Business news : Head NV Reports Flat Sales for First Nine Months Ended Sept. 30

Head NV reported sales declined 1.0 percent in the nine months ended Sept. 30, compared to the prior year, but were up 0.9 percent in currency-neutral (c-n) terms. Racquet Sports, Diving and Licensing divisions all grew sales in c-n terms, while Winter Sports and Sportswear divisions recorded lower sales than in the prior year.

Winter Sports sales for the first nine months were 5.1 percent behind the comparable period in 2012. This was in part due to exchange rate movements and at constant currencies the decline would have been 2.4 percent. By product, skis are ahead of prior year but this was more than offset by declines in ski boots and snowboards, although this fall is mainly due to the timing of shipments and should reverse in the final quarter of the year.

Winter Sports bookings at this point in the year at constant currency are still around 10 percent ahead of those achieved at the same point in the prior year, but due to the exchange rate movements, full year sales growth in Winter Sports will not fully reflect the increase in orders.
The growth in Racquet Sports division of 0.4 percent for the nine months to September 2013 was driven by higher volumes of tennis balls, mainly in North America and an improved mix in tennis racquets, offset by currency movements.

Diving sales for the first nine months of 2013 were up slightly even though the European market remained challenging due to cold weather conditions and general continued economic uncertainties. Growth was seen in North America and Asia.

Sportswear sales for the nine months declined by 1.5 percent, due in part to lower sales of bags in the UK.

Gross margins improved from 39.8 percent to 40.9 percent mainly due to lower cost of sales for tennis balls, in particular lower rubber prices, and lower cost of sales of  bindings.

Adjusted operating loss increased by €0.3m mainly due to higher selling and marketing costs offset by the higher gross profit. The higher selling and marketing costs were due to higher advertising in  Racquet Sports and Diving divisions and higher selling costs in  Racquet Sports and Sportswear divisions.

The positive development of  financing costs due to lower interest from  long term debt along with exchange rate gains offset by higher tax charges lead to a slightly reduced net loss of €4.8m compared to €5.0m in the comparable 2012 period.

Net cash provided by operating activities declined by €9.7m in the first nine months mainly due to adverse working capital movements in the first nine months of 2013 compared to the first nine months of 2012 as cash inflows from working capital for the first nine months of 2012 amounted to €6.8m compared to cash outflows of €3.1m in 2013.

Net debt decreased by €10.4m from 30th September 2012 to 30th September 2013 due to positive operating cash flows after investing activities in the last quarter of 2012.

For 2013 Head anticipates a modest growth in sales driven by further recovery of  Winter Sports division but the impact of currency fluctuations, particularly the Yen, and some higher marketing and investment costs mean that overall operating results will be around those achieved in 2012.

Head NV

Summary of Unaudited Financial Information

For the Nine Months Ended Sept. 30, 2013H

2013                       2012                     %                       2013                        2012                     %

(restated*)                                                                     (restated*)

Pr of it a n d Loss Gross Sales: Winter Sports	49,166	52,518	-6.4%		71,469	75,328	-5.1%
Racquet Sports	32,522	34,251	-5.0%		113,934	113,517	0.4%
Diving	12,021	11,127	8.0%		40,429	39,528	2.3%
Sportswear	1,056	985	7.1%		4,266	4,330	-1.5%
Licensing	1,061	992	6.9%		3,771	3,573	5.6%
Sales Deductions	(2,796)	(2,904)	-3.7%		(6,643)	(6,705)	-0.9%
Net Sales	93,029	96,969	-4.1%		227,226	229,570	-1.0%
Adjusted Operating Profit (Loss)	7,554	7,953			(1,282)	(990)
% of Net Sales	8.1%	8.2%			-0.6%	-0.4%
Adjustments: ESOP (non-cash)	(10)	(26)			(424)	(394)
Reported Operating Profit (Loss)	7,544	7,927			(1,706)	(1,384)
% of Net Sales	8.1%	8.2%			-0.8%	-0.6%
Interest and Other Finance Expense (exc Disagio)	(798)	(1,379)			(3,308)	(4,344)
Non-Cash Disagio Costs	(64)	(25)			(182)	(73)
Interest and Investment Income	75	149			298	604
Other Non-Operating Income (Expense)	481	414			408	(139)
Current Tax	(541)	(407)			(1,717)	(1,589)
Deferred Tax	(1,845)	(1,648)			1,413	1,914
Net Profit (Loss)	4,852	5,031			(4,792)	(5,012)
Ca sh  Flow Net cash provided by (used for) operating activities	(3,779)	(6,063)			(2,732)	6,973
Purchase of property, plant and equipment	1,935	1,998			5,622	5,822
Ba la n ce  Sh ee t Cash and cash equivalents					56,765	28,562
Available for sale financial assets					5,009	5,000
Borrowings					122,142	104,333
Net Debt					60,369	70,771
Working Capital					131,570	138,895
Net Equity					165,359	166,984

* restated to take into account retrospective application of new IAS on accounting for employee benefits for full details, see interim financial statements

By press release through sportsonesource