Billabong Expecting to See a Better Second Half

Renowned Australia based skate, snow and surf apparel and accessories manufacturer and distributor Billabong International (BBG) has claimed that the financial tide is turning in United States with the company performing marginally better than the expectation. Billabong is expecting to see a weaker fast half followed by a strong second half. The company repeated its annual net profit growth forecast based on constant currency terms. However, the retailer warned that its 2009-10 reported profit could be heaved by as much as 6 percent due to a strong Australian currency. The company reported its annual net profit as $152.84 million, where the net profit was $176.38 million in the earlier year. A drop in the U.S. consumer spending was considered as the reason for the decline in net profit.

Derek O'Neill, the chief executive of the company stated on Tuesday that he believes that the worst downturn of the economy is over for United States. Apparently situation is improving with the company doing slightly better than the expectation, Mr. O'Neill added while he was talking in the annual general meeting. The chief executive also mentioned that Europe, the standout performer for Billabong in 2008-09 was performing in the line with expectations. In Australia, the company was performing according to the expectation although the result was countered with a rather soft market in New Zealand, Japan and South Africa.

It is to be mentioned that the earlier half incorporated the trading that was executed before the worldwide recession, considering a gain of $5 million gain and lesser foreign currency hedge rates for purchases in Europe and Australia. Mr. O'Neill stated that each 1 cent movement in the average monthly Australian and US dollars exchange rate above or below 92c for rest of the financial year would move reported net profit by around $500,000. The currency volatility and high spot rates, might lead to a drop in the reported annual net profit by as much as 6 per cent excluding the impairment charge of the previous year.