Billabong posts $550 mln loss, cuts 2013 forecast

SYDNEY Thu Feb 21, 2013 11:23pm GMT

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SYDNEY Feb 22 (Reuters) - Australian surfwear company Billabong International Ltd posted a first-half net loss of A$536.6 million ($550.2 million) and lowered its full-year guidance, citing difficult trading conditions in Europe and a disappointing performance from its Nixon watch brand.

The net loss, which compared with a A$16.1 million profit a year ago, included a A$427.8 million non-cash impairment for goodwill and brands, and a A$106.6 million writedown related to Nixon.

Billabong shares fell as much as 7 percent in early trade to A$0.845. The stock has plummeted about 87 percent over the past two years, compared with a 3 percent rise in the benchmark S&P/ASX 200 index over the same period.

Billabong said talks are continuing with two takeover suitors - private equity firm Altamont Capital Partners, led by Billabong's former U.S. boss Paul Naude, and clothing group VF Corp - and due diligence is expected to be completed next month.

Both suitors have pitched offers at A$556 million, or A$1.10 per share, a significant discount to a A$3.30 bid by TPG Capital that Billabong rejected a year ago as too low. Subsequent offers of A$1.45 from TPG and Bain Capital last year were withdrawn after due diligence.

Billabong's net profit after tax excluding significant items fell 50 percent to A$19.2 million.

The company said it now expects full-year underlying EBITDA(earnings before interest tax, depreciation and amortisation) of A$74 million to A$85 million in constant currency terms, down from the A$85 million to $94 million it forecast in December when it cited weakness in European, Canadian and Brazilian markets.

"These results emphasise that significant structural change is essential to return the group to profitable growth," Chief Executive Launa Inman said in a statement.

The company, which has already sold off some assets, would begin a major restructure of its global supply chain next month to reduce the number of apparel suppliers from more than 275 to 50. It is also on track to close 160 of its stores by June, Inman said.

VF Corp, which owns brands including The North Force, Wrangler, Timberland, The Vans and 7 For All Mankind, said when it released its own earnings last week that bid discussions were continuing but it had no further comment.

The Greensboro, North Carolina-based company said Asia would remain its strongest region as it reported a higher-than-expected fourth-quarter profit but gave a 2013 outlook below analysts' estimates.

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