Billabong returns to profitability in the first half of 2014

Billabong International for half-year ending December 31, 2014 said that the group returned to profitability with net profit after tax of 25.7 million Australian dollars (20.1 million dollars), compared to a loss of 126.3 million Australian dollars (99 million dollars) for the previous corresponding period. Excluding significant items and discontinued businesses, EBITDA for the period was a profit of 42.8 million Australian dollars (33.5 million dollars) and NPAT was 13.8 million Australian dollars (10.8 million dollars).

European EBITDA increased 5.1 million Australian dollars following ongoing restructuring process. In the key United States wholesale channel, brand Billabong sales went up 9.5 percent and RVCA was up 5.7 percent on a like-for-like basis. However, Australian retail sales were down over the Christmas trading period.

“A year into our turnaround it’s encouraging to see the group return to profitability for the first time in three years. There remains though significant operational reform to be undertaken. Where our effort is being concentrated we are seeing positive signs of brand growth and improved margins. In the United States, the group’s biggest market, brand Billabong’s sales are up near double digits for the half in the wholesale market, and RVCA sales are also growing in this key market. Meanwhile, Element has experienced strong double digit growth in Europe, its largest region,” said Billabong CEO Neil Fiske.

Adding further, Fiske said, “Having recently regained 100 percent ownership of our branded e-commerce sites in Australia and Europe, we are now able to include these important assets in our omni platform plans. We will accelerate the transformation of our retail fleet in Asia-Pacific from a brick-and-mortar operation into a true omni-channel model that allows customers to seamlessly shop across all channels.”

Revenues in America were down 1.3 percent on a constant currency basis with a 6.3 million Australian dollars (4.9 million dollars) fall in EBITDA on a constant currency basis in the region, impacted by the move from a retail to wholesale structure in Canada. In the United States Billabong continued its strong growth in the key wholesale channel, with like for like sales up 9.5 percent for the period and RVCA seeing a 5.7 percent lift. In the Americas the wholesale channel accounts for the majority of revenue.

European EBITDA was up 5.1 million Australian dollars (4 million dollars) on flat revenue of 88 million Australian dollars (69 million dollars). Gross margins increased from 49.4 percent to 55.9 percent. Asia-Pacific EBITDA was down 1.4 million Australian dollars (1 million dollars), driven in large part by a weak retail sales performance in Australia, including challenging trading conditions in early December.

This year, the second half earnings are expected benefit from the fact that from February the company will be cycling the West 49 business on a comparable wholesale basis and as such very little of contraction in contribution from West 49 will carry over to the result, however the Group faces the complexity of the contrary impacts of a lower Australian dollar. Overall the group anticipates the December half will, this financial year, continue to be weighted as the stronger contributor to the group's EBITDA.