Omega Speedmaster 57 Co-Axial Yellow Gold (331.53.42.51.02.001)

· Third-best year in the Swatch Group history with Group gross sales of CHF 5 421 million, a decrease of -6.3% on a comparable basis (at constant exchange rates and excluding 2008 divestments of Sokymat and Michel).
· Significant rebound in sales in the second half of 2009, with a phenomenal record month of December, which also was the best month in 2009.
· Watch segment sales with a decrease at constant rates of -5.5% largely outperformed Swiss Watch Federation export sales 2009, gaining market shares for the Group in practically all price segments and markets.
· Production segment with sales decrease mainly due to order cancellations and a change in product mix.
· Electronic Systems segment sales -14.5% lower than last year (excluding 2008 divestments of Sokymat and Michel), but steadily improving in the fourth quarter 2009 with increasing order inflow.
· Improved operating profit margin and net income compared to the first half year expected; Group very confident of further increases in sales and margins in 2010.
· Omega's mission as official timekeeper at the Winter Olympics 2010 in Vancouver and the Swatch Art Peace Hotel opening mid 2010 in Shanghai are two of the highlights to come, as well as significant developments of new products in most of the brands and new production systems in Switzerland.
Group Overview
After the known market decline in late 2008 and early 2009, with a worldwide recession and a sharp drop in consumer spending, most markets recovered from the financially stressed environment in the second half of the year. The last months of 2009 showed a very positive development, with clear signs of market normalization and increased consumer confidence. To some degree, the economic crisis 2009 has separated the wheat from the chaff. This applies especially to the watch industry, where values such as brand awareness, tradition, history and high-quality products count more than ever. Consumers are looking for value and quality.
The Swatch Group, with its large range of products in all price segments, increased its market share in most markets and regions. In this challenging year, the Group achieved gross sales of CHF 5 421 million, a decrease of only -6.3% on a comparable basis (at constant exchange rates and excluding last year's divestments of Sokymat and Michel). This still represents the third-best result in the Swatch Group history. While the first half year saw a significant decline, sales picked up in the second half and just exceeded - in local currencies - sales of the second half of 2008.
b Christmas sales clearly beat expectations and December turned out to be the best-ever month of December in terms of sales. The fourth quarter 2009 - expressed in Euro terms - performed at +7.1% at actual rates and +11.1% at constant rates. Foreign currencies negatively impacted sales by CHF 105 million or -1.8%, mainly in the second half of 2009. Especially the Euro, the British Pound and the Russian Ruble negatively impacted sales compared to previous year rates. The US Dollar had practically no impact, while the Chinese Yuan and the Japanese Yen influenced sales positively. Increasing watch demand in several markets compensated decreases in other markets and helped the segment Watches & Jewelry to achieve a remarkable result in 2009. The Production and Electronic Systems segments, on the other hand, were confronted with weaker demand and realized lower sales than in the previous year.
 
Expected earnings 2009 and Outlook 2010
The Group expects that the operating profit margin and net income for the full year 2009 will improve compared to the first half of 2009. This improvement will be visible predominantly in the Group's core business, the segment Watches & Jewelry.
With the prospect of a continuous recovery of the economic environment and the new developments realized in the last months, the Group is very confident that further solid organic sales growth will be achieved in the year 2010. A promising trend can be identified, based on the excellent sell-through figures in January 2010 as well as the order entries for the months to come. The positive outlook is also backed by the Group's positioning in all market segments and its broad geographical presence. Consumer spending is expected to see a steady increase in most countries, with a growing middle class mainly in the emerging markets supporting this trend.
A positive impact on sales is also expected from Omega's mission as official timekeeper at the Winter Olympics 2010 in Vancouver, starting on 12 February 2010. Omega has been appointed the official timekeeper of the Olympic Games until 2020. Furthermore the opening of the Swatch Art Peace Hotel mid 2010 during the World Exhibition in the fantastic place of Shanghai will represent another milestone for the Group. The increased positive results of the Group's research and development activities will also contribute to further sales growth.