Billabong blames AUD for low net profit results
Australian surfwear and sports apparel brand Billabong has blamed the strong Australian dollar for a disappointing full-year net profit, which it announced on 19 August 2011.
Net profit for the year to June 30 fell to $123.5 million (AUS$119.1 million) from $151.4 million (AUS$146 million) the year before, while revenue rose to $1.8 billion (AUS$1.69 billion) from $1.5 billion (AUS$1.49 billion).
The company said its earnings were hit by a “very weak” retail environment in Australia and natural disasters, including flooding in Queensland state, earthquakes in New Zealand and Japan’s earthquake and tsunami.
“The result itself...it’s disappointing,” said chief executive Derek O’Neill during a conference call with analysts. “The trading result is not where we expected to be.”
Billabong said the significant appreciation of the Australian dollar against its US counterpart and the euro had a dramatic negative impact on its earnings. The Australian dollar rose 27% against the US dollar and 9.7% against the euro in the 12 months to June 30.
“With the exception of the US and some Asian territories, global trading conditions have generally deteriorated significantly,” the company said.
Online shopping, however, performed well for the brand. Billabong’s online sales doubled to nearly $51.9 million (AUS$50 million), representing about 3% of group sales. It hopes online sales will grow to about $207.5 million (AUS$200 million) by the end of 2015.
Billabong operates in Australia, North America, Europe, Japan, New Zealand, South Africa and Brazil selling its namesake clothing brand Billabong, and other brand names including Element, Von Zipper and Tigerlily.
