Billabong lowers forecast

GOLD COAST: Billabong has dropped its profit expectations for the first half of the current financial year, reflecting slow pre Christmas trade.

The surf and lifestyle apparel company now anticipates that its net profit after tax (NPAT) for the six months to December 31 will be 8 to 13 per cent lower than the previous year, in constant currency terms.

It reported that this reflects an expected earnings before income tax of approximately 25 per cent below the previous corresponding period, in constant currency terms.

The company said this figure results from the inclusion of one-off acquisition transaction and restructuring costs of approximately $9 million post tax. It said offsetting these costs will be expected one-off tax benefits of approximately $9.5 million.

Billabong said the revised forecast principally reflects the impact of unseasonally cool, wet weather on retail sales. This has resulted in weaker than expected wholesale repeat business in the lead up to Christmas. It said sales in the Queensland market, which is significant for the company, have also been less than expected.  

It has also revised its full financial year 2010/11 outlook, expecting NPAT to be flat, rather than up two to eight per cent as previously forecast.

This full year guidance reflects an expected EBIT result in constant currency terms of approximately 10 per cent below the previous year, as well as higher interest costs and a lower tax rate.

It said this guidance also reflects the inclusion of one off acquisition transaction and restructuring costs of approximately $11 million post tax. Offsetting these costs are expected one-off tax benefits of approximately $12.5 million.