Billabong International Limited reported a net loss after tax of Australian $275.6 million (U.S.$286.2mm) in the twelve months ended June 30 while also announcing its Transformation Strategy for the company.
As flagged in the half year results, significant and exceptional items
have resulted in costs of A$336.1 million ($349.1mm), net of the gain
on sale of Nixon of A$201.4 million ($209.2mm), of which 99 percent is
Excluding the impact of significant and exceptional
items Adjusted1 Net Profit After Tax (NPAT) was A$33.5 million ($34.8mm)
on reported global sales revenue of A$1.55 billion ($1.6bn). Revenue
was down 7.9 percent in reported Australian dollar (AUD) terms (down 5.0
percent in constant currency terms) compared to the prior corresponding
period (pcp), including online sales growth of approximately 50
CEO Launa Inman said: “At an underlying trading level,
the Group remains profitable. As previously flagged to the market, the
Group’s results have been adversely impacted by various significant and
exceptional items. In recording the various significant and exceptional
costs and charges, the Group has endeavoured to adopt a conservative
position. The Group is well on track in implementing the initiatives
outlined in the previously announced Strategic Capital Structure Review
and will continue to implement a number of new strategic initiatives
announced today as part of Billabong’s Transformation Strategy. These
initiatives will target both cost savings and revenue growth.”
Earnings Before Interest, Tax, Depreciation, Amortisation and
Impairment (EBITDA) of A$120.6 million ($125.3mm) was down 40.9 percent
in reported AUD terms (39.4 percent in constant currency terms) and
within the guidance range. The continued appreciation of the AUD against
the Group’s operating currencies, in particular the Euro and USD,
adversely affected reported consolidated results, specifically by A$51.8
million ($53.8mm) in respect of sales revenue, A$5.0 million (5.2mm) in
respect of EBITDA and A$3.3 million ($3.4mm) in respect of NPAT.
the Group’s profit and loss results have been adversely impacted by the
abovementioned significant and exceptional items, the Group is pleased
to report a significant reduction in working capital, both in dollar
terms as well as a percentage of sales. In addition, the Group has
achieved a strong improvement in cash flow from operating activities and
a reduction in net debt, primarily from proceeds received from the
partial sale of Nixon and equity capital raising in June.
- Working capital as reported reduced:
o 39.7 percent to A$284.1 million from A$471.2 million in the pcp; and
o to 19.7 percent of sales from 27.8 percent in the pcp.
- Net cash flow from operating activities increased by 224.2 percent to A$78.9 million, from A$24.3 million in the pcp.
- Net debt reduced to A$160.9 million or A$94.2 million when adjusting for the net proceeds of the retail entitlement offer.
Billabong has made good progress on the initiatives announced in February 2012 as
part of its Strategic Capital Structure Review, including the partial
sale of Nixon, the closure of underperforming stores and its cost
- US$285m in proceeds from the partial sale of Nixon
58 non-performing stores closed as at 30 June 2012, with a further 82
non-performing stores identified for closure in FY13, expected to
realise incremental EBITDA in FY13 of approximately A$6 million
(approximately A$8 million on an annualised basis)
- Cost savings of
approximately A$30 million per annum expected to be realised in FY13
from cost reduction initiatives undertaken in FY12
together with the Transformation Strategy announced today, are expected
to return the Group to growth and to significantly strengthen the
company’s financial position.
today announces its Transformation Strategy which provides a clear
pathway to unlocking the inherent value within the Billabong Group. Over
the next four years, the Transformation Strategy aims to return the
Group to positive sales growth and is targeted to deliver EBITDA greater
than 2.5x FY12 pro-forma EBITDA of A$84.0 million, excluding 100
percent of Nixon and significant and exceptional items. Specifically,
Billabong will achieve these objectives by focusing on the following key
- Simplifying its business
- Leveraging Brand Billabong
- Leveraging other key brands
- Realising the strategic potential of retail
- Continuing to expand Billabong’s global e-commerce platform
- Globalising and integrating the supply chain
More details of the transformation strategy are available here.
Outlook and dividend
Group expects the current challenging trading conditions to continue
during FY13. Assuming no further deterioration in these conditions, FY13
EBITDA is currently expected to be in the range of A$100 million to
A$110 million in constant currency terms. This compares to pro-forma
FY12 EBITDA of A$84.0 million, excluding 100 percent of Nixon and
significant and exceptional items.
This result is expected to be driven by:
- The benefits from the previously announced Strategic Capital Structure Review;
- The additional benefits realised under the Transformation Strategy announced today; and
- Recognition of Billabong's share of after tax Nixon associate profits.
Board has not declared a final dividend in respect of FY12 and does not
expect to pay an interim dividend in respect of 1H FY13. The dividend
policy will be reviewed thereafter.
Billabong Business website.