Head NV of Amsterdam reported net Revenues for the full year increased 4.7 percent compared to the prior year driven by growth in all the divisions, or 5.3 percent in currency-neutral terms.
For the year ended Dec. 31, 2014, Head’s Winter Sports revenues grew by 2.9 percent (3.4 percent c-n) despite the second consecutive year of late snow. This growth was a consequence of higher volumes in skis and bindings and also a favorable product mix for skis and boots achieved as a result of the success of the race team and the excellent product offerings that have created brand momentum.
The Racquet Sports division reported an increase in revenues of 3.3 percent for the year (4.4 percent c-n). This growth has been achieved through an increase in the volume of both tennis racquets and Head branded tennis balls sold, a favorable product mix across the key categories and improved revenues for accessories.
Diving revenues increased by 9.2 percent for the year (9.3 percent c-n) as revenues from the dive certification business SSI acquired Jan. 1, 2014 offset lower equipment sales. The European dive markets remain tough but some growth was achieved in North America and Asia.
Sportswear revenues increased by 3.4 percent in 2014 (2.7 percent c-n) mainly due to improved sales of Winter Sports apparel offset by lower bag sales in the UK.
Licensing revenues increased 38.1 percent mainly due to better than expected sales.
Gross margin for the group also improved in the year by 2.5 percentage points mainly due to higher licensing revenues, lower cost of sales for the tennis ball business and a change in the mix in the diving business due to the new SSI business which, combined with improved revenues, gave rise to a gross profit for the year ended Dec. 31, 2014 of €161.1m compared to €144.9m in 2013.
The improvement in gross profit of €16.3m was offset by cost increases of €14.9m resulting in a net improvement in adjusted operating profit of €1.4m from €12.1m in 2013 to €13.6m in 2014.
The cost increases were driven by €8.0m in selling and marketing due to higher advertising costs in Racquet Sports and Winter Sports divisions and to the inclusion of the departmental selling costs of the new SSI business and the increase in departmental selling costs in the Winter Sports and Racquet Sports divisions.
General and administrative expenses also increased by €1.4m mainly due to the inclusion of the new SSI business.
Other operating expenses increased by €5.5m due to an increase in the provisions for litigation, higher costs in the diving division, foreign exchange losses and the non recurrence of the income of €0.9m recorded in 2013 due to the release of a provision in that year.
Interest and other finance expenses increased by €1.3m in 2014 compared to 2013 due to the higher debt levels in the company.
Other non-operating expenses increased from an income of €0.2m to an expense of €2.2m mainly due to foreign exchange movements. Tax and interest income remained broadly flat in the year resulting in profit for the year ended 2014 down by €2.4m from €5.3m in 2013 to €2.8m in 2014.
Net cash used by operating activities for the year ended Dec. 31, 2014 amounted to €2.7m compared to €5.0m of net cash provided in 2013. The decline of €7.7m was due predominantly to higher working capital cash outflows for inventory during 2014 when compared to working capital cash outflows for inventory during 2013.
Net debt increased by €53.5m compared with Dec. 31, 2013 predominantly due to the share buyback that took place in the second and fourth quarters of 2014 (€31.5m) and the payments for the acquisitions in the period (€9.8m) in addition to the cash used in operations over the twelve month period.
For 2015, Head expects there may be some impact from the late snow in the 2014/2015 season.
“Financial pressure on consumers continues, but we hope that these can be offset by the momentum that our brand has due to its product offering and the success of our athletes,” the company said.
Head NV
Summary audited financial information for year ended Dec. 31, 2014
Figures in €'000
|
|
2014 |
2013 |
% |
|
Incom e Gross Revenues: Winter Sports |
164,683 |
159,988 |
2.9% |
|
Racquet Sports |
149,547 |
144,818 |
3.3% |
|
Diving |
57,086 |
52,296 |
9.2% |
|
Sportswear |
6,776 |
6,552 |
3.4% |
|
Licensing |
7,151 |
5,179 |
38.1% |
|
Sales Deductions |
(9,867) |
(10,167) |
-2.9% |
|
Net Revenues |
375,376 |
358,667 |
4.7% |
|
Adjusted Operating Profit |
13,561 |
12,140 |
|
|
% of Net |
3.6% |
3.4% |
|
|
Adjustments: ESOP (non-cash) |
378 |
(82) |
|
|
Reported Operating Profit |
13,939 |
12,058 |
|
|
% of Net |
3.7% |
3.4% |
|
|
Interest and Other Finance Expense |
(6,411) |
(5,110) |
|
|
Interest and Investment Income |
346 |
527 |
|
