Amsterdam – 23rd February 2012 – Head NV (VSX: HEAD; U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, announced the following results today.
Summary Unaudited Preliminary Financial Information
see attached pdf file
The year ended down 1.3% in sales compared to the prior year driven by a decline in Winter Sports sales in the last quarter and exchange rate movements, with the US $ weakening against the Euro. On a constant currency basis sales would have been broadly flat.
Winter Sports sales declined by 3.0% for the full year due to poor snow during the critical pre-Christmas sales period. During the last quarter, sales were down 7.4% as re-orders by retails in the key markets were lower than prior years due to soft consumer demand. The delayed start to the 2011/12 season is expected to have a negative impact on the pre-order sales for the 2012/2013 season.
The success of the HEAD race team has however supported the sales and average prices of our wintersport equipment.
The Racquet Sports division reported a decline in sales of 1.7% for the year, but in constant currency terms, sales would have grown slightly. Racquets performed well with sales momentum improving over the year particularly in the tour racquets segment where Novak Djokovic, the number one player in the world endorses our product. In contrast, the tennis ball business suffered from the continued increase in rubber prices that significantly impacts margins.
As anticipated 2011 was a tough year for the Diving Division with further natural disasters and political unrest around the world, particularly in key dive destinations. Reported sales fell 0.5%, but in constant currencies the division would have reported a small growth.
Adjusted operating profit fell by €8.3m due to a combination of lower sales and lower margins due predominantly to higher raw material prices and sourcing costs. In 2011 the company recorded non-cash expense of €0.4m relating to the Executive Stock Option Plans (ESOP) compared to an income of €3.1m in 2010 due to the increase in the share price in 2011.
Compounding the lower operating profit, net income was also adversely affected by higher non-cash amortisation in the year. During 2011 the Company bought back and ultimately redeemed the balance of its outstanding Senior Secured Notes due 2012, this resulted in the acceleration of the amortisation of the non-cash disagio costs which in total amounted to €8.5m (2010: €3.9m). Net income was positively impacted by deferred tax income in the year (€5.5m) compared to an expense in 2010 of €1.1m.
Net cash provided by operating activities fell by €14.0m in 2011 compared to 2010, due in part to lower profitability and also to increases in working capital which have mainly arisen due to higher winter sports inventory. The lower cash generated along with the planned higher capital expenditures and the share buy backs (€9.2m) have resulted in an increase in net debt at the year end of €20.8m.
2012 will be marred by the warm weather at the beginning of the 2011/12 ski season and weak consumer demand, however we will continue to invest in our business through athletic endorsements, a commitment to technological advancement and the growth of new segments such as sportswear in order to improve our profitability.
The 2011 Annual Report will be released on, or around, April 12th 2012 and the Head NV Annual General Meeting will be held on the 24th May 2012.
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, 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.
Prins Bernhardplein 200,
1097 JB Amsterdam
Stock Market: Official Market of the Vienna Stock Exchange
HTM Senior Notes ISIN: XS0184717956 and XS0184719143
Listing: Luxembourg Stock Exchange