Oddo BHF maintains its 'underperform' rating on Swatch Group shares, with a price target lowered from CHF 202 to CHF 167, after the Group published half-year results well below expectations.
Sales came in at CHF 3,445 million, down 14.3% y/y and 10.7% cc, with EBIT of CHF 204 million reflecting a margin of 5.9% (vs. 17.1% in S12 and 13.1% in S2 in 2023).
Our forecasts were sales of CHF 3,819 million (+1% y/y cc) and EBIT of CHF 524 million (margin 13.7%)", says the broker.
Oddo BHF reports that the sharp decline in sales is explained, according to the Group, by the sharp drop in sales of luxury watches in the Group's largest market, Greater China (1/3 of sales in 2023), with a decline in activity of around 30% in the first half of the year.
The analyst believes that the downturn in China remains unavoidable in the 2nd half, but that it should be 'less severe than in H1'.
Against this backdrop, Oddo BHF has lowered its EBIT forecast for 2024 by 38% and for 2025 by 14%.
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The Swatch Group SA is a Switzerland-based holding company engaged in the apparel and accessories industry. The Companyâs activities are divided into two core business segments: Watches and Jewelry, as well as Electronic Systems. The Watches and Jewelry segment includes the production and sale of branded watches, jewelry and quartz movements, notably the brands Breguet, Harry Winston, Blancpain, Glashuette Original, Jaquet Droz, Leon Hatot, Omega, Longines, Rado, Union Glashuette, Tissot, Balmain, Certina, Hamilton, Calvin Klein watches and jewelry, Swatch and Flik Flak. The Electronic Systems segment includes the production and marketing of electronic components, notably batteries and sports timing equipment. The Company also supplies products from these segments to third-party watchmakers. Swatch Group SA is represented worldwide through its subsidiaries and distributors, notably Tourbillion and Hour Passion, and operates Swiss production plants in Boncourt, Grenchen and Villeret.
SWATCH GROUP 
