Swatch shares gain amid optimism over Chinese demand recovery

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By Scott Kanowsky -- Swatch Group AG (SIX:UHR) has said it expects to report a "record year" in 2023, thanks to a strong performance in January in its key Chinese market that was fueled by a sudden easing in strict COVID-19 rules in the country.

In a statement, the Swiss timepiece maker said the lifting of these restrictions has helped boost neighboring regions around China. It also predicted that the move will help revitalize sales in tourist destinations.

"After the end of Covid measures, consumption quickly recovered, not only in China, but also in the surrounding markets of Hong Kong SAR and Macau," Swatch said.

The company subsequently anticipated that sales growth will remain solid this year in "all regions and segments."

Despite the optimistic outlook, Swatch reported full-year 2022 operating profit of CHF 1.16 billion ($1 = CHF 0.9201) that missed Bloomberg consensus estimates of CHF 1.2B. Net sales of CHF 7.5B came in below expectations as well, although they did grow by 5%.

Analysts at Vontobel said the annual returns were hit hard by a wave of COVID infections in China in the fourth quarter, but added that this impact should prove temporary as the recovery in the country progresses.

Shares in Swatch rose by more than 1% in early European trading on Tuesday.

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