Australia's Billabong cuts profit forecast on Japan earthquake

Australia's surfwear maker Billabong International Ltd said on Wednesday that its full year net profit could fall by as much as six percent as the earthquake and tsunami in Japan hits the company operations.


Billabong said net profit for 2010/11 was likely to be two percent to six percent lower than previous year, revising an earlier forecast made in February that full year profit was likely to be flat.


A six percent decline would be equivalent to about 137 million AU dollars (136.23 million U.S. dollars), compared with the 145.99 million AU dollars (145.17 million U.S. dollars) profit recorded in 2009/10 for Billabong.


Billabong, which has 44 stores in Japan, said its warehouse had not been damaged by the earthquake and tsunami.


However, a number of company-owned retail stores and the wider wholesale account base "have been or are likely to be affected".


Nineteen stores initially closed due to the damage and 18 stores remain closed.


"It is understood that two of these stores were badly damaged by the tsunami, three suffered major unspecified damage and a further 13 remain closed due to power disruptions," Billabong said in a statement.


The company said it remained difficult to estimate the exact impact on trading within the wholesale account network, which consisted of 500 accounts in Japan.


"Preliminary discussions indicate that many accounts are currently closed. Billabong expects to work closely with its wholesale partner accounts to help it through this difficult period."


Billabong said around two-thirds of the company's overall annual profit in Japan is generated in the four months from March to June.


"The company is now assuming there will be a significant shortfall in sales that were previously expected in this period," it said.


"Some insurance is in place in Japan and while there is an expectation that some monies will be recovered, this is highly unlikely to occur in the current financial year," the surfwear maker said.


The company also said none of its employees in Japan suffered any significant physical injuries due to the natural disasters.
(Source:http://news.xinhuanet.com)