Swatch Group, the world's largest watchmaker by sales, said it is aiming for its best year ever in 2010 after seeing a strong pick-up in sales in January and February, easing worries that a flagging economic recovery might hit demand.

We see high double-digit sales growth in January and also in February so far and this should be possible for the whole of 2010, Chief Executive Nick Hayek told Reuters.

We are aiming for the best result we have ever had in 2010 in both turnover and profit if the exchange rate doesn't go down the drain, and at the moment it doesn't look like this will happen, he said.

Earlier on Tuesday the company behind some 18 brands including Omega and Longines as well as Swatch products, posted a 9 percent drop in full-year profit to 763 million Swiss francs ($710 million), ahead of the average forecast of 698 million francs given in a Reuters poll of analysts, but maintained its upbeat outlook.

The group unexpectedly cut its dividend to 4 francs a share from 4.25 francs last time, but analysts said this could be explained by the lower 2009 profit.

Hayek said the cut gave the group flexibility to react if a takeover opportunity arose this year.

There are a lot of companies that are struggling at the moment so there might be the one or other opportunity in 2010. There is nothing concrete for the moment, Hayek said.

At 1002 GMT, shares in the group were trading 5.3 percent higher at 282.70 Swiss francs, easily outperforming a near flat DJ Stoxx European personal and household goods index and a 2.1 percent rise in rival Richemont's shares.

I like the stock -- the management turn every penny, the company has a dominant position in the watch industry and an excellent position in China, said Kepler Capital Markets analyst Jon Cox.

The company always does an excellent job in managing costs and if it can keep hold of a lot of them in 2010 it bodes very very well for the group as watch sales rebound, Cox said.


The group result added to evidence of the watch industry emerging from its most severe slump in demand in decades and comes after a series of positive comments from other luxury goods makers such as Richemont, Hermes, LVMH and Burberry.

Swatch Group, which also owns mid-range brands Tissot and Rado as well as high-end marques Blancpain and Breguet, expects key brand Omega's role as the official timekeeper at the Winter Olympics in Vancouver to boost sales this year.

The group outperformed the rest of the watch industry with a 7.7 percent slip in watch and jewelry sales in 2009 and Hayek said sales had grown in many regions in 2009.

The picture is not just Asia. Many parts of the world, such as the UK, Russia, Australia, the Nordic countries, Canada and Mexico showed growth in local currencies in 2009 and will continue to grow in 2010, he said.

America and Japan are the bad boys. The U.S. is certainly coming back, but at a low level, Hayek said.

Swatch Group's operating margin dropped to 17.6 percent from the 21.2 percent posted a year ago, but profitability picked up in the second half and the full-year figure beat expectations.

The group also said it would propose former Swiss National Bank head Jean-Pierre Roth be elected to the group's board at its annual general meeting in May.

($1=1.074 Swiss francs)

(Additional reporting by Silke Koltrowitz; Editing by Greg Mahlich)