Billabong continues to sink, management looks to Quiksilver parent for a lifeline

Billabong continues to sink, management looks to Quiksilver parent for a lifeline

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.

Image by Brocken Inaglory.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Get our daily business news

Sign up to our free email news updates.

 
Finexia’s Childcare Income Fund secures ‘very strong’ rating from Foresight Analytics & Ratings
Partner Content
Private credit specialist Finexia Financial Group (ASX: FNX) has secured a “very...
Finexia
Advertisement

Related Stories

"10x in six months": Brisbane startup Xrecruiter opens Melbourne office

"10x in six months": Brisbane startup Xrecruiter opens Melbourne office

A Brisbane-headquartered startup that helps recruiters strike it ou...

Black Hops Brewing administrators scoping out potential buyers for embattled business

Black Hops Brewing administrators scoping out potential buyers for embattled business

Administrators appointed last month to Gold Coast craft beer compan...

Netwealth founder to leave executive role as funds rise $6.7 billion in three months

Netwealth founder to leave executive role as funds rise $6.7 billion in three months

One of the largest wealth managers on the ASX reported a $6.7 billi...

Law firm profits surge as survey reveals robust client demand and margins

Law firm profits surge as survey reveals robust client demand and margins

Four in every five Australian law firms are reporting profit margin...