HEAD NV Announces Results for the Three and Nine Months ended 30
September 2007
Amsterdam - 8th November 2007 - Head N.V. (NYSE: HED; VSX: HEAD), a
leading global manufacturer and marketer of sports equipment,
announced the following results today.
For the three months ended 30 September 2007 compared to the three
months ended 30 September 2006:
* Net revenues were down 17.1% to ¤92.8 million
* Operating profit decreased by ¤7.9 million to ¤8.8 million, from
¤16.8 million in Q3 2006.
* The net profit for the period was down ¤6.9 to ¤4.1 million
compared to a net profit of ¤11.0 million in Q3 2006.
For the nine months ended 30 September 2007 compared to the nine
months ended 30 September 2006:
* Net revenues were down 13.0% to ¤211.8 million
* The Operating loss for the period was ¤5.4 million compared to an
operating profit of ¤9.4 million in comparable 2006 period.
* The net loss for the period was ¤11.9 million compared to a net
profit of ¤1.1 million in the comparable 2006 period.
Johan Eliasch, Chairman and CEO, commented:
"As anticipated, the third quarter results have been negatively
impacted by the performance of the Winter Sports Division. The poor
snow in the 06/07 skiing season has resulted in lower sales and
utilisation of our facilities. The sales in this division for the
three months were down by 30.5% and profit margins were also lower
compared with the prior year.
In the Racquet Sports Division sales were up 4.2% in the last quarter
due to new product introductions partly offset by strengthening of
the Euro against the US dollar. The currency movement has improved
our gross margin resulting in overall gross profits up slightly in
this division.
The Diving division continues to perform well and we believe has
gained market share during 2007; revenues are up nearly 3% in the
three month period compared with prior year.
Overall, however, primarily due to the adverse conditions affecting
the Winter Sports market, we continue to anticipate that we may
record an operating loss for 2007."
Results for the three and nine months ended September 30, 2007 and
2006:
As of December 31, 2006 the Company determined that certain
share-based compensation plans should have been accounted for as
cash-settled which originally were treated as equity-settled. These
changes have been applied to the 3 and 9 months ended 30 September
2006, and accordingly restated.
Winter Sports
Winter Sports revenues for the three months ended September 30, 2007,
decreased by ¤21.5 million, or 30.5%, to ¤48.9 million from ¤70.4
million in the comparable 2006 period. This decrease was due to
significantly lower orders placed for winter sport products.
For the nine months ended September 30, 2007, Winter Sports revenues
decreased by ¤30.6 million, or 30.5%, to ¤69.6 million from ¤100.2
million in the comparable 2006 period. This decrease was due to lower
sales volumes of all of our winter sports products as a consequence
of bad snow conditions globally in the winter season 2006/2007.
Racquet Sports
Racquet Sports revenues for the three months ended September 30,
2007, increased by ¤1.4 million, or 4.2%, to ¤34.8 million from ¤33.4
million in the comparable 2006 period. This increase was due to
higher sales volumes in tennis racquets as a consequence of new
product introductions, which were partially offset in euro value
terms by the strengthening of the euro against the U.S. dollar.
For the nine months ended September 30, 2007, Racquet Sports revenues
decreased by ¤4.0 million, or 3.7%, to ¤102.3 million from ¤106.3
million in the comparable 2006 period. This decrease was mainly due
to the strengthening of the euro against the U.S. dollar in the
reporting period, which diminished the euro value of US sales and
intensified price competition in the European tennis ball market.
Diving
Diving revenues for the three months ended September 30, 2007,
increased by ¤0.3 million, or 2.5%, to ¤10.4 million from ¤10.1
million in the comparable 2006 period despite a negative impact of
the strengthening of the euro against the U.S. dollar in the
reporting period.
For the nine months ended September 30, 2007, Diving revenues
increased by ¤2.7 million, or 7.1%, to ¤40.7 million from ¤38.0
million in the comparable 2006 period. This increase was mainly
driven by improved availability throughout the distribution chain on
our broad variety of diving products and was negatively affected by
the strengthening of the euro against the U.S. dollar in the
reporting period.
Licensing
Licensing revenues for the three months ended September 30, 2007,
increased by ¤0.2 million, or 14.7%, to ¤1.4 million from ¤1.2
million in the comparable 2006 period.
For the nine months ended September 30, 2007, Licensing revenues
decreased by ¤0.8 million, or 13.4%, to ¤5.1 million from ¤5.9
million in the comparable 2006 period, principally due to lower
revenues recorded for the first quarter of 2007
Profitability
Sales deductions for the three months ended September 30, 2007,
decreased by ¤0.5 million, or 16.8%, to ¤2.7 million from ¤3.2
million in the comparable 2006 period.
For the nine months ended September 30, 2007, sales deductions
decreased by ¤0.9 million, or 13.2%, to ¤6.0 million from ¤6.9
million in the comparable 2006 period due to decreased sales.
For the three months ended September 30, 2007, gross profit decreased
by ¤9.1 million to ¤36.4 million from ¤45.4 million in the comparable
2006 period. Gross margin decreased to 39.2% in 2007 from 40.6% in
the comparable 2006.
For the nine months ended September 30, 2007, gross profit decreased
by ¤14.5 million to ¤83.7 million from ¤98.2 million in the
comparable 2006 period. Gross margin decreased to 39.5% in 2007 from
40.3% in the comparable 2006 period. This decrease was due to lower
sales and lower utilization of production capacity for winter sports
products.
For the three months ended September 30, 2007, selling and marketing
expense decreased by ¤0.4 million, or 1.8%, to ¤22.4 million from
¤22.8 million in the comparable 2006 period.
For the nine months ended September 30, 2007, selling and marketing
expense increased by ¤0.6 million, or 0.8%, to ¤68.0 million from
¤67.4 million in the comparable 2006 period. This increase was mainly
due to higher advertising costs for our sponsored professional ski
racers, which were partly offset by lower commissions, shipment costs
and selling expense as a consequence of decreased sales.
For the three months ended September 30, 2007, general and
administrative expense increased by ¤0.1 million, or 2.0%, to ¤7.4
million from ¤7.2 million in the comparable 2006 period.
For the nine months ended September 30, 2007, general and
administrative expense remained stable.
Share-based Compensation Expense (Income). For the three months ended
September 30, 2007, we recorded ¤1.7 million of share-based
compensation income for our Stock Option Plans compared to ¤ 1.1
million in the comparable 2006 period, mainly due to the lower share
price.
For the nine months ended September 30, 2007, we recorded ¤0.3
million of share-based compensation expense for our Stock Option
Plans compared to ¤ 0.2 million in the comparable 2006 period.
For the three months ended September 30, 2007, other operating
income, net increased by ¤0.2 million to ¤0.5 million from ¤0.3
million in the comparable 2006 period due to sales of a diving brand
and a non consolidated investment.
For the nine months ended September 30, 2007, other operating income,
net increased by ¤0.3 million to ¤1.2 million from ¤0.9 million in
the comparable 2006 period. This increase was due to the release of
an accrual for possible environmental expenses related to the
property in Estonia which we sold in 2005 and the sales of the
Sporasub brand and of a non consolidated investment. This income was
partly offset by lower foreign exchange gains.
As a result of the foregoing factors, operating profit for the three
months ended September 30, 2007, decreased by ¤7.9 million to ¤8.8
million from ¤16.8 million in the comparable 2006 period.
For the nine months ended September 30, 2007, an operating loss of
¤5.4 million was recorded compared to a profit of ¤9.4 million in the
comparable 2006 period, reflecting a decline of ¤14.8 million in
operating results.
For the three and nine months ended September 30, 2007, interest
expense changed insignificantly compared to the comparable 2006
periods.
For the three months ended September 30, 2007, interest income
decreased by ¤0.1 million to ¤0.3 million from ¤0.4 million in the
comparable 2006 period.
For the nine months ended September 30, 2007, interest income
increased by ¤0.1 million to ¤1.4 million from ¤1.3 million in the
comparable 2006 period due to higher interest rates.
For the three months ended September 30, 2007, other non-operating
income, net increased by ¤0.1 million to ¤0.3 million from ¤0.2
million in the comparable 2006 period, mainly due to foreign currency
loss.
For the nine months ended September 30, 2007, other non-operating
income, net decreased by ¤0.4 million to an expense of ¤0.3 million
from an income of ¤0.1 million in the comparable 2006 period, mainly
due to foreign currency loss.
For the three months ended September 30, 2007, income tax expense was
¤2.2 million, a decrease of ¤1.0 million compared to income tax
expense of ¤3.3 million in the comparable 2006 period. This decrease
was due to lower pre-tax income. Additionally, ¤1.2 million of
deferred tax expense were recorded as a result of the effect of the
decrease in the German income tax rate on tax loss carry forwards.
For the nine months ended September 30, 2007, income tax benefit was
¤1.7 million, an increase of ¤2.2 million compared to an income tax
expense of ¤0.5 million in the comparable 2006 period. This increase
reflected the increase in pre-tax losses whose deductibility from
future taxable profits is probable, and was partially offset by
deferred income tax expense of ¤1.2 million as a result of the effect
of the decrease in the German income tax rate on tax loss carry
forwards.
As a result of the foregoing factors, for the three months ended
September 30, 2007, we recorded a profit of ¤4.1 million, compared to
¤11.0 million in the comparable 2006 period. For the nine months
ended June 30, 2007, we recorded a loss of ¤11.9 million compared to
a profit of ¤1.1 million in the comparable 2006 period.
HEAD N.V. Financial Reporting and Conference Call Calendar 2008
Year End 28
2007 February
2008
First Quarter 2008 15 May
2008
Second Quarter 2008 14 August
2008
Third Quarter 2008 13
November
2008
The Company will release the results prior to the opening of the
Vienna Stock Exchange and the conference calls will be held at 4pm
Central European time (10am New York time). Conference call details
will be distributed at least one week prior to each scheduled event
and posted on our website.
In addition, Head files its financial results electronically with the
SEC's EDGAR databases.
The Company archives financial results, conference call presentations
and press releases on the Investor Relations page of its website.
About Head
HEAD NV is a leading global manufacturer and marketer of premium
sports equipment.
HEAD NV's ordinary shares are listed on the New York Stock Exchange
("HED") and 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, badminton
products, alpine skis, ski bindings and ski boots, snowboards,
bindings and boots), Penn (tennis and racquetball balls), Tyrolia
(ski bindings), and Mares/Dacor (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
Andre Agassi, Hermann Maier, Bode Miller, Amelie Mauresmo, Svetlana
Kuznetsova, Andrew Murray, Ivan Ljubicic, Didier Cuche, Marco Büchel,
Patrick Staudacher, Maria Riesch and Sarka Zahbrovska.
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
E-mail: headinvestors@aol.com
Ralf Bernhart, Chief Financial Officer
Tel: +43 1 70 179 354
Fax +43 1 707 8940
The full press release including tables can be downloaded from the
following link: