LISTED surf retailer Billabong International Limited has carved its way to a stellar second half performance to record a net profit of $146.0 million for FY10 - down 4.5 per cent on last year.
Profit was adversely impacted by the 'unfavourable effect' of the continued appreciation of the AUD against the group’s 16 functional currencies, in particular against the USD and the Euro.
Billabong International Limited chief executive officer Derek O’Neill says the result is in line with expectations and reflected a good performance in a challenging global consumer environment.
“The group sells in more than 100 countries and the consumer environment generally remained volatile and difficult to predict,” says O’Neill.
“Overall, the group had an improved second half performance as the key market of the United States began to show signs of improvement and Europe remained solid, but there was a marked deterioration in trading in Australia late in the period that took some of the gloss off the result.
“The difficult trading environment also precipitated an acceleration in the evolution of the global action sports sector and the Group proactively evolved its business to meet the change.
“While the next 12 months are expected to remain challenging, a number of new initiatives were implemented and, coupled with a range of acquisitions, these have positioned the group well for future growth.”
The Burleigh Heads company has been in aggressive acquisition mode and today announced the takeover of the 36-store Rush Surf retail chain in Australia and a number of Surfection stores in Sydney.
Rush operates stores throughout regional Queensland and is one of the Billabong Group’s larger Australian customers. Billabong plans to retain the business as a multi-branded retailer and it will continue to be operated by its founder, Wade James.
It is anticipated the purchase will complete in October 2010 and will be earnings per share positive in year one.
“It will add some retail experience to the group,” says O’Neill.
European sales of $344.0 million were up 5.2 per cent in constant currency terms, but down 11.3 per cent in reported terms. Sales of $712.6 million in the Americas were down 1.2 per cent in constant currency terms, or down 14.8 per cent in reported terms.
Australasian sales of $425.7 million were down 1.9 per cent in constant currency terms, or down 4.2 per cent in reported terms.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) of $253.3 million was down 0.9 per cent in constant currency terms and down 11.1% in reported terms compared with the prior year.
Earnings per share of 58.3 cents was down 15.8 per cent, principally reflecting the lower reported NPAT result and the increase in the weighted average number of shares on issue following the capital raising in May 2009.
The Company views the 2010-11 financial year as a transition year, with various strategic moves enhancing its route to market to deliver its target consumer the compelling branded portfolio offer that the Company has developed over the past 10 years.
Earlier this year the company acquired the Canadian West 49 chain; Californian brand RVCA; and raft of surf stores.
Billabong declared a final dividend of 18 cents, with nine cents franked, steady with the previous year.
BBG shares today slumped almost 10 per cent to $8.00.