Billabong

Billabong’s (ASX: BBG) shares were hammered today falling more than 40% after the surfwear and action-sports company issued a trading update.

BBG anticipates reported earnings before interest tax deprecation and amortization (EBITDA) for the six months ending 31 December 2011 will be in the range of $70 million to $75 million, down on the $94.6 million reported in the previous period.

On a constant currency basis (ie: before converting overseas sales into AUD), the  Company anticipates this EBITDA range would be approximately $4 million higher, with the range on an ‘as reported’ basis being adversely impacted in particular by the stronger AUD against the USD and Euro for the six month period ending 31 December 2011.

BBG stopped short of providing guidance for the full financial year ending 30 June 2012, and strong underlying EBITDA growth in constant currency terms for the full year is not expected.

This is in stark contrast to previous years when BBG was a company showing strong global growth, but tough trading conditions worldwide is affecting BBG and other retailers.

BBG is currently in a ‘perfect storm’ weathering tough trading conditions that include: a poor retail environment, subdued and worrying trading conditions in Europe and the US, a strong AUD which reduces its offshore earnings and rising raw material costs including cotton.

Shareholders would have no option but to HOLD the shares as the share price hits a 10 year low.

BBG is addressing its balance sheet and capital position in consultation with its advisor Goldman Sachs, but re-iterates that an equity capital raising is the least preferred option.

Status: HOLD

BBG’s shares today traded at $2.12

For sharemarket and fixed income trading enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.


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