Australia’s Billabong Ups Profit Forecast
Shares of Billabong International Ltd., Australia’s biggest publicly listed surf wear maker, surged after the company raised its full-year earnings forecast.
Billabong shares climbed 9% today in Sydney after the Burleigh Heads, Queensland-based company forecast that full-year earnings would rise 40%, up from an October estimate of 30%. First-half net income rose 73% to 70.1 million Australian dollars ($55 million) in the six months ended Dec. 31.
Chief Executive Derek O’Neill has expanded in the U.S., where Billabong gets almost half its sales, buying Kustom shoes, Palmers surfboard wax and Honolua Surf Co. clothes and retail stores last year.
“Given the general strength of the business and the growth expected from the current order book, the company has the confidence to upgrade its full-year guidance,” O’Neill said in a statement to the Australian Stock Exchange.
Billabong raised its earnings-growth forecast to 30% from 20% in October. The stock has gained 14% this year and 61% in 2004.
In Australia, first-half earnings before interest, taxes, depreciation and amortization surged 86%, boosted by strong consumer spending, new products and increased sales of Von Zipper sunglasses.
In the Americas, Billabong’s profit rose 77% on increased sales of shorts and denim clothes and record earnings growth for its Element surf and skate wear.
“It’s important that the U.S. is strong because Billabong’s long-term growth driver is offshore,” said Michael Peet, an analyst at UBS in Sydney, who rates the stock “neutral.”
“The business is in fantastic shape no matter where you look with excellent brand management.”
O’Neill said the company’s longer-term forecasts remained unchanged because it was difficult to predict a continuation of the first-half growth.
“Billabong is expecting to return closer to more historical growth rates in the second half, and the company sees no need to alter its mid-term target of the consistent delivery of 15% annual earnings-per-share growth,” he said.