ZURICH — Swatch Group, the renowned Swiss watch manufacturing conglomerate, reported a significant decline in profits for the first half of the year, citing challenges in the luxury goods market, particularly in China.

The company announced on Monday that its profits plunged by 70.5 percent to 147 million Swiss francs ($164 million), accompanied by a 14 percent drop in sales to 3.4 billion francs. Swatch, known for its colorful plastic watches and owning prestigious brands like Longines, Omega, and Tissot, attributed the decline to weakened demand for high-end products.

The sharp downturn in sales was primarily driven by a substantial decrease in luxury goods demand in China, including regions like Hong Kong and Macau, according to Swatch Group.

Financial analysts had anticipated a higher net profit of 354 million francs, underscoring the severity of the downturn compared to market expectations.

Swatch Group’s shares reflected investor concern, declining by 9.3 percent approaching midday, contrasting with a 0.4 percent rise in the Swiss SMI index.

Analyst Luca Solca from Bernstein highlighted Swatch’s vulnerability to the Chinese middle-class consumer segment, which has been adversely impacted by economic challenges.

Despite the bleak first-half results, Swatch Group expressed optimism about potential improvements in the second half of the year, citing cost-cutting measures that are expected to yield benefits. The company emphasized that while the Chinese luxury market remains challenging, it remains optimistic about the long-term potential and growth opportunities, particularly in the lower price segment.

Swatch noted that its Swatch brand managed to buck the negative trend by increasing sales in China by 10 percent, signaling resilience and strategic gains in specific market segments.

The company anticipates ongoing challenges in the luxury goods sector in China throughout the remainder of the year but remains hopeful for a rebound as economic conditions potentially improve.

This outlook underscores Swatch Group’s strategic resilience and adaptation amid challenging market dynamics, focusing on maintaining operational capacity while preparing for future market recoveries.