Led by the Americas region, Billabong International Ltd. reported a modest increase in operating earnings before charges in its fiscal year ended June 30, boosted by a strong second half.

Figures are in Australian dollars.

Earnings before interest taxation depreciation and amortization excluding significant items and discontinued businesses (EBITDA) inched up 0.3 percent to $51.1 million from $50.9 million and grew 2.8 percent on a currency-neutral basis.

Other highlights include:

  • Key metrics improve second half (H2) over first half (H1); comparable gross margins up in all regions in H2 year-on-year (yoy)
  • Americas leads the turnaround with full year EBITDA up 46.9 percent cc (yoy) before global allocations (excluding significant items and discontinued businesses)
  • Operating cash flow improved by $31 million (yoy)
  • Non-cash impairment of $106.5 million leads to statutory Net Loss After Tax of $77.1 million. In the year-ago period, Billabong lost $23.7 million.
  • Net Loss Before Tax of $8.4 million (excluding significant items and discontinued businesses)

Billabong Chief Executive Officer Neil Fiske said, “At the Annual General Meeting we said we were confident that our strategy would produce a strong second half and drive overall EBITDA growth for the year, despite a first half that was behind the prior period. We have achieved those ambitious goals. This result marks a turning point for the company, and one on which we can build.

“We had three core objectives for H2: continue the turnaround in our largest market of the Americas, expand comparable gross margins across all of our regions – a key indicator of brand health – and reduce the Cost of Doing Business (CODB). We hit all three of those targets.

“The key to our ongoing success is the relevance of our brands. We continue to strengthen the connection with our customers, with global social media followership up 42 percent year-on-year to almost 37 million.

“EBITDA for the year of $51.1 million is up 2.8 percent constant currency and is less than a million dollars below the guidance range that we provided in November and affirmed again in February, allowing for the sale of Tigerlily. If not for the widely reported weak retail conditions in Australia we would have been well up in the range.

“In the face of tough market conditions the Americas returned 46.9 percent EBITDA growth cc. Europe rebounded from a soft first half to post full year EBITDA growth of 8.9 percent cc, comparable gross margins improved in every region in the second half year-on-year, and operating cash flow improved substantially.

“These results reflect the tangible progress we are making in implementing our turnaround strategy in all regions, particularly in the Americas and Europe. The outcome validates our approach and provides a way ahead to address the performance in the Asia Pacific region, where there have been challenges in the broader retail market over the past year, particularly in Australia.

“This half represents the first time in three years that comparable gross margins have improved in every region, year-on-year. Gross margin expansion is a key driver of our profit improvement plan and margins were up 210 basis points for the half, and up 380 basis points in our largest market of the Americas.

“In the second half, EBITDA on a constant currency basis was up 50 percent, by far the best growth we have reported for any period since the recapitalisation in 2013.

“The result in the Americas, on top of a strong EBITDA lift in H1, gives us confidence that this region, often described as our greatest opportunity, has turned the corner.

“We simplified the business with the sale of Tigerlily and paid down debt. As a result Tigerlily is excluded from these results.

“Looking ahead, market conditions remain challenging, particularly in Australia, but we see opportunities for sustained earnings growth driven by further expansion in gross margins, acceleration of our direct to customer channels, strength in the Americas, growth in our RVCA brand, expanded global distribution, cost efficiencies and the ongoing benefits of our global platforms.”

Photo courtesy Billabong