February 23rd, 2012
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.
About Head
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: headinvestors@aol.com
Gunter Hagspiel, Chief Financial Officer
Tel: +43 5574 608
Fax +43 5574 608 130
E-mail: g.hagspiel@head.com
Forward-Looking Statements
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.
Head NV
Prins Bernhardplein 200,
1097 JB Amsterdam
Shares:
ISIN: NL0000238301
Stock Market: Official Market of the Vienna Stock
Exchange
Notes:
HTM Senior Notes ISIN: XS0184717956 and XS0184719143
Listing: Luxembourg Stock Exchange