Head posted net profit of only €338,000 for 2011, down from €7,324,000 in the previous year, and the operating margin fell to 4.1 percent from 7.5 percent. The group's total revenues declined by 1.3 percent to €339.1 million in the course of 2011, but they were broadly flat in constant currencies.
The poor snow conditions caused the company to record a 3.0 percent decrease in winter sports sales, down to €164.6 million, with a drop of 7.4 percent in the critical reorder period of the fourth quarter. While noting that it was able to maintain sales and prices through the success of its race team, Head warned that the delayed start of the 2011-12 winter selling season may have a negative impact on pre-orders for the next one.
At €147 million, sales of racquet sports products were off by 1.7 percent in euros and flat in local currencies. Racquets enjoyed an improving sales momentum in the course of the year, particularly in the tour segment, thanks to the victories of Novak Djokovic, but the tennis ball business suffered from the impact of rising rubber prices.
Sales grew slightly in the diving division on a currency-neutral basis, but fell by 0.5 percent to about €31 million in reported terms. They were negatively affected by natural disasters and political unrest, particularly in key diving destinations.
Sportswear sales jumped by 318.5 percent to €5.6 million, and they are expected to continue to grow. The company is determined to continue to invest in athletic endorsements and technology to improve its profitability.
For the fourth quarter of 2011, Head reports an overall sales decline of 3.4 percent to €121.0 million, partly due to a strengthening euro. Winter sports sales were off by 7.4 percent in the period, and diving was off by 1.0 percent, but racquet sports were up by 3.7 percent and sportswear by 1,319.4 percent (sic).
Further financial information, notably on the profitability of the various product segments, should be available in Head's annual report, due to be released on or around April 12.
