January 30, 2018 / 6:51 AM / a year ago

UPDATE 1-Swatch "very positive" on 2018 after H2 sales accelerate

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By John Revill

ZURICH, Jan 30 (Reuters) - Swatch Group said it expected "very positive" growth in 2018 after net profit rose 28 percent in 2017, helped by an improvement in global demand for Swiss watches.

Swiss watchmakers are just emerging from a severe downturn, helped by a recovery in demand among their biggest customer group - Chinese shoppers - but executives cautioned at a watch fair this month that inventory levels at multi-brand retailers were still too high.

"The Swatch Group anticipates further very positive growth in local currencies in 2018, not only from its own distribution channels such as retail and e-commerce, but also from third-party channels," the world's biggest watchmaker said in a statement on Tuesday.

"In addition, further growth will utilise the capacities of all production areas."

It proposed raising its dividend.

Net profit after minorities at the group, whose broad portfolio spans luxury Breguet and plastic Swatch timepieces, rose 28 percent to 733 million Swiss francs ($781.45 million), matching the forecasts in a Reuters poll.

Sales rose 5.8 percent at constant exchange rates and 5.4 percent in Swiss francs, helped by a strong acceleration in the second half of the year.

Swatch said sales increased by 12.2 percent in the second half of 2017, and an even faster 14.9 percent rate in the fourth quarter. December was the second-highest sales month in the company's history, it said.

It said it had seen "marked" growth in China, its biggest market, while Europe increased last year. Growth in North America also accelerated during 2017, Swatch said.

This year had started well, said Swatch, with the company likely to benefit from its Omega brand's sponsorship of next month's Winter Olympics in South Korea.

"Swatch Group...will continue to generate very dynamic growth in local currency in 2018," the company said.

"The very good start in January confirms sustained consumption in most regions and countries, not only in the prestige and luxury sector, but also in the basic price segments." ($1 = 0.9380 Swiss francs) (Additional reporting by Silke Koltrowitz; Editing by Michael Shields)

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