Amsterdam – 24th February 2011 – Head N.V. (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)
* 2009 numbers have been amended as a result of a review of our accounts by the Netherlands Authority for the Financial Markets (the “AFM”) for comparison reasons. Please see our press release as of November 24th 2010.
As anticipated for the full year 2010, our sales are above last years level, driven by our winter sports sales which showed strong momentum at the end of the year. This reverses the trend in our other large division, Racquets sports, which started the year with some strong growth, but this declined towards the end of the year. Our sales in the year were positively impacted by currency and at constant currency rates would have grown by 5%.
Winter Sports for the full year increased by nearly 13% driven by a recovery in the market as a result of good snow prior to the critical pre-Christmas sales period and positive momentum for the brand created by great product development and continued focus on our endorsement strategy. Sales improved in all our product categories.
Racquet sports experienced a strong start to the year, but momentum slowed down in the second half of the year and overall sales were flat on a constant currency basis. Sales in racquets declined in the year compared to the prior year, but this was offset by improved sales in balls.
Diving sales improved nearly 6% from a low in 2009. This was in part due to positive exchange rate movements and in part due to some momentum by the Mares Brand. We believe that the market recovered and grew in soft products such as fins, masks and neoprene, but declined in the hard goods such as regulators. 2011 will prove another challenging year after the floods in Australia and the shark attacks and civil unrest in Egypt both of which are key dive destinations.
Overall adjusted operating profit has improved by €10.7 million. The improvement in sales, in particular in winter sports has been compounded by the positive impact of our recent restructuring programmes to result in the improved absolute operating profit and operating margin. In 2010, the Company recorded non-cash income of €3.1 million relating to the Executive Stock Option Plans (ESOP) which was due to the decrease of share price over the period. In 2009, the Company recorded non-cash expense of €9.0 million.
The overall positive cash generation in the year resulted in our net debt reduced by €7.3 million. Cash provided by operating activities was lower by just under €10m as the improvement achieved in 2009 in relation to working capital management could not be repeated in 2010. Capital expenditure was up slightly as anticipated.
It is too early in the year to predict the company’s performance in 2011, but we have seen our cost base increase further since the end of the year as some raw materials have jumped in price, and labour rates in China have been subjected to mandatory double digit percentage increases. In addition, the Renminbi has appreciated in value against the US $, which again increases our sourcing costs.
The 2010 Annual Report will be released on or around the 14 April 2011 and the Head NV AGM will be held on the 26 May 2011.
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 four divisions: Winter Sports, Racquet Sports, Diving and Licensing. We sell products under the HEAD (tennis, squash and racquetball racquets, tennis balls, tennis footwear, badminton products, alpine skis, ski bindings and ski boots, snowboards, bindings and boots and sportswear), Penn (tennis and racquetball balls), Tyrolia (ski bindings), and Mares/Dacor (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 N.V., its management or third parties, identify forward-looking statements. Forward-Looking statements include statements regarding Head N.V.’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 N.V.’s management as well as assumptions made by its management and information currently available to Head N.V. Although Head N.V. 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 impact of the current global economic turmoil, weather and other factors beyond their control, competitive pressures and trends in the sporting goods industry, our ability to implement their business strategy, our liquidity and capital expenditures, our ability to obtain financing, our ability to realize the cost savings expected from the cost reduction program, our ability to compete, including internationally, our ability to introduce new and innovative products, legal proceedings and regulatory matters, our ability to fund their 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 N.V. or persons acting on its behalf.
NL 1012 KK Amsterdam
Stock Market: Official Market of the Vienna Stock Exchange
HTM Senior Notes ISIN: XS0184717956 and XS0184719143
HTM Senior Secured Notes ISIN: XS0447202218 and XS044702309
Listing: Luxembourg Stock Exchange