Iconic surfwear retailer Billabong has finally cut a break.

Billabong has returned to profit for the first time in three years, posting a $25.7 million profit for the six months to December 31.

This is compared to a whopping $126 million loss in the same period last year.

Exclusing significant items and discontinued businesses, gross earnings were a profit of $42.8 million.

European earnings increased $5.1 million following ongoing restructuring.

In the key United States wholesale channel, brand Billabong sales were up 9.5 per cent and RVCA sales were up 5.7 per cent on a like for like basis.

However, Australian retail sales were down over Christmas.

Billabong CEO Neil Fiske said the brand is a year into its turnaround strategy.

"It’s encouraging to see the Group return to profitability for the first tim e in three years.

"There remains though significant operational reform to be undertaken.

"Where our effort is being concentrated we are seeing positive signs of brand growth and improved margins.

"In the United States, the Group’s biggest market, brand Billabong’s sales are up near double digits for the half in the wholesale market and RVCA sales are also growing in this key market.

"Meanwhile, Element has experienced strong double digit growth in Europe, its largest region.

"However, as expected in what is a complex global turnaround, there is not yet universal progress across our operations and these results are impacted by changes to our portfolio."

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