Head N.V. reported that net revenues for the first quarter increased
7.5% to €61.6 million from €57.3 million last year. The company slimmed
its net loss to a loss of €3.5 million compared to a €9.6 million loss
in Q1 2007.
Johan Eliasch, chairman and CEO, commented:
“Following our poor results for 2007, the first quarter for 2008 has
been positively impacted by the good conditions experienced during the
recent Winter Sport season and the success of our race team. This
however has not been fully reflected in the operating profit of the
company as a result of lower gross margins in Winter Sports and Diving
and higher selling and marketing costs. Overall our operating loss,
excluding the share based compensation income and expense, has improved
by €0.6m in the quarter.
"We feel that the Winter Sports Industry has not fully recovered
from the poor season it experienced in 2006/07 and the results in Q1
2008 are not indicative of the full year outcome. Bookings for the
2008/09 season, which will make up the majority of our sales in the
Winter Sports Division in 2008, suggest that while we should see an
improvement this year, we will not reach sales levels achieved in 2006.
"In our other divisions, market conditions are tough due to the
current economic climate and the discretionary nature of our products
and as a result, for the group, we are currently anticipating an
operating loss in the region of that achieved in 2007.“
Winter Sports revenues for the three months ended March 31, 2008
increased 43.2%, to €15.4 million from €10.8 million in the comparable
2007 period. This increase was due to higher sales volumes of all of
the company's winter sports products compared to sales volumes of the
first quarter 2007 which were extremely low due to bad snow conditions
in the winter season 2006/07 causing lower re-orders.
Profitability
Sales deductions for the three months ended March 31, 2008 increased
11.5%, to €1.7 million from €1.5 million in the comparable 2007 period
due to increased sales.
Gross Profit. For the three months ended March 31, 2008 gross profit
increased by €1.5 million to €24.8 million from €23.4 million in the
comparable 2007 period. This increase was due to higher sales. Gross
margin decreased to 40.3% in 2008 from 40.7% in the comparable 2007
period negatively affected by increased raw material prices.
Selling and Marketing Expense. For the three months ended March 31,
2008, selling and marketing expense increased by €0.6 million, or 2.6%,
to €24.9 million from €24.2 million in the comparable 2007 period. This
increase was mainly due to higher advertising costs mainly for our ski
racing team.
General and Administrative Expense. For the three months ended March
31, 2008, general and administrative expenses remained stable compared
to the comparable 2007 period.
Share-Based Compensation Expense (Income).For the three months ended
March 31, 2008, we recorded €3.6 million of share-based compensation
income for our Stock Option Plans compared to € 1.3 million of
share-based compensation expense in the comparable 2007 period due to
the decrease in our share price which led to a decrease of the
liability due to the option holders.
Other Operating Income, net. For the three months ended March 31,
2008, other operating income, net decreased by €0.2 million, or 32.3%,
to €0.4 million from €0.6 million in the comparable 2007 period due to
a release of an environmental accrual for our Estonian premises in 2007.
Operating Loss. As a result of the foregoing factors, operating loss
for the three months ended March 31, 2008 decreased by €5.5 million to
€3.4 million from €8.9 million in the comparable 2007 period.
Interest Expense. For the three months ended March 31, 2008,
interest expense remained stable compared to the comparable 2007
period.
Interest Income. For the three months ended March 31, 2008, interest
income decreased by €0.2 million, or 41.0% to €0.3 million from €0.6
million in the comparable 2007 period. This decrease was due to lower
cash and cash equivalents.
Other Non-operating Income (Expense), net. For the three months
ended March 31, 2008, other non-operating expense, net decreased by
€0.5 million to income of €0.1 million from expense of €0.4 million in
the comparable 2007 period mainly attributable to foreign currency loss
in 2007.
Income Tax Benefit (Expense). For the three months ended March 31,
2008, the income tax benefit was €2.6 million, an increase of €0.3
million compared to income tax benefit of €2.3 million in the
comparable 2007 period due to lower current income tax expense. For the
three months ended March 31, 2008, the deferred income tax benefit
remained stable based on the comparable loss before share-based
compensation (income) expense as this income/expense has no tax effect.
Net Loss. As a result of the foregoing factors, for the three months
ended March 31, 2008, we had a net loss of €3.5 million, compared to a
net loss of €9.6 million in the comparable 2007 period
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