Total sales at Head N.V. rose 5.0% on a constant-currency basis in 2010 with a big boost from winter sports sales, according to preliminary and unaudited figures released by the company last week. The company is not scheduled to release full, audited results for 2010 until around April 14.
“As anticipated for the full year 2010, our sales are above last year’s level, driven by our winter sports sales which showed strong momentum at the end of the year,” the company said in a press release. “This reverses the trend in our other large division, Racquets sports, which started the year with some strong growth, but this declined towards the end of the year.”
Winter Sports for the full year increased by nearly 13% driven by good snow prior to the critical pre-Christmas sales period, product development and the company’s growing endorsement activity. Sales improved in all product categories.
Racquet Sports experienced a strong start to the year, but momentum slowed down in the second half and overall sales were flat on a constant currency basis. Sales in racquets declined in the year compared to the prior year, but were offset by improved sales of balls.
Head’s Diving division sales also rebounded, improving nearly 6% from their nadir in 2009. This was in part due to positive exchange rate movements and in part due to some momentum by the Mares brand.
Head’s overall adjusted operating profit improved by €10.7 million ($14.2 mm) as savings from recent restructurings compounded the impact of higher sales on operating profits and operating margin.
Positive cash flow enabled Head to reduce net debt by €7.3 million ($9.7 mm), although operating cash flow declined by just under €10 million ($13.3 mm) because the company was unable to repeat the reductions in working capital management achieved in 2009. Capital expenditure was up slightly as anticipated.
Head said it was too early to forecast 2011 performance, but acknowledged that it has seen its costs rise since the end of the year as some raw materials have jumped in price, and labor rates in China have been subjected to mandatory double digit percentage increases. “In addition, the Renminbi has appreciated in value against the U.S. dollar, which again increases our sourcing costs,” the company’s release stated.