GOLD COAST: Billabong has earmarked 2010/11 a "year of transition", with the company expecting half year net profit to be slightly lower than the previous year.
At its annual address to shareholders on October 26, Billabong chairman Ted Kunkel and CEO Derek O'Neill indicated the strong performance of the Australian dollar, a spate of recent acquisitions and a weak forward-order business in Australia would all impact on its net profit after tax (NPAT) figures.
O'Neill specifically referenced $2.3 million in "acquisition transaction costs" associated with the planned purchase of the Surf Dive 'n' Ski and Jetty Surf retail businesses.
“While the caution by retailers in placing their summer orders in Australia may result in some healthy in-season repeat business, this will not be sufficient to offset the adverse effect of the weak forward order book which will have a significant impact on the half year result. As anticipated, forward orders for winter in Australia are following similar trends to those experienced in the first half," O'Neill said.
“In reported terms the rapid and significant appreciation of the Australian dollar against the US dollar in particular, but also against the Euro, compared to the prior year is currently expected to adversely impact reported NPAT results.”
O'Neill said the company's full year net profit forecast of between two and eight per cent growth remained in tact.
“A focus in the short to medium term is to drive operational efficiencies and synergies from acquired businesses and to generally maintain tight management of overheads, cash and working capital across the whole business. I note there are no further brand or retail acquisitions of any note on the radar at this time.”
Billabong operates both retail and wholesale operations for brands including Billabong, Nixon, Element and DaKine.