quarter to â¬115.1 million ($147.3 million), led by an 11% hike winter sports
sales. Operating profits also grew but the company reported a net loss in the
period due to higher taxes and foreign closs.
($9.2 million), from â¬4.7 million ($6 million) a year ago. Excluding the impact
of the non cash share based compensation, and one time charges, operating
profit would have increased by to â¬9.8 million ($12.5 million).
Largely due to foreign currency exchange losses, the net
loss for the period was â¬1.3 million ($1.6 million) compared to a net profit in
Q407 of â¬0.7million ($0.85 million).
For the full year, net revenues were up 1.6% to â¬326.0 million
($417.3 million). The reported operating profit for the year was â¬1.9 million
($2.4 million) compared to an operating loss of â¬0.7 million ($0.85 million) in
2007. Excluding the impact of the non cash share based compensation, and one
time charges, operating profit would have decreased by â¬0.3 million ($0.38
million) to a profit of â¬0.9 million ($1.15 million.) The net loss for the year
was â¬9.7 million ($12.4 million) compared to a net loss of â¬11.2 million ($14.3
million) in 2007.
Johan Eliasch, Chairman and CEO, commented: “The
excellent snow in central Europe, the impact of cost cutting measures
implemented in response to the economic downturn and the non cash share based
compensation income resulted in the group making a small profit for the year.
The fourth quarter was dominated by our winter sports sales
where we saw an 11% increase in revenues over the fourth quarter in 2007
achieved in part through market share gains as a result of our excellent
products and the performance of our ski race team. Racquet sports matched last
years sales, although the mix deteriorated impacting the divisions'
profitability. The effects of the economic downturn can be most clearly seen
impacting the diving division where sales for the last quarter were down nearly
6% and gross margin down nearly 10 percentage points.
The uncertainties that we saw in the market in autumn last
year have now begun to impact our results and our future bookings and 2009 is,
at this stage, very hard to predict. The year is going to be very challenging
as the global financial crisis will take its toll on consumers and retailers
across the world. Retailers are cautious about placing orders, consumers have
lower levels of disposable income and everyone throughout the supply chain is
looking to reduce their working capital. In response we have cut costs across
the divisions, are focused on tightly controlling our working capital and will
continue to drive our sales.”
Winter Sports
Winter Sports revenues for the three months ended December
31, 2008 increased 11.0%, to â¬78.7 million ($100.7 million) from â¬70.9 million
($90.8 million) in the comparable 2007 period. This increase was due to a
better mix in skis, bindings and boots and the increasing of the yen against
the Euro. For the twelve months ended December 31, 2008 Winter Sports revenues
increased by â¬15.8 million, or 11.3%, to â¬156.4 million ($200.2 million) from â¬140.5
million ($179.8 million) in the comparable 2007 period. This increase was due
to higher sales volumes of skis, ski boots and helmets and better mix of all of
our winter sports products compared to the 2007 period. The strengthening of
yen against the Euro also positively affected our sales.
Racquet Sports
Racquet Sports revenues for the three months ended December
31, 2008 increased 0.7%, to â¬27.7 million ($35.4 million) from â¬27.5 million
($35.2 million) in the comparable 2007 period. This increase was mainly due to
the strengthening of the U.S. dollar and yen against the EURO. For the twelve
months ended December 31, 2008 Racquet Sports revenues decreased by 6.5%, to â¬121.4
million ($155.4 million) from â¬129.8 million ($166.1 million) in the comparable
2007 period. This decrease was due to the strengthening of the EURO against the
U.S. dollar and pound as well as unfavorable product mix partially offset by
higher sales volumes of balls and sales from our newly introduced tennis
footwear.
Diving
Diving revenues for the three months ended December 31, 2008
decreased by 6.0%, to â¬10.5 million ($13.4 million) from â¬11.1 million ($14.2
million) in the comparable 2007 period due the negative economic conditions.
For the twelve months ended December 31, 2008, Diving revenues increased by
1.0%, to â¬52.4 million ($67 million) from â¬51.8 million ($66.3 million) in the
comparable 2007 period. This increase was mainly driven by the introduction of
new advanced products but negatively affected by the strengthening of the EURO
against the U.S. dollar and pound and the negative economic conditions.
Licensing
Licensing revenues for the three months ended December 31,
2008 decreased by 29.9% to â¬1.5 million ($1.9 million) from â¬2.2 million ($2.8
million) in the comparable 2007 period. For the twelve months ended December
31, licensing revenues decreased 23.3%, to â¬5.6 million ($7.2 million) from â¬7.3
million ($9.3 million) in the comparable 2007 period due to fewer licensing
agreements, particularly in the
and the impact of exchange rates.
Sales Deductions
Sales deductions for the three months ended December 31,
2008 increased by 33.3%, to â¬3.3 million ($4.2 million) from â¬2.5 million ($3.2
million) in the comparable 2007 period due to higher sales. For the twelve
months ended December 31, 2008 sales deductions increased by 14.7%, to â¬9.7
million ($12.4 million) from â¬8.5 million ($10.9 million) in the comparable
2007 period due to higher sales in the last quarter and promotion sales of
close out products during the second quarter 2008.
Profitability
Gross Profit.
For the three months ended December 31, 2008 gross profit
increased to â¬42.5 million ($54.4 million) from â¬40.7 million ($52.1 million)
in the comparable 2007 period. Gross margin decreased to 36.9% in 2008 from
37.2% in the comparable 2007. For the twelve months ended December 31, 2008
gross profit decreased to â¬123.1 million ($157.6 million) from â¬124.1 million
($158.8 million) in the comparable 2007 period. Gross margin decreased to 37.8%
in 2008 from 38.7% in the comparable 2007 period. This decrease was due to
increased raw material and energy prices as well as unfavorable product mix in
Racquet Sports.
Selling and Marketing Expense.
For the three months ended December 31, 2008, selling and
marketing expense decreased by 3.7%, to â¬25.3 million ($32.4 million) from â¬26.2
million ($33.5 million) in the comparable 2007 period. For the twelve months
ended December 31, 2008, selling and marketing expense decreased 1.2%, to â¬93.2
million ($119.3 million) from â¬94.3 million ($120.7 million) in the comparable
2007 period. Lower warranty and departmental selling expenses as well as the
strengthening of the EURO against the U.S. dollar more than offset higher
advertising costs for our sponsored professional ski racers, our newly
introduced badminton products and tennis footwear.
General and Administrative Expense. For the three months
ended December 31, 2008, general and administrative expense decreased by 5.8%,
to â¬7.6 million ($9.7 million) from â¬8.1 million ($10.4 million) in the
comparable 2007 period. For the twelve months ended December 31, 2008, general
and administrative expense decreased by 1.7%, to â¬29.6 million ($37.9 million)
from â¬30.1 million ($38.5 million) in the comparable 2007 period. This decrease
is mainly due to currency impact.
Share-Based Compensation Expense (Income). The liability
relating to the Stock Option Plans recorded on our balance sheet is depending
on our share price. During the three months ended December 31, 2008, we
recorded a â¬0.9 million ($1.2 million) non cash share-based compensation income
(2007 comparable period: â¬0.6 million ($0.8 million)) as the share price
declined in the period. For the twelve months ended December 31, 2008, we
recorded â¬5.3 million ($6.8 million) of non cash share-based compensation
income for our Stock Option Plans as the share price also declined over this
period, compared to â¬0.2 million ($0.3 million) of non cash share-based
compensation income in the comparable 2007 period.
Restructuring Cost. For the twelve months ended December 31,
2008, we recorded â¬4.3 million ($5.5 million) of restructuring expenses
consisting relocation costs in relation to the transfer of parts of the ski
production from our site in Kennelbach, Austria to our site in Budweis, Czech
Republic and shifting of tennis ball production from our site in Phoenix, USA
to our site in Shenzhen, China.
Other Operating Expense (Income), net. For the three months
ended December 31, 2008, other operating income, net increased to â¬0.2 million
($0.3 million) from an expense of â¬0.2 million ($0.3 million) in the comparable
period in 2007. For the twelve months ended December 31, 2008, other operating
income, net decreased to â¬0.5 million ($0.6 million) from â¬1.4 million ($1.8
million) in the comparable 2007 mainly due to a release of an environmental
accrual for our Estonian premises in 2007 and foreign currency exchange losses
in 2008.
Operating Profit (Loss). As a result of the foregoing
factors, operating profit for the three months ended December 31, 2008
increased to â¬7.2 million ($9.2 million) from â¬4.7 million ($6 million) in the
comparable 2007 period. For the twelve months ended December 31, 2008,
operating loss decreased to operating income of â¬1.9 million ($2.4 million)
from operating loss of â¬0.7 million ($0.9 million) in the comparable 2007
period.
Interest Expense. For the three months ended December 31,
2008, interest expense increased to â¬3.4 million ($4.3 million) from â¬3.3
million ($4.2 million) in the comparable 2007. For the twelve months ended
December 31, 2008, interest expense increased 2.9%, to â¬12.9 million ($16.5
million) from â¬12.6 million (16.1 million) in the comparable 2007 mainly due to
an increase in short-term borrowings.
Interest and Investment Income. For the three months ended
December 31, 2008, interest income decreased by 55.2%, to â¬0.3 million ($0.4
million) from â¬0.7 million ($0.9 million) in the comparable 2007 period. For
the twelve months ended December 31, 2008, interest income decreased 44.0% to â¬1.2
million ($1.5 million) from â¬2.1 million (2.7 million) in the comparable 2007
period. This decrease was due to lower cash and cash equivalents.
Foreign Exchange Gain (Loss). For the three months ended
December 31, 2008, the foreign exchange loss increased 350.7%, to â¬1.6 million
($2 million) from a gain of â¬0.6 million ($0.8 million)in the comparable 2007
period. For the twelve months ended December 31, 2008, the foreign exchange
gain decreased to â¬0.1 million ($0.2 million) from â¬0.3 million ($0.4 million)
in the comparable 2007 period.
Income Tax Benefit (Expense). For the three months ended
December 31, 2008, the income tax expense was â¬3.9 million ($5 million)
compared to income tax expense of â¬1.9 million ($2.4 million) in the comparable
2007 period due to higher taxable income. For the twelve months ended December
31, 2008, the income tax benefit was â¬0.1 million ($0.2 million), an increase
of â¬0.3 million compared to an income tax expense of â¬0.2 million ($0.3
million) in the comparable 2007 period. This increase resulted from higher
taxable losses before share-based compensation income as this income has no tax
effect.
Net Profit (Loss). As a result of the foregoing factors, for
the three months ended December 31, 2008, we had a net loss of â¬1.3 million
($1.7 million), compared to a net profit of â¬0.7 million ($0.9 million) in the
comparable 2007 period. For the twelve months ended December 31, 2008, we had a
net loss of â¬9.7 million ($12.4 million) compared to a net loss of â¬11.2
million ($14.3 million) the comparable 2007 period.
