Billabong 'on track for growth'

February 20, 2009

Surfwear maker Billabong International Ltd has reported a 7.1 per cent decline in first half profit to $82.4 million.

Billabong said it remains on track to achieve full year earnings per share growth of between six and 10 per cent for the full year.

Earnings per share for the six months to December 31 fell 7.4 per cent to 39.9 cents per share.

The Gold-Coast based company declared an interim dividend of 27 cents per share, franked to 45 per cent.

"While the company has experienced margin erosion in its biggest division, the Americas, the effect is being partially offset by strong appreciation in the US dollar against the Australian dollar," Billabong chief executive Derek O'Neill.

"The group's forward order book, including those of the new business units, coupled with currency benefits and cost controls, gives the company the confidence it will achieve its guidance in the absence of any further significant deterioration in the global boardsports market."

The first half result included a $2.3 million non-cash pre-tax impairment relating to Billabong's retail stores in the UK and US.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were steady at $147.3 million, the company said.

During the half Billabong experienced a strong overall performance in Europe, a steady outcome in Australasia and higher sales growth at lower margins in the US, due to lower consumer spending.

Deprecation in the Australian dollar benefited the result.

In Europe, reported sales rose 24 per cent to $177.8 million, while EBITDA margins increased to 20.1 per cent from 19.3 in the previous corresponding period.

Reported sales in Australasia lifted gained 6.3 per cent to $245.7 million, and EBITDA margins fell to 28.3 per cent.

The Americas had reported sales growth of 33.9 per cent to $385.1 million, significantly boosted by acquisitions and favourable currency movements.

EBITDA margins softened to 10.6 per cent due to a reduction in underlying year-on-year sales amid extremely weak economic and consumer conditions, Billabong said.