006 17.7
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Income taxes –186 –3.7 –168 –2.9
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Net income 763 14.8 838 14.8
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Attributable to equity holders of
The Swatch Group Ltd 759 834
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Attributable to non-controlling
interests 4 4
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Unaudited figures.
Consolidated Balance Sheet (Condensed)
31.12.2009 31.12.2008
-------------------------------------------------------------------------
Assets CHF million % CHF million %
-------------------------------------------------------------------------
Non-current assets 2 292 29.7 2 248 31.1
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– Inventories 2 743 35.6 2 738 37.8
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– Trade receivables 761 9.9 733 10.1
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– Other current assets 1 910 24.8 1 516 21.0
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Current assets 5 414 70.3 4 987 68.9
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Total assets 7 706 100.0 7 235 100.0
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31.12.2009 31.12.2008
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Equity and liabilities CHF million % CHF million %
-------------------------------------------------------------------------
Equity 5 981 77.6 5 451 75.3
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– Non-current liabilities 484 6.3 882 12.2
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– Current liabilities 1 241 16.1 902 12.5
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Total liabilities 1 725 22.4 1 784 24.7
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Total equity and liabilities 7 706 100.0 7 235 100.0
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Unaudited figures.
Consolidated Statement of Cash Flows (Condensed)
2009 2008
-------------------------------------------------------------------------
CHF million CHF million
-------------------------------------------------------------------------
Operating activities
-------------------------------------------------------------------------
Net income 763 838
-------------------------------------------------------------------------
Depreciation and
impairment charge 220 220
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Fair value result /
interests -33 183
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Changes in working capital 0 –502
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Taxes –51 –165
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Divestment gain, pensions,
provisions and other
items –9 –63
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Cash flow from operating
activities 890 511
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Investing activities
-------------------------------------------------------------------------
Investments in non-current
assets –252 –336
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Proceeds from sale of
non-current assets 6 9
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Purchase / sale of
marketable securities 25 –160
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Investments in subsidiaries
and associates –14 –99
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Divestments of businesses
and deconsolidations 0 88
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Cash flow from investing
activities –235 –498
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Financing activities
-------------------------------------------------------------------------
Dividends paid –226 –226
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Purchase / sale of
treasury shares 1 –360
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Change in non-current
borrowings –11 –6
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Change in current
borrowings 3 15
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Repurchase of convertible
bonds –2 –21
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Cash flow from financing
activities –235 –598
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Net impact of foreign
exchange rate differences
on cash –2 –19
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Change in cash and cash
equivalents 418 –604
-------------------------------------------------------------------------
Change in cash and cash
Equivalents
-------------------------------------------------------------------------
– At beginning of year 680 1 284
-------------------------------------------------------------------------
– At end of year 1 098 418 680 –604
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Unaudited figures.
Segment Information
2009 2008
-------------------------------------------------------------------------
(CHF million) Third Group Total Third Group Total
-------------------------------------------------------------------------
Gross sales
-------------------------------------------------------------------------
Watches & Jewelry 4 426 3 4 429 4 794 2 4 796
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Production 608 881 1 489 659 1 151 1 810
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Electronic Systems 380 14 394 505 25 530
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Corporate and
elimination 7 –898 –891 8 –1 178 –1 170
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Total 5 421 0 5 421 5 966 0 5 966
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Net sales
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Watches & Jewelry 4 184 3 4 187 4 545 2 4 547
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Production 576 853 1 429 624 1 118 1 742
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Electronic Systems 377 14 391 501 25 526
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Corporate and
elimination 5 –870 –865 7 –1 145 –1 138
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Total 5 142 0 5 142 5 677 0 5 677
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Operating profit
-------------------------------------------------------------------------
% of % of % of % of
sales Total sales Total
-------------------------------------------------------------------------
Watches & Jewelry 804 19.2% 89.0% 828 18.2% 68.9%
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Production 94 6.6% 10.4% 281 16.1% 23.4%
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Electronic Systems 24 6.1% 2.7% 104 19.8% 8.6%
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Corporate and
elimination –19 –2.1% –11 –0.9%
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Total 903 17.6% 100.0% 1 202 21.2% 100.0%
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Unaudited figures.
Statistical Information
2009 2008
-------------------------------------------------------------------------
Basic Diluted Basic Diluted
-------------------------------------------------------------------------
Average number of
registered shares
outstanding 110 446 207 119 043 086 111 605 632 120 203 642
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Average number of
bearer shares
outstanding 30 335 000 30 335 000 30 596 542 30 596 542
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Key data per
registered share
(nom. CHF 0.45) in CHF
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Consolidated net
income 2.89 2.85 3.15 3.10
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Cash flow from
operating activities 3.40 3.29 1.93 1.87
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Consolidated
shareholders' equity 22.74 22.05 20.55 19.90
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Dividend 0.80(*) 0.80(*) 0.85 0.85
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Price / earnings
ratio 17.1 17.3 9.0 9.2
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Key data per bearer
share (nom. CHF 2.25)
in CHF
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Consolidated net
income 14.47 14.26 15.75 15.51
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Cash flow from
operating activities 17.01 16.45 9.67 9.36
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Consolidated
shareholders' equity 113.85 110.12 102.73 99.49
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Dividend 4.00(*) 4.00(*) 4.25 4.25
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Price / earnings
ratio 18.1 18.4 9.3 9.4
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Share capital in
CHF 125 210 250 125 210 250 125 210 250 125 210 250
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(*) Board of Directors' proposal
Unaudited figures.
Web site: www.swatchgroup.com
SOURCE Swatch Group
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