The Swatch Group, the world’s largest watchmaker, posted net income of 206 million Swiss francs ($136.2 million) for 2002’s first half, a 13.1% drop from last year’s figures. A major reason for the drop, the company says, was the “negative effect” of the rising value of the Swiss franc on worldwide earnings when converted to Swiss currency. Other factors included sluggish watch sales in major tourist centers and global economic uncertainties.

Total sales tallied 1.9 billion Swiss francs ($1.2 billion), a 3.9% drop. Operating revenues were 271 million francs ($197.1 million), down 9.4% from 2001’s first half.

The conglomerate, based in Biel, Switzerland, made the announcement Aug. 21.

The Group’s core business—the 18 brands of its watch division—grew 1.1% in worldwide sales. “With very few exceptions, all countries reported slight growth,” says the report. Individual watch brands “all reported a slightly positive trend in local currency terms.”

However, conversion of those sales to the strong Swiss franc “more than offset this positive effect,” causing a 3.4% drop in sales from 2001, to about 1.4 billion Swiss francs ($912.5 million).

The Swatch Group continues worldwide expansion of its retail business. That includes a new Blancpain store in Paris; new Tourbillon stores in Basel, Lausanne, and Lugano, Switzerland; a new Breguet store in London; and new Omega boutiques scheduled to open this year in Bangkok, Thailand, and Milan, Italy. Expansion of jewelry collections for the Breguet, Léon Hatot, Omega, and Swatch watch brands also is proceeding.