Swatch Group says its first-half profit will slide 50-60 percent on dwindling sales in Hong Kong and Europe. Grace Pascoe reports.
Alarm bells are ringing at the world's largest watchmaker. Net sales at Switerland's Swatch could drop almost 12 percent in the first half of the year. And that could drag profits down by a huge 50-60 percent, it warns. Weak sales in Asia are part of the problem. (SOUNDBITE) (English) FIDELITY WORLDWIDE INVESTMENT, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "China is very much slowing down. We have seen this for quite some time now. We have had a slowdown in GDP growth for four out of the last five quarters, for 15 out of the last 20 quarters." Latest growth data from China is a little more upbeat - but Swatch has one of the highest exposures in the luxury sector to Chinese shoppers. And Europe is also seen in the frame. Both regions vulnerable, say analysts, to a slowdown in tourist demand. Thursday's deadly attack in the French city of Nice a reminder of how security fears are playing their part too. As is a strong Swiss franc .... Pushing up the production cost for Swiss watches. Spooked investors have pulled out of Swatch on the profit warning Sending shares tumbling by almost 12 percent. Other watchmakers have also taken a hit - including Richemont where shares have fallen nearly four percent.