Amsterdam – 11th August 2011 – Head NV (VSX: HEAD; U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, and HTM Sport GmbH, a subsidiary of Head NV, announced the following results today.
Summary Unaudited Financial Information
see attached pdf file
In winter sports, the good early snow in 2010/2011 season did not last in Europe, and by mid January sales reorders reduced considerably driving sales down in the division by nearly 7% for the first quarter. This was reversed in the second quarter when sales increased by 18.7% driven mainly by earlier shipments of bindings under contract manufacturing agreements for the 2011/2012 season and a favourable product mix for boots.
Our tennis division was particularly impacted by the weakening of the US $ against the Euro which occurred in the second quarter. Overall volumes increased in both balls and racquets for the first six months of the year but the exchange rate movements combined with an unfavourable product mix in racquets resulted in lower reported sales for the division.
While the diving market started well in 2011, it was severely impacted by both political turbulence in key dive destinations in North Africa and natural disasters in Australia and Japan which resulted in a decline in sales for the first quarter. Some recovery was made during the second quarter when volumes increased, but these were impacted by exchange movements resulting in overall reported sales being broadly flat for the first six months of 2011.
Our newly introduced Sportswear Division generated a further €1.1m in sales in the second quarter matching those achieved in the first quarter.
Overall, sales for the group for the first six months of the year declined by nearly 1.4%.
The adjusted operating loss for the six month period improved marginally by €0.3m compared to prior year. This was mainly due to a €1.5m positive movement in other operating items, primarily due to exchange rate gains, offset by lower sales and increased raw material prices which reduced the gross margin by one percentage point from 42% to 41%.
The net loss for the six months increased by €1.8m due to non-cash share based compensation income in 2011 being lower by €3.4m and higher interest and other finance expense of €2.7m, offset by lower foreign exchange losses of €3.8m and the small improvement in the adjusted operating loss. The increase in interest and other finance expense of €2.7m in the period mainly arose due to the buy back of €14.4m of par value senior secured notes and the resultant acceleration of the amortization of non-cash disagio costs of €2.4m.
Operating cashflow for the six months declined by €9.6m due predominantly to movements on accounts payable. The increase in working capital is a result of returning to more normalised levels after the very tight levels during 2009 and 2010 which cannot be maintained long term.
The year to date has been mixed. We are delighted with the performance of Novak Djokovic who after his grand slam win at Wimbledon is now ranked number one in the world, but macro economic factors continue to impact our financial results, with exchange rate movements and increases in raw materials suppressing the margins, and natural disasters, political unrest and consumer confidence affecting sales.
We continue to forecast a lower operating profit in 2011 than we achieved in 2010.
HEAD NV is a leading global manufacturer and marketer of premium sports equipment.
HEAD NV’s ordinary shares are listed on the Vienna Stock Exchange (“HEAD”).
Our business is organized into five divisions: Winter Sports, Racquet Sports, Diving, Sportswear and Licensing. We sell products under the HEAD (tennis, squash and racquetball racquets, tennis balls, tennis footwear, badminton products, alpine skis, ski bindings and ski boots, snowboards, bindings and boots and sportswear), Penn (tennis and racquetball balls), Tyrolia (ski bindings) and Mares (diving equipment) brands.
For more information, please visit our website: http://www.head.com
Analysts, investors, media and others seeking financial and general information, please contact:
Clare Vincent, Investor Relations
Tel: +44 207 499 7800
Fax: +44 207 491 7725
E mail: email@example.com
Gunter Hagspiel, Chief Financial Officer
Tel: +43 5574 608
Fax +43 5574 608 130
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will” and similar terms and phrases, including references to assumptions, as they relate to Head NV, its management or third parties, identify forward-looking statements. Forward-Looking statements include statements regarding Head NV’s business strategy, financial condition, results of operations, and market data, as well as any other statements that are not historical facts. These statements reflect beliefs of Head NV’s management as well as assumptions made by its management and information currently available to Head NV. Although Head NV believes that these beliefs and assumptions are reasonable, the statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These Factors include, but are not limited to, the following: the still possible impact of the global economic turmoil, weather and other factors beyond our control, competitive pressures and trends in the sporting goods industry, our ability to implement our business strategy, our liquidity and capital expenditures, our ability to obtain financing, our ability to compete, including internationally, our ability to introduce new and innovative products, legal proceedings and regulatory matters, our ability to fund our future capital needs, and general economic conditions. These factors, risks and uncertainties expressly qualify all subsequent oral and written forward-looking statements attributable to Head NV or persons acting on its behalf.
NL 1012 KK Amsterdam
Stock Market: Official Market of the Vienna Stock Exchange
HTM Senior Notes ISIN: XS0184717956 and XS0184719143
HTM Senior Secured Notes ISIN: XS0447202218 and XS0447202309
Listing: Luxembourg Stock Exchange