Billabong waves a fatter swag
BILLABONG shares soared into fresh territory after the extreme sports clothing manufacturer posted a net profit nearly 13 per cent above its prospectus forecast.
Billabong´s profit for its first year of full trading was $42.1 million, well up on the $37.8 million forecast before the company listed 12 months ago.
Fuelling investor interest in the company, Billabong chief executive Matthew Perrin said he expected it to post 25 per cent growth in earnings this year.
This sent the stock soaring by 40c yesterday to close at $6.85, up 5 per cent on the day. The shares were at $2.30 when it listed a year ago.
While all of Billabong´s operations around the world showed improved results in its first year, its star performers were North America and Europe.
Mr Perrin said those results contributed over $4 million to the $4.3 million improvement in profit over the forecast result.
"There is a lot more potential yet in the northern hemisphere," he said.
"In Europe, while we distribute to 22 countries, 75 per cent of our distribution is to three countries - the UK, France and Spain.
"Our whole marketing approach is not so much based on the surf association but on a youth association.
"That means that our target is as much young people in Frankfurt or Idaho who aren´t near the beach as it is beach people."
Specifically, the earnings before interest and tax in Europe totalled $14.7 million, representing growth of 44 per cent over the year and a result 18.5 per cent higher than the prospectus forecast.
In North America -- and more than 90 per cent of Billabong´s business is in the US -- earnings before interest and tax totalled $30.7 million, 12.5 per cent higher than the prospectus forecast.
During the year, the company acquired two US-based companies -- skateboard clothing manufacturer Element and sunglasses and snow goggles brand Von Zipper.
Mr Perrin said that while Von Zipper had been a small negative on the balance sheet, both companies were expected to contribute positively this year.
Billabong´s home market of Australia has been combined with those of New Zealand and Japan and, in this section, earnings before interest and tax totalled $25.3 million, 1.8 per cent higher than the prospectus forecast.
"Underlying revenue and earnings growth in Australasia exceeded historical rates despite the introduction of the GST and the adverse impact of a weakening Australian dollar," Mr Perrin said.
"Early indications for the current year suggest that the underlying historical growth rate of 15 per cent is likely to be exceeded again."
He said that the recently absorbed business in Japan had returned a small profit for the year and the company hoped to expand this operation this year.
Billabong´s performance in 2000-01 represented earnings of 21.2c a share, 12.1 per cent higher than forecast a year ago.
The company also paid a fully franked dividend of 6.5c a share for the six months to June 30, making a dividend of 13c a share, an increase of 1c, or 13 per cent, over the forecast dividend.
Press - ANDREW FRASER - News.com.au