Swatch profit rises due to Tiffany settlement

Biel/Bienne, Switzerland--Swatch Group reported a 9 percent increase in net sales and a 17 percent increase in operating profit, boosted by the watch giant’s multimillion-dollar settlement with Tiffany & Co.

The Biel/Bienne-based watchmaker reported Wednesday that net sales in 2013 reached $9.35 billion compared with $8.62 billion in 2012.

Operating profit hit $2.56 billion as operating margins rose from 25.4 percent to 27.4 percent, with the company’s win in its case against Tiffany accounting for 3 margin points of the increase.

In late December, a court in The Netherlands ordered the New York-based jeweler to pay Swatch Group $449.5 million, resolving the companies' legal battle over their now-severed watch contract. Both sides claimed the other failed to live up to the terms of the contract they inked in December 2007 for the development, production and distribution of Tiffany-branded watches.

Swatch Group’s net income in 2013 climbed 20 percent, reaching $2.13 billion.

Net sales, including production, in the Watches & Jewelry division were up 9 percent to $9.03 billion, and the company said it has had an “auspicious” start to 2014. Swatch Group made no mention of the fire that destroyed the galvanic department at its main ETA factory in Grenchen, Switzerland at the end of the year, causing an estimated $44.3 to $55.4 million in damage and production delays.

“In the first month of the year, sales of both watches and jewelry were very good. After four years of strong and dynamic growth by Swatch Group, as well as the entire Swiss watch industry, continued healthy growth is expected in 2014,” the company said.

In 2013, Swatch Group added 3,800 employees worldwide, including 900 in Switzerland, bringing its global workforce to 33,600. That is an increase of about 13 percent.

The additions include the integration of the Harry Winston team--Swatch Group acquired the venerable jeweler’s name and stores in a $1 billion deal completed in March--and the acquisition of Rivoli Investments LLC, which distributes to more than 360 retail stores in the Middle East, plus the addition of staff for a new watch dial plant in Grenchen, component plant in Villeret and component production facilities in Boncourt.