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Swatch Net Soars, but Caution Reigns

Swiss watchmaker says weak dollar, soaring gold prices present 'challenges.'

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PARIS – Swatch Group on Friday reported record profits for last year and said prospects for the rest of this year remained strong as emerging markets offset financial turbulence in Europe and the United States.

The Swiss watchmaker, owner of brands including Omega, Breguet, Rado, Blancpain and Swatch, said net income last year advanced 22.3 percent to 1.02 billion Swiss francs, or $846.8 million, from 830 million Swiss francs, or $692.4 million, a year earlier, in line with most analysts' expectations.

As reported, gross sales last year grew 17.6 percent to 5.94 billion Swiss francs, or $4.96 billion, spurred by strong demand for luxury watches.

Dollar figures are converted from Swiss francs using average exchange rates.

Earlier this month, Swatch chief executive officer Nicolas Hayek Jr. told markets that the first two months of the year had been strong and that the company had seen no slowdown in the U.S.

"The strong trend seen in 2007 has continued in the first two months of the current year, giving rise to expectations of ongoing substantial sales growth and profitability increases across all segments," Swatch reiterated in a statement.

Swatch tempered its enthusiasm by saying that the "sharp" weakening of the yen and dollar against the Swiss franc and euro as well as “marked” increases in the price of gold, diamonds and other raw materials had created “new challenges for the group in 2008.”

For more, see Monday's issue of WWD.