Billabong
Presented by
Josi Price, Kiri Linseth, Fun Wu,
Emma Ma, Summer Lang
Introduction
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History
Global Market
SWOT Analysis
Industry & Competitor Analysis
Financials
Recommendations
Conclusion
History
• Stagnant pool of water
• Billabong founded
• Burleigh ,the heart of Australian
surfing, 1973
• Gordon Merchant
• Boardshorts, durable and well price
• get credits from famous surfers
1980’s
• Stable Australian market
• Global expansion
• First –North America
large comsumptive groups
• Japan, South Africa and New Zealand
got licenses
• New land— Europe
• More international surfers credits
1990’s
 Professional surfing products
 skate and snow
 No.1 status in Australian waters
2000
 August 11th, Australia Stock
Exchange
 Billabong International Ltd
ASX: BBG
 Strong promotion in finance
After 2000
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2004
Sunglasses brand—Von Zipper
Element Skateboards brand
Honolua Surf Company
Kustom Footwear and Palmers Surf
2005
Beach culture airport-retail business
After 2000
 2006
• Nixon watches and accessories
 Element Footwear range
the California-based Beachworks
retail business
Current
 Clothing, accessories, eyewear,
wetsuits and hardgoods
 Youth culture (12-20 year-old)
 Marketing, distribution, wholesale and
retail
 Special technique
Current
 CEO – Derek O'Neill
 1,750 employees worldwide
 Gets licenses and distributions in
more than 100 countries
 About 8,000 stores around the world
Current
 Slogan –“only a surfer knows the
feeling”
 Pushing all kinds of surfing
Global Business
Expand The Global Market
— U.S. & Europe
 Annexed Xcel Hawaii
 Bought Nixon
 Opened the flagship in Time Square
Expand The Global Market
— Asia-Pacific & Africa
 Set supply chain in China
 Licensed business in South Africa
Other Instruments
 Sponsor athletes and track events
 Launch a pan-Europe digital sports
channel
 Distribution channels
SWOT Analysis
 Strengths
 Weaknesses
 Opportunities
 Threats
Strengths
 Billabong Brand Name
 Robust Revenue Growth
 Strong Profitability
Weaknesses
 Low Returns
 High Dept-Equity Ratio
 High Dependence to the Billabong
Brand
Opportunities
 Strategic Acquisitions
 Positive Outlook for Sporting Goods
 Growth in the Footwear Industry
Threats
 Competition in Global Surf, Skate and
other Apparel
 Rising Costs of Raw Materials
 Slowdown in Consumer Spending
Current Situation in Surf
Industry
North America, Europe, Australia
 On the mature stage of the product life cycle
 In US market, sales is close to one billion
dollars in 2005 and 2006.
 Asia, South America and Africa
 Absence on surf culture
 Huge potential market
Competition in Surf Industry
 Barrier of entry
 Production (design, quality,
distribution channel, price)
 Activities of the company
Competitor Analysis(1)
Hurley:
 Located in the United States
 One of the biggest surf sport brands
 Seperated from Billabong USA as a
independent license in 1982
 In 1998, Bob Hurley set up his own
brand-Hurley
 Was sold to Nike in 2002
Competitor Analysis(1)
Hurley:
 Different market segment
 Concentrate on grassroots marketing
 Unique company culture
Competitor Analysis(2)
Quiksilver:
 Located in Australia
 Set up distribution center in the mid
1970’s
 Was brought to Europe in 1984
 Built a subsidiary brand -Roxy
Competitor Analysis (2)
Quiksilver:
 Based on the needs of consumers
 A series of newly conception stores－
“ boardrider ” and “ outlet ”.
 Join in surfing activities and extreme
sports
Competitor Analysis (3)
Rip Curl:
 Located in Australia
 Founded in 1969
 In 1974, sponsored the first
Australian professional tour with
Coca-Cola
 $150 million of net income and 70%
of products export abroad each year
Competitor Analysis (3)
Rip Curl:
 Reform products in design and needs.
 Expand the international market
actively and widely.
Billabong Key Numbers
 Company Type: Public
 Fiscal Year End: June
 2006 Sales: $750.2 Million USD
 1-Year Sales Growth: 15.7%
 2006 Net Income: $106.3 Million
USD
 1-Year Net Income Growth: 11.3%
 2006 Employees: 1,750
Billabong Financials
 Billabong was originated out of Australia and
bases its accounting practices in accordance
to Australian Accounting Standards
 Uses Australian dollars in all of its financial
statements and all foreign currencies are
translated into Australian
 Australian currency is the company’s
functional and presentational currency
 Any gains or losses made between foreign
currency exchanges are stated in the income
statement
Translating Foreign Currencies
Foreign currencies that are different from Australian dollars
are translated to the functional currency.
3 Steps:
 Assets and liabilities for each balance sheet are
translated using the closing rate at the date of the
balance sheet.
 Income and expenses for each income statement are
translated at average exchange rates.
 All resulting exchange differences are recognized as a
separate component of equity.
 The differences in exchanges from transactions are
placed in to shareholder’s equity
Investment Classification
 Billabong classifies its investments in to groups
depending on the purpose of the investments
 The 4 groups are:
 Financial Assets at Fair Value through Profit
and Loss
 Loans and Receivables
 Held-to-Maturity Investments
 Available-for-Sale Financial Assets
Billabong Balance Sheet
2007
Australasia
Americas
Europe
Rest of the World
Total
Sales to External Customers
353,628
604,567
264,716
----
1,222,911
Other Revenue, Including Interest
Total Segment Revenue
2,696
356,324
1,305
605,872
---264,716
3,601
3,601
7,602
$1,230,513
93,223
111,948
50,310
3,601
259,082
108,409
-74,371
-34038
----
----
-5,920
-9,226
-6632
----
-21,778
-3,970
191,742
-9,428
18,923
-2092
7,548
---3,601
-15,490
$221,814
Segment Result
Inter-company Royalties & Sourcing
Fees
Less: Depreciation & Amortization
Less: Interest (expense)/ Income (net)
Profit Before Income Tax
Consolidated Profit Before Income Tax
221,814
Less: Income Tax Expense
Consolidated Profit For The Year
Segment Assets
(54,207)
$167,607
1,031,315
602,760
183,263
----
Elimination
Total Assets
Segment Liabilities
1,817,338
(426,760)
$1,390,578
43,845
117,946
59,409
----
221,200
Elimination
(252,358)
Unallocated Liabilities
Total Liabilities
662,053
$630,895
Recommendations
 Distribution channel
 Make the products individuated
 Make good use of the international
human resource
Recommendations
 Pay attention to Asia market (warmup and create the needs)
 Launch a series of new brand covered
different market segment
 Pursue other way to increase the
brand recognition.
 Improve Weak Management
Are There Any Questions?