Amsterdam - 7th August 2014 - Head NV (VSX: HEAD; U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, announced the following results today.
Sales for the first six months of 2014 were up 2.0% compared to the prior year driven primarily by Winter Sports, offset by exchange rate movements. At constant currency the sales for the first six months of 2014 would have increased by 4.2%.
Winter Sports sales for the first six months were up 6.5% compared to the same period in 2013. This, however, is not a key delivery period for the division and consists mainly of close out sales for the 2013/2014 season and some deliveries of bindings under contract manufacturing agreements for the 2014/2015 season.
Our Winter Sports pre-orders for the 2014/2015 season, which have broadly been collected now, are impacted by the weather conditions during the prior season. During this season, southern parts of Europe and the USA experienced good snowfall, but the weather in our core markets of Central and Northern Europe was unseasonably warm and this will negatively influence the winter sports market in 2014. However, we believe that whilst the market overall may decline, we may gain market share in some countries. Our bookings at this stage have improved compared to those achieved in the same period in 2013.
The small decline in the overall Racquet Sports division performance was mainly due to the negative exchange rate impact coupled with tough market conditions for racquets that resulted in lower volumes of racquets sold. The decline of tennis ball volumes in the first quarter reversed in the second quarter resulting in a broadly stable performance for tennis balls for the first six months of 2014 compared to the first six months of 2013.
Our Diving division sales for the first six months benefited from the inclusion of the newly acquired SSI Group. Excluding the impact of SSI, the sales of equipment have declined due to tough conditions in some markets, for example the adverse weather conditions and the continued economic crisis in Southern Europe and political turmoil in the Middle East.
Sportswear sales for the six months were broadly flat mainly due to higher revenues for Summer and Winter Sportswear, partly offset by lower sales of bags in the UK market.
Gross margins for the six months to 30th June 2014 have improved from 40.9% to 44.3% mainly due to higher licensing revenues and lower cost of sales for our bindings, tennis ball and diving business.
The adjusted operating loss for the six months to 30th June 2014 decreased from €8.8m to €8.1m as a result of the improved gross profit (€5.8m) offset by increased costs of €5.1m mainly due to the inclusion of the newly acquired SSI Group, higher Winter Sport advertising and higher departmental selling expenses.
The net interest increased by €0.6m as the average debt in the first six months of 2014 was higher than in 2013. The cost incurred in the first six months of 2013 for the share option scheme (ESOP) reverted to income in the first six months of 2014 as the share-price declined over the period.
As a result of the foregoing factors the net loss for the six months to 30th June 2014 decreased by €0.7m compared to the net loss for the six months to 30th June 2013.
Net cash provided by operating activities increased by €0.8m in the first six months to 30th June 2014 mirroring the reduction in the net loss for the period.
Net debt increased by €33.4m from 30th June 2013 to 30th June 2014 due predominantly to the share buy back that took place in the second quarter of 2014 (€23.8m) and the payments for the acquisitions in the period.
For 2014, based on our current order book, we are anticipating a further recovery of our Winter Sports division and along with the impact of our acquisition our sales should grow modestly for the year. However the impact of currency fluctuations and some higher marketing and investment costs mean that overall we believe our operating results will be broadly in line with those achieved in 2013.
Our interim financial statements for the period ended 30th of June 2014 can be found on our website at www.head.com/corporate/investors/quarterly_reports.php.
HEAD NV is a leading global manufacturer and marketer of premium sports equipment and apparel.
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 (alpine skis, ski bindings, ski boots, snowboard and protection products, tennis, racquetball, paddle and squash racquets, tennis balls and tennis footwear, sportswear and swimming products), Penn (tennis balls and racquetball balls), Tyrolia (ski bindings) and Mares and SSI (diving) brands.
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
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: 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
Market: SIX Swiss Exchange
The press release can also be downloaded from the following link:Results Q2 2014
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Head N.V. via GlobeNewswire
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