AMSTERDAM, Netherlands, Nov. 13, 2008 (GLOBE NEWSWIRE) -- Head N.V. (VSX:HEAD) (Pink Sheets:HEDYY), a leading global manufacturer and marketer of sports equipment, announced the following results today.
For the three months ended 30 September 2008 compared to the three months ended 30 September 2007:
* Net revenues were up 0.3% to EUR93.1 million
* Operating profit decreased by EUR4.0m to a profit of EUR4.8
* Excluding the impact of the non cash share-based
compensation, operating profit would have decreased by EUR2.6
million to a profit of EUR4.5 million
* The net profit for the period was EUR1.2 million compared
to a EUR4.1 million profit in Q3 2007.
For the nine months ended 30 September 2008 compared to the nine months ended 30 September 2007:
* Net revenues were down 0.4% to EUR211.0 million
* Operating loss improved by EUR0.1m to a loss of EUR5.3m
* Excluding the impact of the non cash share-based
compensation, the operating loss would have deteriorated by
EUR4.7m from a loss of EUR5.1 million in 2007 to EUR9.7
million in 2008
* The net loss for the period was EUR8.5 million compared to
a net loss of EUR11.9 million in the comparable 2007 period.
Johan Eliasch, Chairman and CEO, commented:
"The markets in which we operate are very challenging, for the first six months of the year the tennis racquet market shrunk by nearly 8% in Europe and the ball market by over 12%. We see continuing pressure in the diving market and orders are starting to slow down as anticipated and communicated last quarter.
"Even given the tough economic conditions and the further strengthening of the Euro compared to the comparable 2007 period, we achieved a sales growth in the quarter mainly as a result of a strong performance by the Winter Sports division. This growth, however, did not translate into improved profitability for the group due proportionately higher growths in raw material and energy prices and a weakening product mix particularly in our racquet sports division.
"The market challenges we are facing can only be addressed by ensuring that restructuring continues to be a core focus of the group and it will be essential to continue to undertake these projects in order to return the group to profitability.
"Our outlook for the year remains unchanged, and we continue to anticipate that we will record an operating loss for 2008. We are taking every step to adapt to the tougher trading conditions and to mitigate the pressures on the company's resources. In the face of the global financial crisis and the weakening of the global economy such steps will be vital."
Winter Sports
Winter Sports revenues for the three months ended September 30, 2008 increased by EUR5.4 million, or 11.1%, to EUR54.3 million from EUR48.9 million in the comparable 2007 period. This increase was due to higher sales volumes of skis, ski boots and protection wear. For the nine months ended September 30, 2008 Winter Sports revenues increased by EUR8.0 million, or 11.5%, to EUR77.7 million from EUR69.6 million in the comparable 2007 period. This increase was due to higher sales volumes of all of our winter sports products compared to sales volumes for the comparable 2007 period.
Racquet Sports
Racquet Sports revenues for the three months ended September 30, 2008 decreased by EUR4.3 million, or 12.3%, to EUR30.5 million from EUR34.8 million in the comparable 2007 period. This decrease was mainly due to the strengthening of the euro against the U.S. dollar as well as unfavorable product mix partially offset by higher sales volumes of balls. For the nine months ended September 30, 2008 Racquet Sports revenues decreased by EUR8.6 million, or 8.4%, to EUR93.7 million from EUR102.3 million in the comparable 2007 period. This decrease was due to the strengthening of the euro against the U.S. dollar as well as unfavorable product mix partially offset by higher sales volumes of balls and sales from our newly introduced tennis footwear.
Diving
Diving revenues for the three months ended September 30, 2008 decreased by EUR0.4 million, or 3.6%, to EUR10.0 million from EUR10.4 million in the comparable 2007 period due the strengthening of the euro against the U.S. dollar in the reporting period. For the nine months ended September 30, 2008, Diving revenues increased by EUR1.2 million, or 3.0%, to EUR41.9 million from EUR40.7 million in the comparable 2007 period. This increase was mainly driven by the introduction of new advanced products but negatively affected by the strengthening of the euro against the U.S. dollar.
Licensing
Licensing revenues for the three months ended September 30, 2008 decreased by EUR0.2 million, or 14.0% to EUR1.2 million from EUR1.4 million in the comparable 2007 period. For the nine months ended September 30, 2008 Licensing revenues decreased by EUR1.1 million, or 20.6%, to EUR4.1 million from EUR5.1 million in the comparable 2007 period due to fewer licensing agreements.
Total Revenues
Total Net Revenues. For the three months ended September 30, 2008 total net revenues increased by EUR0.3 million, or 0.3%, to EUR93.1 million from EUR92.8 million in the comparable 2007 period. This increase was mainly due to higher sales volumes of winter sport products partially offset by the effect of the strengthening of the euro against the U.S. dollar. For the nine months ended September 30, 2008 total net revenues decreased by EUR0.8 million, or 0.4%, to EUR211.0 million from EUR211.8 million in the comparable 2007 period. This decrease was mainly due to the strengthening of the euro against the U.S. dollar which was partly offset by higher sale volumes of all divisions.
Profitability
Sales deductions for the three months ended September 30, 2008 increased by EUR0.3 million, or 9.7%, to EUR2.9 million from EUR2.7 million in the comparable 2007 period due to higher sales. For the nine months ended September 30, 2008 sales deductions increased by EUR0.4 million, or 6.9%, to EUR6.4 million from EUR6.0 million in the comparable 2007 period due to promotion sales of close out products during the second quarter 2008.
Gross Profit. For the three months ended September 30, 2008 gross profit decreased by EUR1.6 million to EUR34.7 million from EUR36.4 million in the comparable 2007 period. Gross margin decreased to 37.3% in 2008 from 39.2% in the comparable 2007. For the nine months ended September 30, 2008 gross profit decreased by EUR3.0 million to EUR80.7 million from EUR83.7 million in the comparable 2007 period. Gross margin decreased to 38.2% in 2008 from 39.5% in the comparable 2007 period. This decrease was due to increased raw material and energy prices as well as unfavorable product mix in Winter Sports and Racquet Sports.
Selling and Marketing Expense. For the three months ended September 30, 2008, selling and marketing expense decreased by EUR0.2 million, or 1.0%, to EUR22.1 million from EUR22.4 million in the comparable 2007 period. For the nine months ended September 30, 2008, selling and marketing expense decreased by EUR0.1 million, or 0.2%, to EUR67.9 million from EUR68.0 million in the comparable 2007 period. Higher advertising costs for our sponsored professional ski racers, our newly introduced badminton products and tennis footwear were partly offset by lower shipment costs and the strengthening of the euro against the U.S. dollar.
General and Administrative Expense. For the three months ended September 30, 2008, general and administrative expense decreased by EUR0.2 million, or 3.3%, to EUR7.1 million from EUR7.4 million in the comparable 2007 period. For the nine months ended September 30, 2008, general and administrative remained stable compared to 2007.
Share-Based Compensation Expense (Income). The liability relating to the Stock Option Plans recorded on our balance sheet is depending on our share price. During the three months ended September 30, 2008, we recorded a EUR0.4 million non cash share-based compensation income (2007 comparable period: EUR1.7 million) as the share price declined in the period. For the nine months ended September 30, 2008, we recorded EUR4.4 million of non cash share-based compensation income for our Stock Option Plans as the share price also declined over this period, compared to EUR0.3 million of non cash share-based compensation expense in the comparable 2007 period when we experienced a slight increase in the share price.
Restructuring Cost. For the nine months ended September 30, 2008, we recorded EUR0.4 million re-movement cost in relation to the transfer of parts of the ski production from its site in Kennelbach, Austria to its site in Budweis, Czech Republic and EUR0.4 million additional depreciation of fixed assets due to the reduction of the remaining useful life relating to the planned reduction in production capacity resulting from shifting of international tennis ball production from USA to China.
Other Operating Expense (Income), net. For the three months ended September 30, 2008, other operating expense, net increased by EUR0.8 million, to EUR0.3 million from an income, net of EUR0.5 million in the comparable period in 2007. For the nine months ended September 30, 2008, other operating income, net decreased by EUR1.0 million, to EUR0.2 million from EUR1.2 million in the comparable 2007 mainly due to a release of an environmental accrual for our Estonian premises in 2007 and foreign currency exchange losses in 2008.
Operating Profit (Loss). As a result of the foregoing factors, operating profit for the three months ended September 30, 2008 decreased by EUR4.0 million to EUR4.8 million from EUR8.8 million in the comparable 2007 period. For the nine months ended September 30, 2008, operating loss decreased by EUR0.1 million to EUR5.3 million from EUR5.4 million in the comparable 2007 period.
Interest Expense. For the three months ended September 30, 2008, interest expense increased by EUR0.1 million, or 2.9%, to EUR3.2 million from EUR3.1 million in the comparable 2007. For the nine months ended September 30, 2008, interest expense increased by EUR0.2 million, or 2.6%, to EUR9.5 million from EUR9.3 million in the comparable 2007 mainly due to an increase in short-term borrowings.
Interest Income. For the three months ended September 30, 2008, interest income decreased by EUR0.1 million, or 44.2%, to EUR0.2 million from EUR0.3 million in the comparable 2007 period. For the nine months ended September 30, 2008, interest income decreased by EUR0.5 million, or 38.4% to EUR0.9 million from EUR1.4 million in the comparable 2007 period. This decrease was due to lower cash and cash equivalents.
Other Non-operating Income (Expense), net. For the three months ended September 30, 2008, other non-operating income, net remained stable. For the nine months ended September 30, 2008, other non-operating income, net increased by EUR1.9 million to an income, net of EUR1.5 million from an expense, net of EUR0.3 million in the comparable 2007 period mainly attributable to foreign currency gains.
Income Tax Benefit (Expense). For the three months ended September 30, 2008, the income tax expense was EUR1.0 million, a decrease of EUR1.2 million compared to income tax expense of EUR2.2 million in the comparable 2007 period due to lower taxable income. For the nine months ended September 30, 2008, the income tax benefit was EUR3.9 million, an increase of EUR2.2 million compared to an income tax benefit of EUR1.7 million in the comparable 2007 period. This increase resulted from lower current income tax expense and higher taxable losses before share-based compensation (income) expense as this income/expense has no tax effect.
Net Profit (Loss). As a result of the foregoing factors, for the three months ended September 30, 2008, we had a net profit of EUR1.2 million, compared to a net profit of EUR4.1 million in the comparable 2007 period. For the nine months ended September 30, 2008, we had a net loss of EUR8.5 million compared to a net loss of EUR11.9 million in the comparable 2007 period.
About Head
HEAD NV is a leading global manufacturer and marketer of premium branded sports equipment.
HEAD NV's ordinary shares are listed on the Vienna Stock Exchange ("HEAD").
Our business is organized into four divisions: Winter Sports, Racquet Sports, Diving and Licensing. We sell products under the HEAD (tennis, squash, paddle and racquetball racquets, tennis balls, tennis footwear, badminton products, alpine skis, ski bindings and ski boots, snowboards, bindings and boots), Penn (tennis and racquetball balls), Tyrolia (ski bindings), and Mares (diving equipment) brands.
We hold leading positions in all of our product markets and our products are endorsed by some of the world's top athletes including Richard Gasquet, Andrew Murray, Ivan Ljubicic, Svetlana Kuznetsova, Patty Schnyder, Amelie Mauresmo, Hermann Maier, Bode Miller, Didier Cuche, Marco Buchel, Rainer Schonfelder, Patrick Staudacher, Maria Riesch, Anja Parson, Elisabeth Gorgl, Sarka Zahrobska, Jon Olsson and Gianluca Genoni.
For more information, please visit our website: 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 headinvestors@aol.com Ralf Bernhart, Chief Financial Officer Tel: +43 1 70 179 354 Fax +43 1 707 8940
This press release should be read in conjunction with the company's report for the three and none months ended 30 September 2008.
This press release and the statements of Mr. Johan Eliasch quoted herein contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainties. Although Head believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included and quoted herein, the inclusion of such information should not be regarded as a representation by Head or any other person that the objectives and plans of Head will be achieved.