Swatch says weak dollar hurts goals

Zurich: Swatch Group continues to enjoy "good" sales growth but the weak dollar and high raw material prices are making it harder to meet profit goals, its chief executive said in a newspaper interview.

"I still view the market situation as positive," the CEO of the world's largest watchmaker, Nick Hayek, told Swiss bi-weekly Finanz und Wirtschaft in an interview released on Friday, one day ahead of publication.

"There are certainly problems with the unfavourable currency situation. Especially the conversion of income in the dollar area and of currencies that are tied to the dollar, will show up", he said.

The dollar has lost around 8.5 per cent against the franc since the beginning of the year. But US sales were still good in dollar terms, Hayek said.

When asked whether Swatch was seeing a significant slowdown in sales, Hayek told the paper: "No, we still see good growth."

"We certainly won't reach 16 or 17 per cent sales growth every year," he added. "But there is no reason why our group should not continue to grow between six and 10 per cent in francs."

The question was how much would be left as profit given the currency and raw material price developments, he said. "In this regard, reaching the goals will get harder."

Swatch Group is due to report first-half results by August 21. In April, Hayek told Reuters he expected sales to grow at a double-digit rate in local currencies in 2008 as a whole.

Last week, Swiss group Richemont posted a forecast-beating 13 per cent rise in first quarter sales as strong demand from China and Hong Kong helped protect the luxury goods maker from economic turmoil.

Hayek said Swatch saw demand slowing in markets like Spain, where the real estate crisis was hitting. "Business in Japan is not sensational, but it's still a plus," he said.

"Russia posts excellent growth rates, Asia is still going very well, Germany is good, Switzerland too," he said. The Middle East and India also delivered strong results.

The group, which is best known for its colourful plastic watches, posted a 18 per cent rise in sales to 5.94 billion francs in 2007.