Swatch sees recovery in rest of year after first-half profit plunge

Swatch Group said on Thursday it expected a recovery in the second half after first-half net profit plummeted 52 percent to 263 million Swiss francs ($267.2 million) as lower sales and the absence of cost cuts hit the world's biggest watchmaker.

"Swatch Group anticipates clear growth in local currency in the second half of the year compared with the weaker second half of 2015, and thus an annual result closer or equivalent to the previous year," it said.

The Swiss maker of Omega and Tissot watches shocked markets with a profit warning last week, sending its shares down sharply, but said it would hold on to staff and maintain investments.

The watchmaker had warned investors that profit would at least halve after sales fell in Hong Kong and Europe.

It said on Thursday group net sales fell 12.5 percent at constant exchange rates to 3.72 billion francs, but saw signs of improved conditions and stressed its brand portfolio and its global network kept it well placed for success.

"In the first three weeks of July, very good growth was achieved in mainland China compared with the previous year, especially by the luxury and prestige brands Breguet, Blancpain, Glashuette Original, Omega and Longines," it said.

It saw positive developments in southeast Asia and expected markets to develop positively in parts of Europe -- particularly in Italy, Spain and Britain -- while markets in France and Belgium would remain difficult.

"Decisive growth factors in the coming months will be the normalization of tourism in parts of Europe as well as the further positive developments in China. On the other hand, third-party distributors in Hong Kong are still very uneasy, which will cause further delays in reorders," it said.

It said in North America and Japan growth in local currency was achievable.