Billabong International Ltd. reported earnings slid 71.8 percent in its fiscal half ended Dec. 31 to Australian $16.1 million (U.S.$16.4 mm) from $Aus57.2 million a year earlier. Excluding an after-tax impact of an impairment charge expense of Aus$15.0 million (U.S.$15.3 mm), the net profit was Aus$31.1 million (U.S.$31.7 mm), a decrease of 45.6 percent in reported terms (or 43.7 percent currency-neutral (CN)).

Revenues  inched up 1.5 percent to Aus$849.8 million (U.S.$866.8 mm) from Aus$834.8 million a year ago.

EBITDA was down 21.7 percent (or 18.3 percent CN) to Aus$74.1 million (U.S.$75.6 mm). The consolidated EBITDA margin decreased to 8.7 percent from 11.3 percent a year earlier. The lower EBITDA was driven, in particular, by factors including:
•    lower than anticipated sales in the important trading periods of November and early December in Europe and
•    Australia leading to lower gross profit on a higher fixed cost base;
•    gross profit pressure from higher product input costs, including cotton, and the inability to recover the cost
•    increases in a highly price-sensitive retail environment;
•    a highly promotional environment at both wholesale and retail in Australia and Europe and, to a lesser extent, the
•    US; and
•    aggressive clearance of inventory in the midst of an already highly promotional retail environment.

By region, sales in the Americas slid 1.9 percent to Aus$400.8 million ($408.8 mm) from Aus$408.4 million. EBITDA increased 3.6 percent to Aus$30.1 million ($30.7 mm), up from Aus$29.1 million.

EBITDA margins in the Americas were higher at 7.5 percent compared with 7.1 percent in the prior year period, principally reflecting the increase in margins in West 49, the allocation of lower global overhead costs offset by costs associated with the account base restructure in South America. Excluding the allocation of global overhead costs, EBITDA margins were 10.2 percent compared with 11.4 percent in the year-ago period. Compared to the year-ago period in constant currency terms, sales revenue increased 5.1 percent and EBITDA increased 12.1 percent.

In the Australasia region, sales improved 9.9 percent to Aus$295.9 million (U.S.$301.8 mm) from Aus$269.3 million. EBITDA slumped 33.1 percent to Aus$27.0 million (U.S.$27.5 mm), down from Aus$40.3 million. EBITDA margins were lower at 9.1 percent compared with 15.0 percent in the year-ago period, principally reflecting the combined impact of a very weak retail environment in Australia and extremely difficult trading conditions in South Africa offset in part by the abovementioned allocation of lower global overhead costs. Excluding the allocation of global overhead costs, EBITDA margins were 11.8 percent compared with 19.3 percent in the year-ago period. Compared to the year-ago period in constant currency terms, sales revenue increased 11.7 percent and EBITDA decreased 31.6 percent.

Sales revenues in the Australasian segment increased over the year-ago period principally as a result of the inclusion of a full half year of trading for the prior year acquisitions of SDS/Jetty Surf and Rush Surf in Australia. However, the performance of the underlying Australian business weighed on the region. Low consumer confidence, record savings levels and unseasonally cold summer weather led to a very weak retail trading environment in Australia, compounded by a shift to online shopping given the strong AUD. These factors impacted wholesale repeat business in the lead up to Christmas trade and also impacted company owned retail performance. Sales revenue lifted strongly compared to the year-ago period in constant currency terms in Asia.

In the Europe region, revenue decreased 4.3 percent to Aus$150.5 million (U.S.$153.5  mm), down from Aus$157.2 million and EBITDA decreased 35.0 percent to Aus$15.6 million,  ($15.9 mm), down from Aus$24.1 million. EBITDA margins of 10.4 percent were down compared to the year-ago period of 15.3 percent, principally reflecting the impact of European sovereign debt issues with shortfalls in wholesale repeat business experienced in the lead up to Christmas and higher product input costs offset in part by the abovementioned allocation of lower global overhead costs. Excluding the allocation of global overhead costs, EBITDA margins were 13.0 percent compared with 19.6 percent in the year-ago period. Compared to the year-ago period in constant currency terms, sales revenue was flat and EBITDA decreased 32.4 percent.