By RTT News,
February 05, 2014, 04:48:00 AM EDT
(RTTNews.com) - Swiss watch and jewelry maker Swatch Group (SWGAF.PK, SWGNF.PK) Wednesday said annual profit increased significantly from the prior year, helped by higher sales as well as compensation from Tiffany & Co. ( TIF ). Further, the company reported an auspicious start to 2014 in all segments.
In December 2013, luxury jeweler Tiffany was ordered by the Netherlands Arbitration Institute to pay Swatch 402.7 million francs plus interest as damages related to a failed long-term cooperation agreement signed in December 2007. Tiffany was charged of continued breaches of its obligations and duties under the agreement.
For 2013, Swatch said its net income attributable to equity holders of the company rose to 1.921 billion Swiss francs ($2.12 billion) from 1.596 billion francs in the previous year. Prior-year figures have been restated.
Net sales advanced 8.5 percent to 8.456 billion francs from 7.796 billion francs in the prior year, led by the strong brands and the extensive distribution and retail network.
Gross sales were 8.3 percent higher at 8.817 billion francs, despite negative exchange rates.
Watches & Jewelry generated a sales growth of over 10 percent. Including production, net sales rose 8.8 percent to 8.173 billion francs.
Exports of wrist watches by the entire Swiss Watch Industry increased 1.8 percent to the end of November 2013, indicating a significant increase in market share by the Swatch Group.
The electronic systems segment sales slipped year-over-year, as it was exposed to the weak US dollar and Japanese yen for the entire year.
Operating profit increased 17 percent to 2.314 billion francs in 2013, corresponding to an operating margin of 27.4 percent.
Swatch said the effect on operating margin related to the compensation from Tiffany, after depreciation of inventory and impairment of other assets, accounts for around 3 margin points.
Additionally, Swatch said all brands had an auspicious start in 2014. Sales of both watches and jewelry were very good in January.
After four years of strong and dynamic growth by Swatch Group, as well as the entire Swiss watch industry, the firm sees continued healthy growth in 2014.
The Swatch Group is in an excellent position for both the future and for long-term growth, the firm added.
Further, citing the good results of 2013 and the positive outlook for 2014, the Board of Directors proposed a dividend of 7.50 francs per bearer share and 1.50 francs per registered share, which is up 11.1 percent from last year.
The stock is up over 4 percent currently at 553.50 francs.
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