Head NV reported sales declined 4.1 percent to €93.0 million in the third quarter compared to that same period in 2012, but that bookings for Winter Sports products are running 10 percent ahead of last year in currency-neutral (c-n) terms.



The Dutch company said sales by its Diving, Sportswear and Licensing divisions all grew during the quarter ended Sept. 30, while sales of Winter Sports and Racquet Sports declined after adjusting for currency translation.

 

Winter Sports, which sells ski and snowboard gear under the Head  and Tryrolia brands, generated sales of €49.2 million, down 6.4 percent from the third quarter of 2012. While Head did not provide c-n figures for the quarter, it said a 5.1 percent decline in Winter Sports sales for the nine months translated to a 2.4 percent decline in c-n terms. Ski sales for the first nine months of the year were running ahead of the comparable 2012 level, but were more than offset by declines in ski boots and snowboards. Those declines were mainly due to the timing of shipments and should reverse in the final quarter of the year.

 

As of last week, year-to-date Winter Sports bookings were still around 10 percent ahead in c-n terms from the same period in 2012.

 

At Racquet Sports, sales of Head and Penn products declined 5.0 percent in the third quarter to €32.5 million and are up 0.4 percent for the nine months ended Sept. 30 due to higher volumes of tennis balls, mainly in North America and an improved mix in tennis racquets, offset by currency movements.

 

Diving sales, which consist of the Mares brand, increased 8 percent to €12.0 million in the quarter and 2.3 percent for the year-to-date period, despite challenging weather and economic conditions in Europe. Growth came primarily from North America and Asia.

 

Sportswear sales rose 7.1 percent to €1.1 billion, but are down 1.5 percent for the nine months, due in part to lower sales of bags in the United Kingdom. Licensing sales increase 6.9 percent to €1.1 million and are down 0.9 percent for the nine months.

 

Head reported gross margins improved 90 basis points for the nine months ended Sept. 29 to 40.9 percent mainly due to lower cost of sales for tennis balls, in particular lower rubber prices, and lower cost of sales of bindings.
Operating income declined 4.8 percent to €7.5 million, or 8.1 percent of revenue, down 10 basis points from the third quarter of 2012. Higher tax charges offset a 42 percent decline in interest payments on long term debt to reduce net income by 3.6 percent to €4.9 million during the quarter.

 

Net cash used for operating activities declined 38 percent to €3.8 million during the quarter, compared to a year earlier. The company ended the quarter with twice as much cash, 5 percent less working capital and nearly 15 percent less net debt.

 

For 2013 Head anticipates a modest growth in sales driven by further recovery of Winter Sports division. But the company said it expects currency fluctuations, particularly the Yen, and some higher marketing and investment costs, to result in operating results similar to those seen in 2012.