Australian surfwear brand Billabong has suffered terribly as a result of the appreciation of the Australian dollar, with international sales up, but profit down 4.5 percent.
Billabong International Limited announced a net profit of $146 million for the financial year ended 30 June 2010. Billabong has suffered greatly at the hands of the appreciating Aussie dollar, with net profit after tax in ‘constant currency terms’ (ie: if the exchange rate was the same as in 2008-09) up 3.1 percent. But in today’s market, with exchange rates as they are, after repatriating overseas investments back into Australian dollars, Billabong’s Net Profit After Tax is down 4.5 percent.
Billabong’s total group sales were flat at $1.48 billion in constant curency terms and down 11.2 percent in reported terms. Gross margin was higher at 54.4 percent, up 1.2 percent on the previous year, with Billabong not forced to do as much discounting, particular in the USA with the effects of the global financial crisis moderating.
Billabong International Limited chief executive Derek O’Neill said the result was in line with expectations and represented a good performance in a difficult global environment.
“The Group sells in more than 100 countries and the consumer environment generally remained volatile and difficult to predict. Against this backdrop, the Group performed well,” said Mr O’Neill.
Billabong Australia performance tapered off towards the end of the financial year, with the effects of the Federal Government’s fiscal stimulus having been removed from consumers discretionary spending patterms.
“Overall, the Group had an improved second half performance as the key market of the United States began to show signs of improvement and Europe remained solid, but there was a marked deteriouration in trading in Australia” he said.
“While the next 12 months are expected to remain challenging, a number of new initiatives were implemented and, coupled with a range of actuisitions, these have positioned the Group well for future growth.” Mr O’Neill said.
Earlier this year, Billabong came to terms to buy Californian ‘progressive apparel brand’ RVCA.