Australian Dollar and Billabong AGM

Submitted by Share Trading on 27 October, 2010 - 10:15

The strong Aussie dollar and a weak order book means Billabong (ASX:BBG) will have its company's earnings remain flat for the current financial year.

The Gold Coast surfwear brand addressed shareholders at its AGM (Annual General Meeting) at Broadbeach on Tuesday, with chief executive officer Derek O'Neill announcing half-year net profit was expected to be slightly lower than the previous corresponding period because of acquisition transaction costs, the strong dollar and weak forward orders. He anticipated Billabong's net profit for the year to June 30, 2011, would be flat to 6 per cent lower (or 2 to 8 per cent higher on a constant currency basis). A 1 cent fluctuation of the Aussie dollar against either the US dollar or the Euro (the US and Europe being Billabong's two major offshore markets) meant a variation in earnings of 0.4 per cent. About 80 per cent of the surf wear's revenues are from offshore.

In the past few months, Billabong has been buying several smaller companies, so it now has more than 600 retail outlets as opposed to only 380 in the middle of the year. "We've acquired a lot of brands over the past few months, but at the moment our concentration is on extracting all of the benefits of those acquisitions." O'Neill said. "Our shareholders want to see a return on the capital we've already employed." The CEO said that the market rarely understood that it sometimes took up to three years to fully integrate a new acquisition into the company.

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