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Currency, tax waves drown Billabong profit

AAP logoAAP 24/08/2016 Marty Silk

The higher US dollar and tax expenses have wiped out Billabong's profit, with the company posting a $23.7 million full-year net loss despite growing worldwide sales.

The surfwear manufacturer, which lifted profit to $4.15 million in 2014/15, says its bottom line has also been hit by reducing excess inventory in the Americas.

"Against a backdrop of global uncertainty and industry change, we continue to focus on the levers within out control, including inventories, initiatives to lift margins, cost of doing business and quality distribution," Billabong chief executive Neil Fiske said.

Despite the swing to a net loss, the company boosted revenue by 4.5 per cent to $1.1 billion in the 12 months to June 30, compared to the previous year. However, when adjusted in constant currency terms, the overall value of sales was down 1.4 per cent.

Billabong said the main impact of the rising US dollar had been the increased cost of goods, and higher markdowns to reduce excess inventory in the Americas.

Company earnings fell in the Americas and the Asia Pacific regions, but they rose for a third straight year in Europe to $16.9 million, from $11.3 million the previous year. Online sales were also up, by 52 per cent.

Billabong said a tax expense of $7.8 million this year, compared to tax credit of 12.2 million the previous year, had gouged its profits as well.

The surfwear manufacturer said results in the current year would depend on the strength of sales in the Asia Pacific region in the November and December period.

"Our strategy is to create strong global brands with tight distribution and an Omni platform that integrates wholesale, retail stores, ecommerce and social media. That's the way our consumer wants to shop," Mr Fiske said.

"In an industry in transition, we believe our strategy is right and positions us well."

BILLABONG'S PROFIT WIPEOUT

* Full-year loss of $23.7mln, compared to $4.15mln profit

* Sales value down 1.4pct (constant currency)

* No final dividend paid.

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