Weak Dollar Cuts into Swatch's 2004 Profits

The Swatch Group, the world's largest watchmaker, announced net income of 512 million Swiss francs ($434.6 million), up 4.1 percent from 2003, saying the weakness of the dollar trimmed 33 million francs from its profits.

The U.S. currency declined eight percent against the franc last year, which cut export earnings when converted into Swiss francs.

Swatch, which counts among its brands Omega, Tissot and Rado, recorded an operating profit of 651 million francs last year compared with 594 million francs in 2003, boosted by an increase in spending on luxury goods.

Meanwhile, Swatch announced a hopeful start to this year with record sales and results in the first two months of this year, noting it saw "a further increase in profitability".

The firm also said it planned to buy back 250 million francs worth of shares in a move aimed at returning cash to shareholders.

Although best known for its colorful watches at the lower end of the market, Swatch is engaged in moves to drive its brands up-market as it aims to boost margins.

The company said its Omega brand sold well in 2004 while growth in its "basic range" Swatch and Flik Flak brands was restrained.

Swatch's watch division accounts for around half of the group's sales, while its jewelry and watch movements businesses make up the rest.