Swatch says in strong position to weather franc rise

Swiss watchmaker Swatch Group said on Thursday it was in a "strong position" and would maintain its dividend for 2014 despite a strong Swiss franc and a fall in net profit last year.

Swiss watchmakers, already grappling with weak demand in the key Chinese market, could be dealt a further blow by the Swiss currency's recent surge as most of their costs are in francs.

Several of the Swatch's brands are compensating for the franc rise with price adjustments of 5 percent to 7 percent in select markets, the company said, without elaborating.

Swatch Group, whose brands range from cheap colourful plastic watches to diamond-studded Blancpain timepieces, said it would further expand its manufacturing base in Switzerland, despite the appreciation of the franc.

Swatch said its production and distribution network would help it generate high single-digit sales in local currencies, as well as healthy profits.

Its companies such as Harry Winston in the United States and Rivoli in the Middle East, whose costs are recorded in local currency, have helped temper the impact of the strong franc, Swatch said.

"After a strong December 2014 in Swiss francs, 2015 started very auspiciously with a strong January, of course computed in local currency," the world's biggest watchmaker said in a statement.

The firm proposed an unchanged dividend of 7.50 Swiss francs per bearer share and 1.50 francs per registered share for 2014.

Swatch shares have lost 11 percent so far this year, hit by the Swiss National Bank's move to scrap its cap on the euro, after sliding 25 percent last year on concerns over demand and competition from smartwatches.

Net profit fell more than expected to 1.416 billion Swiss francs ($1.53 billion) last year. It was forecast to fall to 1.529 million francs in a Reuters poll.

Gross sales rose 4.6 percent to 9.219 billion Swiss francs, just ahead of a 9.193 billion estimate in the poll. They were up 6.1 percent at constant exchange rates.

1 CHF = $1.08/£0.71