Swatch Group – In the year 2000 sales exceed the CHF 4 billion mark for the first time

Once again the Swatch Group has achieved a record result with a growth in sales of 17.6 % compared with the previous year. Thanks to an improved consumer sentiment in Europe, the rapid recovery of markets in the Far East, a flourishing US economy during 2000 and the Group’s reinforced position in all markets sales rose to over CHF 4.26 billion for the first time in the history of the Swatch Group.

All sectors made a decisive contribution to this growth rate. It should be specially mentioned that, despite a high standard set in the second half of 1999, the Swatch Group suceeded in reaching a double-digit growth rate.

Gross sales in million CHF	1999	2000	Growth

Finished watches (of which luxury segment alone above + 30 %)	2,729	3,120	+14.3%

Watch production	1,190	1,412	+18,7%
Electronic systems	377	468	+24,1%
Corporate services	12	47
Consolidation	(682)	(784)

TOTAL	3,626	4,263	+17.6 %

Sales of watches, movements and stepping motors in million units	103.5	112.3	+ 8.5 %

Despite of the weakening of the currency impact towards the end of the year to distinctively below 4 % of the annual turnover, the expectation of the Swatch Group Management of an annual growth rate of roughly 18 % was achieved.
With the strong growth rate in 2000, the benchmark has considerably increased once again. However, the Group is confident that it will achieve its ambitious objectives for 2001 thanks to its excellent starting position.

In view of the current development of the distribution network (retail and wholesale), the expansion of the electronic systems segment (increase of capacities) and the continuing high demand for finished watches and movements, in particular in the higher price ranges, a further rise in sales of between 10 and 15 % can be expected for 2001, depending on currency trends.

FINISHED WATCHES
Gross sales in 2000: CHF 3,120 m
(Previous year CHF 2,729 m) + 14.3 %
Annual sales in the finished watches segment rose by + 14.3 % over the previous year as a whole, despite the particularly high standard set in the second half of 1999.

The driving force, with a growth rate of over 30 %, was provided by the brands in the top luxury segment (excluding Rado and Longines). With a new management, innovative measures for both products and communication, Breguet achieved an above-average growth rate. Sales at Blancpain also increased at an extraordinary rate. A new addition in this segment is the brand Glashütte-Original. All brands showed excellent growth, the continuing marked success of Omega deserving special mention. The successful opening of the first Omega single-brand salespoint on the prestigious Bahnhofstrasse in Zurich was a further demonstration of this brand’s strength and potential.
Thanks to innovative ideas adopted on the product and marketing side, Longines also achieved an excellent growth rate. Rado increased its figures as usual steadily and solidly.

The middle-range segment also achieved double-digit growth, Tissot producing especially good results.

In the Basic Range it was mainly sales through Swatch Stores which produced a good sales increase. Whereas sales in the other distribution of some parts of Western Europe showed a slight decrease, all other markets show growth. Due to the particularly high utilization of our production capacities, the launch of the Swatch products Skin Chrono and Square planned for the latter part of last year was slightly delayed with the consequence that this part of the turnover will only be realized in the current year. Furthermore, the production of the low-priced Lanco watches and some areas of the Private Label products have been reduced in order to make capacity available which was concentrated on production of Swatch products as well as on the luxury and prestige segment. The importance of Swatch Telecom products has also decreased.

The specific and targeted development of the Group’s own retail structures, the launch of the e-commerce-platform in the USA in spring 2001, the step-by-step expansion of the jewelry sector at Breguet, Swatch, Omega and Léon Hatot and the continuing systematic integration of the brands Breguet and Glashütte-Original in the Group’s own sales structures (prior to the take-over, Glashütte-Original was almost exclusively distributed in Germany and Austria and will, therefore, take a strong advantage of the international scope of the Swatch Group) will have an additional positive impact on the Group’s ambitious targets for 2001

PRODUCTION OF WATCHES, MOVEMENTS AND COMPONENTS
Gross sales for 2000: CHF 1,412 m
(Previous year CHF 1,190 m) + 18.7 %
Of which third parties CHF 727 m
(Previous year CHF 575 m) + 26.4 %

The enormous efforts made to achieve a turnaround in this segment led to an impressive result (rise in sales of + 18.7%).
The higher price segment in particular saw strong demand for both mechanical and electronic movements, while in the low price segment, where prices remained relatively stable, only modest growth was targeted and realized.
It is planned to meet the current high demand for movements and components through expansion projects involving a considerable proportion of the investment program announced by the Group last summer which will be used to develop and modernize capacities as well as to rationalize production processes.

Progress was also made in rationalizing the production of components and sales figures rose accordingly. Favre & Perret considerably increased their production of gold cases for top range watches, both for brands within the Group and for third parties. The Group’s balance spring manufacturer Nivarox-Far also achieved double-digit growth and with further investment it will be in a better position to meet in the future rapidly increasing demand. Final assembly for all brands concentrated in Swatch Group Assembly, a strategy which has had positive consequences. Universo, which manufactures hands and whose figures have been consolidated for the first time, will be drastically modernized using investment funds dedicated to rationalizations. This will have a positive impact in the future and turn the company from losses to clear profits.

Order books at ETA, Nouvelle Lémania and F. Piguet are more than full for 2001. In some parts of the product portfolio of ETA as well as the full range of products at Nouvelle Lémania and F. Piguet orders far exceed production capacity for the current year. Here too, detailed plans for expansion are being drawn up and first project realizations are in progress.

ELECTRONIC SYSTEMS
Gross sales for 2000: CHF 468 m
(Previous year CHF 377 m) + 24.1 %
Of which third parties CHF 412 m
(Previous year 320 m) + 28.8 %

Sales in the electronic systems sector also rose considerably in 2000. EM Marin increased its sales strongly in taking advantage of the numerous possibilities of applications in the field of low power / low voltage products with more than 70 % of sales to third parties, Lasag has taken profit of strong demand in the field of industrial laser applications and also Oscilloquartz developed significantly.Thanks to our strong position in many and various markets, particularly also outside the markets of mobile phones, and our solid foothold in the microelectronics manufacturing sector, further expansion can confidently be backed up by a targeted investment program.

Micro Crystal has taken advantage of the strong demand of the mobile phone producers. According to more recent projections, growth rates seem to slow down.
Following radical changes in mobile telephony Renata‘s lithium-ion battery project has been somewhat delayed, which has necessitated certain modifications in the product concept and the installations for production. Plans for the project were subsequently revised and the project was rescheduled. As a consequence, Renata’s turnover has stagnated.

EXPECTED PROFIT FOR 2000
With regard to operating result and net profit for 2000, final figures (despite of some shadows and problem areas mentioned above) are expected on record levels considerably exceeding those for 1999 and revealing growth rates substantially higher than those realized in sales which is the expression of the vigorous, manifold and well-balanced Swatch Group.

PLANNED IMPORTANT FUTURE DATES
March 16, 2001
Announcement of key figures for the business year 2000
followed by telephone conference for financial analysts
May 2, 2001
Morning: Balance sheet press conference
Afternoon: Analysts conference
May 22, 2001
Annual General Meeting
May 25, 2001
Dividend payment
End of August 2000
Announcement of half-yearly figures (1st half of 2001)
followed by telephone conference for financial analysts

PS: The original version of this press release is in German

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Swatch Group – In the year 2000 sales exceed the CHF 4 billion mark for the first time