ZURICH (Reuters) – Watchmaker Swatch Group reported record growth in the first half of the year on Thursday, benefiting from the lifting of COVID-19 pandemic restrictions in Asia as well as sustained activity in Europe and North America.

Half-year net sales reached 4.019 billion Swiss francs (4.17 billion euros), up 18% over the previous year, setting a new record.

The action of the Swiss group took on the Zurich Stock Exchange 6.86% at 08:43 GMT.

The lifting of restrictions in Asia has boosted sales of the maker of Omega, Tissot and Longines watches, particularly in China, Thailand and Macao, where tourist activity has increased sharply.

The core European market also saw strong growth, with sales in Switzerland increasing by almost 50%.

The lowest price segment saw the strongest growth, and the group announced plans to launch new products targeting the lower and mid-price segments, but not exclusively.

Despite the growth opportunities, Swatch pointed out that the strength of the Swiss franc and the unfavorable monetary environment constitute a cloud on the horizon. The impact of exchange rates on its net sales amounts to almost a quarter of a billion Swiss francs.

Additionally, sourcing raw materials on time remains a major challenge and the labor market situation is tight, Swatch said.

The results were hailed by analysts, beating expectations with revenue exceeding 3.922 billion Swiss francs.

“On paper, Swatch is the most attractive choice in the luxury sector to benefit from the recovery in China while having little exposure to the slowdown in the United States,” said Citi analyst Thomas Chauvet.

He, however, pointed out that the Omega brand and the mid-range segment had underperformed and needed to be reinvigorated.

(Report Noele Illien, Dina Kartit, edited by Kate Entringer)

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