Affirming its relatively grim guidance from earlier in the year, Billabong’s financial results have dropped across the board during the first half.
The surf retailer warned in January that losses would compound during 1H18, and compound they did.
Billabong posted a net loss after tax of $18.4 million for the first half, and its earnings before interest taxation depreciation and amortisation (EBITDA) also fell more than 19 per cent to hit $19.3 million.
Despite an ugly first half, the company is adamant that its fortunes will improve by the end of FY18 due to an impending takeover by Quiksilver parent company Boardriders.
In January, Billabong entered a scheme implementation deed with Boardriders, offering the US-based surfing giant to acquire all BBG shares at $1.00 per share.
Billabong Chairman Ian Pollard says the scheme is “unanimously” supported by the board of directors, in the absence of a superior proposal to keep the company afloat.
“The directors unanimously recommend the proposal, with founder Gordon Merchant and a nominee company of cornerstone investor Centerbridge Partners both stating they intend to vote in favour of the scheme,” says Pollard.
“Approval of the scheme by shareholders will avoid serious ongoing risks and uncertainties associated with Billabong’s business, both operational risks and risks associated with the current capital structure, including refinancing risk.”
Pollard also admitted that while Billabong has made progress recovering from its near-fatal share price wipe in 2014, the process has been “more difficult than anticipated”.
“[Billabong’s] earnings growth has been impacted by market conditions and other factors including currency, channel shifts and significant restructuring in the global retail sector,” says Pollard.
“The full year guidance we reiterate today implies the third consecutive year of relatively flat EBITDA where market conditions have offset the operational progress achieved within the business.
“These difficult market conditions are not expected to improve in the near term.”
At a meeting set to take place next month, shareholders will have an opportunity to vote on the proposed sale to Boardriders.
Published by Paris Faint for Business News Australia