BILLABONG INTERNATIONAL LIMITED 30 August Investor presentation highlights

Transcription

1 BILLABONG INTERNATIONAL LIMITED 30 August 2010 Investor presentation highlights

2 RESULTS FY10 Results in Constant Currency (AUD) 2010 $m 2009 $m 2010 Change % Sales Revenue 1, ,482.6 (0.0) EBITDA (0.9) NPAT (pre-impairment charge) NPAT (pre-acquisition transaction costs and pre-impairment charge) NPAT (post-impairment charge) Results As Reported (AUD) Sales Revenue 1, ,669.1 (11.2) EBITDA (11.1) EBITDA Margin 17.1% 17.1% Earnings Per Share 58.3c 69.2c (15.8) Return on Capital Employed 12.9% 15.7%

3 RESULTS Constant Currency Sales FY10 Sales FY09 Australasia 29% Americas 48% Australasia 29% Americas 49% Europe 23% Europe 22% EBITDA FY10 Global 1% EBITDA FY09 Global 1% Australasia 35% Americas 36% Australasia 39% Americas 34% Europe 28% Europe 26%

4 RESULTS FY10 Working Capital in Constant Currency (AUD) 2010 $m 2009 $m 2010 Change % Net Working Capital % of 12 Months Sales stated at FY10 Year End Exchange Rates 28.3% 27.9% Gearing Levels As Reported (AUD) Borrowings (net) (3.7) Gearing Ratio (Net Debt / Net Debt + Equity) 15.1% 16.0% Interest Cover 12.6 times 7.1 times Borrowing Headroom 79% 69% Cash Flow As Reported (AUD) Net cash receipts from customers and payments to third parties EBITDA Net cash receipts as a % of EBITDA 100% 91%

5 EVOLUTION of Billabong Group Designer Wholesaler International Supply chain Brand expansion Present day Manufacturer Domestic Licensee territories Restructure and float Retail

6 BUSINESS MODEL Production and supply chain Branding, marketing and merchandising Third party wholesale* Company owned retail* Strategic objectives Quality and stability Unique design and product innovations Strong focused brands Control brand integrity Consumer insights Strengthen the distribution channel *% varies by market

7 AUSTRALIA Forward Orders Summer Orders Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Deliveries Hi summer Orders Deliveries

8 FINANCIAL METRICS Guiding principles for the business Aspiration to achieve and maintain strong wholesale and retail EBITDA margins Ongoing improvements to pre-tax return on capital employed (ROCE) relative to the Group s pre-tax cost of capital of approx. 12% Mid to high teen EBITDA margins in the medium term, following transition year Return to industry leading ROCE in the medium term Conservative gearing Gearing Ratio (Net Debt / Net Debt + Equity) < 30-35% over plan period Maintenance of appropriate financing headroom Available headroom 40-50% over plan period

9 BRANDS Growth drivers Existing Market Penetration Brand market share varies significantly by Region Significant potential to increase penetration of existing brands into the established channels New/ Emerging Market Development Emerging markets (Asia, S. America and E. Europe) are seeing strong growth in their middle class who will increasingly have the disposable income and leisure time to consider action sports Brand Design & Marketing Innovation Fundamental to Billabong s future growth is continued design and marketing innovation New Category Growth Most brands in the portfolio have potential to extend into new categories Broader action sport and lifestyle segments hold further potential for Billabong

10 BILLABONG Wholesale Sales 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Including Sales to Related Retail Excluding Pac Sun (Constant Currency) Americas Europe Australasia Consol FY08 FY09 FY10

11 ELEMENT Wholesale Sales 140% 120% 100% 80% 60% 40% 20% 0% Including Sales to Related Retail Excluding Pac Sun (Constant Currency) Americas Europe Australasia Consol FY08 FY09 FY10

12 NIXON Wholesale Sales 160% 140% 120% 100% 80% 60% 40% 20% 0% Including Sales to Related Retail (Constant Currency) Americas Europe Australasia Consol FY08 FY09 FY10

13 RETAIL Growth driver support Controllable floor space supports all 4 key growth drivers for Billabong as well as enhancing the value of wholesale acquisitions Existing Market Penetration Controlled brand exposure Replacement of lost surf channel distribution as independents exit Partner programs symbiotic with owned retail New/ Emerging Market Development Industry development Brand Design & Marketing Innovation Direct consumer feedback Space for experimentation Volumes to support fast fashion Controllable Floor Space (Partner Programs, Retail, Online) Increase Vertical % and retail profitability Space for exposure of wider range (particularly younger brands) New Category Growth Selective Acquisitions/ Alliances

14 RETAIL Speed to market Retail provides the scale to short-circuit the current sell-in process to wholesalers for part of the range and deliver new ranges in a comparable timeframe to vertical apparel retailers Comparison of BBG vs. Typical Apparel Retailer Leadtimes BBG Leadtime: Range Development Trim, Samples, Fabric Sourcing Sell-in Production & Delivery Required Time: Range Develop Trim, Samples, Fabric Production & Delivery Typical Vertical Retailer: Range Develop Trim, Samples, Fabric Production & Delivery Retail does not require the sell in process as long as retail planners are linked into wholesale design team Range release schedule required for wholesale indent model is not relevant for retail

15 COMPANY RETAIL June/July

16 RETAIL Sales as % of total sales (constant currency) 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% FY06 FY07 FY08 FY09 FY10 North America South Americas Europe Australasia Consolidated

17 RETAIL EBITDA margins Retail Full Profit EBITDA Margin 10.9% Americas Europe Australasia Billabong USA Retail France Amazon, Beachculture Quiet Flight Retail Spain Billabong Asia South America Retail USA Outlets Europe Outlets Two Seasons Billabong Australia Japan, Kirra Surf South Africa Retail Full Profit EBITDA Margin 0.0% Beachworks, Honolua Note: banners listed in alphabetical order UK other than Two Seasons

18 RETAIL FY % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% North America Retail Full Profit EBITDA Margin (Constant Currency) South Americas Europe Australasia Consolidated

19 RETAIL FY % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% North America Retail Full Profit EBITDA Margin (Constant Currency) Excluding Beachworks & Honolua South Americas Europe Excluding Beachworks & Honolua Australasia Consolidated

20 RETAIL FY % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% North America Retail Full Profit EBITDA Margin (Constant Currency) Excluding Beachworks & Honolua South Americas Europe Excluding Beachworks & Honolua Stores open more than 2yrs, excluding Beachworks & Honolua Australasia Consolidated

21 NORTH AMERICA North America FY06 US$000s FY10 US$000s CAGR Total Sales 362, , % Sales Excl Top 5 231, , % Top 5 Sales 131, , % PacSun incl. in Top 5 - down from $95 million to $36 million

22 RETAIL METRICS Store evaluation (2nd full-year after opening) Full Profit EBIT Margin Target > 15% Return on Capital Employed Target > 20% IRR Target > 20% NPV Must be positive assuming 20% discount rate

23 RETAIL Full profit actual 39,000 38,500 38,000 37,500 37,000 36,500 36,000 35,500 35,000 Quiet Flight (US$000s) FY09 Sales FY10 EBITDA 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - % BBG Family 61.0% 70.0% ROCE 5.1% 10.9% EBITDA Margin 8.6% 15.4%

24 RETAIL Full profit actual Amazon (NZ$000s) 60,000 50,000 40,000 30,000 20,000 10,000 - FY07 FY08 FY09 FY10 Sales EBITDA 10,000 8,000 6,000 4,000 2,000 - % BBG Family 25.0% 40.0% 50.0% 55.0% ROCE 38.4% 42.6% 36.1% 34.9% EBITDA Margin 21.4% 20.3% 18.6% 16.8%

25 RETAIL Full profit actual 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Kirra Surf (AU$000s) FY09 Sales FY10 EBITDA 1,400 1,200 1, % BBG Family 43.9% 52.5% ROCE 15.4% 18.0% EBITDA Margin 22.1% 17.5%

26 RETAIL Projections Rush Now Mid-term (2-3 years) BBG Family Brand Share % 25% 45% EBITDA Margin % 20% ROCE % 37%

27 RETAIL Projections West 49 Now Mid-term (2-3 years) BBG Family Brand Share % 15% 45% EBITDA Margin % 15% ROCE % 25%

28 EVOLUTION ROCE impact ROCE = 25.4% 22.6% 22.0% 15.7% 12.9% 510 stores* Retail Network 242 stores 335 stores * Pro forma store numbers 49 stores 64 stores 110 stores 159 stores

29 NIXON Growth drivers Nixon has driven growth across all four brand growth drivers Existing Market Penetration 10%+ FY07-FY10 sales CAGR in N. America market Main driver was expansion into speciality watch channel New/ Emerging Market Development 20%+ FY07-FY10 sales CAGR outside of N. America leveraging Billabong s global distribution network Brand Design & Marketing Innovation Tide watch Unique high end watch design Luxury accessories New Category Growth Apparel Headphones Nixon ROCE increased from 8% in 2005 to 18% in 2010

30 ROCE Historical view

31 RETAIL (AUS/NZ) Strategy Purpose: Guiding Principles: Strategic objectives: To Inspire Youth through innovative and profitable retail concepts Provide a controllable retail operational platform and distribution channel to showcase our brands Create innovative, incomparable and profitable retail concepts that inspire youth Attract and retain great retailers who are equally passionate about our organisation Build strong Retail Brands by creating innovative and aspirational marketing with authenticity and integrity Superior customer clarity, insight and service through connecting/living the same lifestyle Operational excellence in all areas of our Retail business 1. Build a best in class operational platform 2. Develop partner store program to protect independent channel 3. Grow retail presence in bricks & mortar stores and online 4. Drive value from integrated wholesale/ retail model

32 RETAIL (AUS/NZ) Improve operational capability