Swatch shares sink as company cuts dividend on disappointing 2024 sales

Published 30/01/2025, 10:10
© Reuters.

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.”

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.