Chinese Market ChallengesThe group's Chinese clientele has been suffering from a strong negative wealth effect linked to the real estate market problem that should take years to work through.
Financial Performance1H EBIT of €2.21bn missed the Street's €2.43bn estimate largely on fixed cost deleverage within Specialist Watchmakers as sales declined -16% cc due to weaker results in Asia Pacific.
Profitability ChallengesProfitability in H1 was weaker than expected at €2.2bn reflecting a lower-than-expected gross margin and greater opex deleverage for all divisions due to lower sales for Specialist Watchmakers, adverse FX margin impact, continued investment and one-off changes.