AMSTERDAM, Netherlands, Feb. 28, 2008 (PRIME NEWSWIRE) -- 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 31 December 2007 compared to the three months ended 31 December 2006:
* Net revenues were down 11.4% to EUR 109.2 million * Operating profit decreased by EUR 5.9 million to EUR 4.7 million, from EUR 10.6 million in Q4 2006. * The net profit for the period was down EUR 2.5 to EUR 0.7 million compared to a net profit of EUR 3.3 million in Q4 2006.
For the year ended 31 December 2007 compared to the year ended 31 December 2006:
* Net revenues were down 12.5% to EUR 321.0 million * The Operating loss for the year was EUR 0.7 million compared to an operating profit of EUR 20.0 million in 2006. * The net loss for the year was EUR 11.2 million compared to a net profit of EUR 4.4 million in 2006.
Johan Eliasch, Chairman and CEO, commented:
"As anticipated, the fourth 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 19.3% and profit margins were also lower compared with the prior year.
"Whilst the financial performance of the Winter Sports Division has been heavily impacted by the market conditions, the race team has demonstrated the excellent performance of the products with 11 world cup victories and 36 top three placements so far this season dominating the speed disciplines.
"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 U.S. dollar. Gross Profit of the division has improved due to the impact of the MicroGel series and cost reduction initiatives.
"The Diving Division continues to perform well and we believe has gained market share during 2007; revenues are up 4.6% in the three month period compared with prior year.
"Overall, as anticipated and communicated to the market in May, the full year resulted in a small operating loss which amounted to EUR 0.7m after restructuring costs. Our continual investment in new athletes, technological product development, and cost reduction will be of key importance during 2008 in order to return the company to profitability."
Results for the three months and year ended December 31, 2007 and 2006:
Winter Sports
Winter Sports revenues for the three months ended December 31, 2007, decreased by EUR 17.0 million, or 19.3%, to EUR 70.9 million from EUR 87.9 million in the comparable 2006 period. This decrease was due to significantly lower orders placed for winter sport products.
For the year ended December 31, 2007, Winter Sports revenues decreased by EUR 47.5 million, or 25.3%, to EUR 140.5 million from EUR 188.1 million in 2006. 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 December 31, 2007, increased by EUR 1.1 million, or 4.2%, to EUR 27.5 million from EUR 26.4 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 year ended December 31, 2007, Racquet Sports revenues decreased by EUR 2.8 million, or 2.1%, to EUR 129.8 million from EUR 132.7 million in 2006. Despite significant increased sales volumes of our tennis racquets in the fourth quarter the strengthening of the euro against the U.S. dollar in the reporting period diminished the euro value of U.S. sales.
Diving
Diving revenues for the three months ended December 31, 2007, increased by EUR 0.5 million, or 4.6%, to EUR 11.1 million from EUR 10.6 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 year ended December 31, 2007, Diving revenues increased by EUR 3.2 million, or 6.6%, to EUR 51.8 million from EUR 48.6 million in 2006. 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 December 31, 2007 remained flat comparable to the three months ended December 31, 2006.
For the year ended December 31, 2007, Licensing revenues decreased by EUR 0.8 million, or 9.9%, to EUR 7.3 million from EUR 8.1 million in 2006, principally due to lower revenues recorded for the first quarter of 2007.
Profitability
Sales deductions for the three months ended December 31, 2007, decreased by EUR 1.3 million, or 34.5%, to EUR 2.5 million from EUR 3.8 million in the comparable 2006 period.
For the year ended December 31, 2007, sales deductions decreased by EUR 2.2 million, or 20.7%, to EUR 8.5 million from EUR 10.7 million in 2006 due to decreased sales.
Gross Profit. For the three months ended December 31, 2007, gross profit decreased by EUR 5.3 million to EUR 40.7 million from EUR 46.0 million in the comparable 2006 period. Gross margin decreased slightly to 37.2% in 2007 from 37.3% in the comparable 2006.
For the year ended December 31, 2007, gross profit decreased by EUR 20.1 million to EUR 124.1 million from EUR 144.2 million in 2006. Gross margin decreased to 38.7% in 2007 from 39.3% in the comparable 2006 period. This decrease was due to lower sales and lower utilization of production capacity for winter sports products.
Selling and Marketing Expense. For the three months ended December 31, 2007, selling and marketing expense increased by EUR 0.7 million, or 2.9%, to EUR 26.2 million from EUR 25.5 million in the comparable 2006 period.
For the year ended December 31, 2007, selling and marketing expense increased by EUR 1.4 million, or 1.5%, to EUR 94.3 million from EUR 92.9 million in 2006. 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 and the strengthening of the euro against the U.S. dollar.
General and Administrative Expense. For the three months ended December 31, 2007, general and administrative expense decreased by EUR 0.2 million, or 2.1%, to EUR 8.1 million from EUR 8.2 million in the comparable 2006 period.
For the year ended December 31, 2007, general and administrative expense expense decreased by EUR 0.3 million, or 0.9%, to EUR 30.1 million from EUR 30.3 million in 2006.
Restructuring Costs. For the twelve months ended December 31, 2007, we recorded EUR 2.0 million of restructuring expenses related to the reorganization of ski production and outsourcing some of the production capacities in Italy.
Share-based Compensation (Income) Expense. For the three months ended December 31, 2007, we recorded EUR 0.6 million of share-based compensation income for our Stock Option Plans compared to an expense of EUR 1.6 million in the comparable 2006 period, mainly due to the lower share price.
For the twelve months ended December 31, 2007, we recorded EUR 0.2 million of share-based compensation income for our Stock Option Plans compared to EUR 1.8 million expense in 2006. The positive effect is mainly due to the decrease of the share price during 2007.
Other Operating (Income) Expense, net. For the three months ended December 31, 2007, other operating loss, increased by EUR 0.2 million to EUR 0.2 million from EUR 0.0 million in the comparable 2006.
For the twelve months ended December 31, 2007, other operating income, net increased by EUR 0.5 million to EUR 1.4 million from EUR 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.
Operating Profit (Loss). As a result of the foregoing factors, operating profit for the three months ended December 31, 2007, decreased by EUR 5.9 million to EUR 4.7 million from EUR 10.6 million in the comparable 2006 period.
For the year ended December 31, 2007, an operating loss of EUR 0.7 million was recorded compared to a profit of EUR 20.0 million in 2006, reflecting a decline of EUR 20.7 million in operating results.
Interest Expense. For the three months ended December 31, 2007, interest expense increased EUR 0.1m compared to the three months ended December 31,2006. For the twelve months ended December 31, 2007, interest expense increased by EUR 0.2 million to EUR 12.6 million from EUR 12.4 million in the comparable 2006 period. This increase was mainly due to the contribution from our venture business partner.
Interest Income. For the three months ended December 31, 2007, interest income increased by EUR 0.4 million to EUR 0.7 million from EUR 0.3 million in the comparable 2006 period.
For the twelve months ended December 31, 2007, interest income increased by EUR 0.5 million to EUR 2.1 million from EUR 1.6 million in the comparable 2006 period due to higher interest rates.
Foreign Exchange Gain (Loss). For the three months ended December 31, 2007 a foreign exchange gain of EUR 0.6m was recorded compared to a loss of EUR 0.4m in the comparable 2006 period.
For the twelve months ended December 31, 2007, a foreign exchange gain of EUR 0.3m was recorded compared to a loss of EUR 0.3m in the year to December 31, 2006.
Income Tax Expense. For the three months ended December 31, 2007, income tax expense was EUR 1.9 million, a decrease of EUR 2.1 million compared to income tax expense of EUR 4.0 million in the comparable 2006 period. For the twelve months ended December 31, 2007, income tax expense was EUR 0.2 million, a decrease of EUR 4.3 million compared to the income tax expense of EUR 4.5 million in the comparable 2006 period.
The decrease in tax expense reflects lower current income tax expense due to reduced pre-tax results of some of our subsidiaries in a tax paying position. The increase in tax losses, whose deductibility from future taxable profits is probable, is partially offset by a deferred tax expense of EUR 1.4 million as a result of a decrease in the German tax rate and accordingly a decrease in deferred tax asset on tax losses carried forwards.
Profit (Loss). As a result of the foregoing factors, for the three months ended December 31, 2007, we recorded a profit of EUR 0.7 million, compared to EUR 3.3 million in the comparable 2006 period. For the year ended December 31, 2007, we recorded a loss of EUR 11.2 million compared to a profit of EUR 4.4 million in the comparable 2006 period.
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 Buechel, Patrick Staudacher, Maria Riesch and Sarka Zahbrovska.
For more information, please visit our website: www.head.com
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