Billabong expects to report EBIDTA growth in FY17
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Total group sales excluding discontinued operations at Billabong were up 4.6 percent to 1.1 billion dollars, while on a constant currency basis the total sales were down slightly for the year. Revenues of the three big brands — Billabong, Element and RVCA — were up 5.3 percent globally. While first half EBIDTA is expected to be down due to challenging market conditions, the company expects EBITDA for the fiscal 2017 to be ahead of the last year.
“Based on trading to date, we expect first half EBITDA to be down substantially on the same period last year, due mostly to the weakness in the first four months in Australian and European retail. However, we expect full year FY17 EBITDA excluding significant items and assuming no divestments to be ahead of FY16 overall, and in the range of 60 Australian dollars to 65 million Australian dollars (44 to 48 million dollars),” said CEO and MD Neil Fiske at the company’s AGM.
Brand sales up but EBITDA declines
Billabong posted a rise of 1.9 percent, Element was up 5.3 percent and RVCA sales increased 18.1 percent. Comparable total retail revenues were up 1.8 percent for the year, including an increase of 52 percent in global e-commerce sales.
The FY16 group EBITDA, excluding significant items and discontinued operations, was 57.5 million dollars, down 8.2 million dollars on the previous year. The company said that over half of that decline in Group EBITDA was attributable to the decline in Sector 9, which was sold in June.
“2016 was a challenging year for our global action sports industry. Even with the continued sales growth of our big three brands, operational progress and significant reductions in our costs of doing business, we reported a net loss of 23.7 million dollars. The year-on-year decline was principally due to reduced gross margins and a higher accounting tax expense,” said company’s Chairman Ian Pollard in a statement, adding, “It has been three years since our then newly-appointed CEO announced our seven-part strategy to transform the company and the board continues to believe it is the right strategy.”
Billabong reveals positive earnings outlook
Looking ahead at FY17, while trading conditions remain challenging, the company said, it would stay focused on making progress in margins, costs, inventories and building brand equity through premium, high quality products, innovative marketing and tight distribution.
“I am pleased to report positive signs in the US, with EBITDA for the first four months ahead of the same period last year, and positive brick & mortar comp-store sales. However, among the big accounts in the US one of RVCA’s major customers recently emerged from bankruptcy and is well down on previous trading levels,” Fiske added.
The company said, trading in parts of APAC and in Europe retail was slow for the first four months in part due to unseasonal weather. In Australia, October was particularly weak across the surf retail market as a whole, however, as weather conditions normalized, trading picked up substantially in November. The same weather patterns, Billabong said, also affected the wholesale accounts.
“Our full year expectation is subject to reasonable trading conditions and currency markets remaining relatively stable,” said Fiske, adding, “We continue to have a significant bias of APAC earnings to the last six weeks of the calendar year and, in the case of the Americas, a bias of earnings to the month of June. Our sales performance in those periods is key to delivering on our full year expectations. We see this business as capable of generating double digit EBITDA margins over time.”
Summing up- Expects to report decline in earnings in the first half of FY17
- But forecasts returning to EBITDA growth between 60-65 AUD for FY17
Picture:Facebook/Billabong