Although Globe International had a strong first half that saw profits soar, this was not enough to offset the negative impact of the stronger U.S. dollar in the second half through June 30. The group ended the financial year with lower profits, with the net income declining by 3 percent to 8.2 million Australian dollars (€5.0m-$5.5m) on revenues that rose by 8 percent in reported terms to A$ 158.7 million (€96.5m-$107.2m), but only increased by 5 percent in constant currencies. The gross margin was down by 1.5 percentage points to 46.2 percent, also due to the impact of the stronger U.S. dollar on margins in the Australian business. The Ebitda margin declined by 0.8 percentage points to 5.8 percent.
While unveiling its results, the group announced the divestment of its Dwindle Distribution business, which took place on Aug. 9. Globe reportedly sold this distribution company and the related skate hardware brands, which it had acquired in 2002, for US$ 1.5 million. The brands marketed by this California-based company include Almost, Blind, Dusters California, Kryptonics and Enjoi. Globe used to manufacture some of their products at its own factory in Shenzen.
Globe said that the sale of this business division to Highline Industries Corporation was part of an ongoing strategic overhaul of the group's brand mix, aimed at reducing the number of smaller brands in its global operations. It believes that the company now has a much better balance of apparel, footwear and skateboard hardgoods brands proportionate to the revenues of each product category.
Over the past year, Globe's growth was driven by the Australasian and North American segments, which grew by 5 and 7 percent respectively, in local currencies. FXD apparel and boots, Salty Crew clothing and Impala roller skates performed well in these markets.
Despite healthy growth, the Ebitda in Australasia dropped by 8 percent owing to the stronger dollar, while in North America, the Ebitda was down to A$ 200,000 (€121,600-$135,100), compared with A$ 41.6 million for the prior year, driven by a reduction in gross margins due the customer mix and increased costs because of investments in future growth for brands such as Salty Crew, FXD and Impala.
In Europe, sales were flat in constant currencies, and so were profits. Salty Crew and Impala had a strong performance in the region.
The company said it will work through the divestment of Dwindle and the associated restructuring of the North American business and other under-performing brands. The current profit outlook for the present financial year is largely in line with the past year. However, it does not take into account recent macro-events caused by the ongoing trade war between the U.S. and China, which are likely to have a negative impact on Globe's profitability.