BILLABONG DRAGS DOWN GOLD COAST CORPORATE RECOVERY
Written on the 5 September 2014 by Nick Nichols
BILLABONG (ASX: BBG) continued to drag down an otherwise robust reporting season for listed Gold Coast companies in the 2014 financial year, which saw combined profits surge 11 per cent to $95.48 million.
However, Billabong’s full-year loss of $233.7 million has kept the city’s corporate bottom-line firmly in the red to the tune of $145.1 million – well down from $802.6 million a year earlier due to a record loss from the surfwear giant.
Fourteen Gold Coast companies listed on the ASX have released their financial results over the latest reporting season, with six of those companies reporting bottom-line losses.
The number was the same as last year, including perennial loss-making minnows Medigard (ASX: MGZ), China Magnesium Corporation (ASX: CMC) and Charter Pacific (ASX: CHF).
However, Villa World (ASX: VLW) enjoyed a major turnaround in fortunes with its bottom line surging from a $13.49 million loss in FY13 to a $19.06 million profit in the latest financial year.
Sunland (ASX: SDG) is also capitalising on the property market’s recovery, pushing its bottom line above forecasts to $14.25 million and raising expectations of a higher returns this financial year.
The Gold Coast’s biggest listed company by market capitalisation, G8 Education (ASX: GEM), also lifted interim net earnings to $16.3 million, from $11 million a year earlier.
G8’s financial year aligns with the calendar year, which saw G8 post a $31.1 million profit in CY13.
Based on the latest profit results, the Gold Coast’s most profitable company is Retail Food Group (ASX: RFG) which posted a record net profit of $36.9 million.
However, G8 could breach that figure in the current financial year thanks to a raft of acquisitions that settled this year.
Billabong still has capacity to take the top spot as the Gold Coast’s most profitable listed company, although it has a big task ahead in reversing its underlying losses in the Americas and Europe.
These losses continue to swamp the profits being made by Billabong in Australasia.
The company’s revenue base has diminished over the past year through asset sales, falling to $1.22 billion from $1.34 billion in FY13.
CEO Neil Fiske says he can’t forecast results for the current year, arguing that Billabong continues to experience difficult conditions in its biggest market, the Americas, despite sales figures showing improvement on last year.
“There’s much more work to do and the road ahead remains challenging,” Fiske says of the company’s ongoing turnaround strategy.
Billabong has reported back-to-back annual losses since FY12, with accumulated losses since then totalling $1.36 billion.
It last posted a profit in FY11, which was a $119.1 million bottom-line result.
While Billabong continues to realign its business, the key drivers of profit among the Gold Coast’s listed set in FY15 are likely to be G8 Education, Villa World, Retail Food Group and Mantra Group.
All have forecast growth in earnings, as has Sunland which will not count as a Gold Coast company in FY15 as the company has relocated its headquarters to Brisbane.
Author: Nick Nichols