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Investing.com -- Swatch Group (SIX:UHR) cut its dividend after reporting weaker sales for the past year, as gains in key markets such as the US, Japan, India, and the Middle East were offset by sluggish demand in China.
The Swiss watchmaker said Thursday that Omega, Longines, and Tissot were its strongest-performing brands.
The company’s shares fell nearly 6% in European trading Thursday.
For 2024, the company is proposing a dividend of 0.90 Swiss francs (99 US cents) per registered share, down from 1.30 francs last year. The payout for bearer shares is set at 4.50 francs, compared with 6.50 francs previously.
Annual net sales fell 12% at constant exchange rates to 6.735 billion francs, missing the consensus estimates.
Sales from the watches and jewelry segment declined to 6.42 billion francs from 7.55 billion francs.
Swatch noted that demand picked up in December, with Omega, Tissot, and Hamilton seeing double-digit growth. However, sales of prestige brands remained below the prior year’s level.
The company also highlighted strong performance in the US, Canada, and certain European markets, including the UK, the Netherlands, and Belgium, where sales exceeded the previous year by 20% or more.
Net profit dropped sharply to 219 million francs from 890 million francs, reflecting both lower sales and rising costs.
Operating cash flow also declined, reaching 333 million francs compared with 615 million francs a year earlier, while net liquidity fell to 1.38 billion francs from 1.988 billion francs.
Looking ahead, Swatch expects significant improvements in sales, operating performance, and cash flow, supported by a wave of new product launches across different price points.
However, the company cautioned that demand in China remains weak.
“We expect these results to be received fairly poorly by the market, particularly in light of some luxury peers beating expectations particularly on revenue growth in 4Q,” RBC Capital Markets analysts commented in a post-earnings note.
“We would anticipate fairly material FY25E consensus earnings downgrades given the magnitude of the FY24 earnings miss,” they added.
Jefferies analysts shared similar remarks. They believe that at the current valuation of the stock, consensus estimates for Swatch “should fall strongly [by] double-digits today.”