BILLABONG INTERNATIONAL

Billabong International



Billabong International

Company Overview

Billabong International (Billabong) is an Australian company engaged in the production, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hard goods (such as surf and board sports). The company's products are licensed and distributed in more than 100 countries spanning Australia, North America, Europe, Japan, New Zealand, South Africa and Brazil. Billabong's products are distributed through specialized board sports retailers and through the company's own branded retail outlets. The company's products are available through approximately 10,000 doors worldwide. Billabong sells its merchandise under the brands Billabong, Element, Von Zipper, Kustom, Palmers, Honolua Surf, Nixon, Xcel, Tigerlily and sector 9 brands. Billabong is the company's foundation brand and is one of the leading brands in the global board sports sector, particularly within the surfing community. The company also markets a line of shoes for technical skate footwear and for girls under the Element brand. Von Zipper is an eyewear brand which targets the board sports and general action sports sectors. Kustom is a surf inspired footwear brand offered in Europe. A palmer is a surf hardware brand specialized in the manufacturing of surfboard wax and surfing accessories, including deck grip and legropes. Honolua Surf brand is inspired by the iconic Hawaiian waterman and has a strong presence in Hawaii. Nixon offers watches and Accessories.The Company markets swimwear and apparel products under the Tigerlily brand in Australia. Sector 9 is a skateboard brand, it specializes in skate long boards. Billabong International Limited's core business is the marketing, distribution, wholesaling and retailing of apparel, accessories, eyewear, wetsuits and hard goods in the board sports sector under the Billabong, Element, Von Zipper, Honolua Surf Company, Kustom, Palmers Surf, Nixon, Xcel, Tigerlily, Sector 9 and DaKine brands.

Ratios Analysis

Profitability Ratios

2010

2009

2008

ROA % (Net)

6.59

7.95

11.66

ROE % (Net)

12.2

15.5

22.66

ROI % (Operating)

13.1

16.14

22.45

EBITDA Margin %

14.81

14.29

19.89

Calculated Tax Rate %

28.5

25.82

28.22

Evaluation and Comments

Profitability ratios are is continuously declining since 2008. This is a concern for the company. This is because of tow way effect: one the sales of the company are consistently decreasing and secondly assets of the company have also been increased since 2008. Therefore the company is inefficient in utilizing its assets to generate the sales and increase profitability. The economic downturn has the major cause of decline in the revenues.

The company recorded revenues of AUD1, 487.5 million (approximately $1,312.3 million) in the financial year ended June 2010 (FY2010), a decrease of 11.2% compared with FY2009. For FY2010, Americas, the company's largest geographic market, accounted for 48% of the total revenues. Billabong's reports its revenues through three geographical segments Americas (48% of the reported revenues in FY2010), Australasia (28.67%) and Europe (23.18). The remaining revenues were generated by rest of the world.

Liquidity Ratios

2010

2009

2008

Quick Ratio

1.71

2.39

1.99

Current Ratio

2.48

3.3

3.07

Net Current Assets % TA

23.7

32.05

27.71

Evaluation and Comments

Here the short term liquidity of the company is so far better. But since 2008 it is declining.

Debt Management

2010

2009

2008

LT Debt to Equity

0.33

0.47

0.59

Total Debt to Equity

0.35

0.47

0.61

Interest Coverage

12.84

7.32

11.33

Evaluation and Comments

Long term liquidity of the firm has worsened since 2008. But the interest coverage ratio is quite ...