Billabong Half Year Earnings Take a Plunge

Submitted by Share Market Writer on 19 December, 2011 - 14:20

Shares of surfwear retailer Billabong International (BBG) plunged after announcing its half year earnings to fall between $70 million to $75 million from the $96.4 million in the prior corresponding period. The shares fell by 34.4 per cent to $2.39 at 1033 AEDT.

"While the group remains focused on reducing working capital and maximising cash flow from operating activities, the poor macroeconomic and trading environment is hampering the group's ability to clear excess inventory," according to Billabong's statement to the ASX.

The surfwear retailer said that debt issues in Europe and apparent fears of global recession were affecting consumer confidence and spending patterns all over the world. It further added that even though the company was not able to provide guidance for the full financial year due to the economic situation, it was not expecting strong growth for its earnings before interest, tax, depreciation and amortisation (EBITDA).

"The company is undertaking a further operational review of the business to ensure additional appropriate reductions are made to overheads in the current financial year and into the 2012/13 financial year," Billabong said in its statement.

In addition to the operational review, Goldman Sachs would undertake a capital review of the company which would assess all the potential alternatives to strengthen its capital structure and cover all the alternatives of its balance sheet.

According to the company, this is not the right time for any equity raising.