SWGAY Swatch Group AG (PK)

BIEL, Switzerland—Swatch Group AG Thursday said it would focus its smartwatch technology on its plastic Swatch brand in response to devices launched by Apple Inc. and others before considering installing it in its pricier brands.

The Biel-based company, which also owns Omega, Longines and Tissot, launched its own watch with remote payment functions in China in January, that had been received "really well" by consumers there, Chief Executive Nick Hayek said.

The Swatch Bellamy, a version of its eponymous plastic Swatch watch that uses near-field communication technology, sells for 80 euros ($88) to €100. Further introductions are scheduled for the U.S., Brazil and Switzerland later this year.

"It's not that we have nothing in the pipeline, we are a huge producer in every segment in every category," Mr. Hayek said at a news conference in Biel.

Making progress in the smartwatch market is crucial for Swatch, which is seen as the most vulnerable of the Swiss watchmakers to the Apple Watch and similar watches produced by Samsung Electronics Co. because many of the Swiss company's watches sell in the same sub-$1,000 price category.

Smartwatches are expected to reach a total of 34.3 million units shipped in 2016, up from the 21.3 million units expected to ship in 2015, according to International Data Corporation, a market researcher. By 2019, it forecasts shipments to reach 88.3 million units.

Jon Cox, an analyst at Kepler Chevreux, said it was very important for Swatch to be involved in smartwatches. "I assume around 20% of group operating profit comes from watches retailing at $1,000 and below and that is where the smartwatch threat is going to be—compared to much of the rest of the industry which is just focused on the premium end," he said.

Smartwatches are an opportunity to sell more watches, Mr. Hayek said, but he doesn't see Apple as a competitor to Swatch, as the technology company sells through consumer-electronics stores rather than jewelers or watch shops.

"We are not talking about competing with Apple," said the colorful Mr. Hayek, who was dressed in a plaid shirt and scarf, occasionally donned a pair of Swatch sunglasses and puffed on a big cigar during the news conference. "They are consumer-electronics people and we don't want to get into that sector.

"We are also competing with jewelry, it's two different worlds."

Many industry figures also expect a subdued year for the Swiss watch industry in 2016, after the sector reported a fall in exports last year, the first drop for six years.

Earlier this year Swatch reported a 3% fall in sales for 2015 to 8.45 billion Swiss Francs ($8.47 billion) while net profit plunged 21% to 1.12 billion francs. Fellow watchmaker Cie. Financiè re Richemont has responded to the downturn by cutting up to 350 jobs in Switzerland because of tough market conditions and the strength of the Swiss franc, which makes production more expensive in the Alpine country.

Mr. Hayek said Swatch wouldn't be cutting jobs. "We don't hire people short term and send them away when it is less good," he said. "We do everything we can to maintain the units and value in the company."

Write to John Revill at john.revill@wsj.com

(END) Dow Jones Newswires

March 10, 2016 07:55 ET (12:55 GMT)

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