Head claims higher market share in tennis

According to Head, the global tennis market declined in the first half of 2011, but remained fairly stable in Europe.

Quoting market data, Head noted that in the U.S., sales of racquets and balls fell by around 5 and 2 percent, respectively. In Japan, the natural disasters in March drove the market for these products down by 15 to 20 percent.

Head reports that its own sales of racquets and tennis balls went up globally in terms of volume during the first half of the year. However, the company's revenues in this segment declined by 4.9 percent to €68.8 million in the same period due to an unfavorable product mix for racquets and to the weak dollar. The same factors led to an even higher decrease of 7.8 percent in the second quarter.

In the diving segment, natural disasters in Australia and Japan and the political turmoil in North Africa pushed the global market down in the first quarter of this year, according to Head. The market picked up again in April, but then it cooled down again in June due to growing economic uncertainty in Greece and other European markets.

Nevertheless, the group's main diving brand, Mares, recorded a slight sales increase in the first half of this year on a currency-neutral basis. At €26.6 million,

Head's revenues from diving remained essentially stable in terms of euros during the first half, as increased volumes were offset by unfavorable currency exchange rates. They grew by 1.0 percent in the second quarter. The group expects continued growth for the balance of 2011 due to recent launches of new diving computers and the first full business year for the company's new Australian subsidiary.

Head feels that the snow sports market ended up flat in the past selling season because of lower re-orders in the first part of the present calendar year. Based on pre-orders for the following season, Head says its sales of alpine ski equipment, snowboards and protection equipment will probably go down slightly.

The group's revenues from winter sports products increased by 2.3 percent to €22.2 million in the first six months of 2011. They went up by 18.7 percent in the second quarter due to higher volumes of ski bindings and a favorable price mix for ski boots. The higher volumes of bindings were based on the timing of orders received by Tyrolia's OEM customers.

Head's licensing revenues declined by 12.6 percent in the first half and by 12.4 percent in the latest quarter. On the other hand, the company's brand-new sportswear business contributed sales of €2,025,000 for the first half of this year.

All in all, the group's total revenues decreased by 0.9 percent to €58.5 million in the second quarter, and by 1.4 percent to €118.3 million for the full first half. In essence, higher sales volumes in all segments were mainly offset by the weakening value of the dollar.

Gross margins declined, mainly due to higher raw material costs. The gross margin fell to 39.0 percent in the latest quarter from 41.0 percent in the same period a year ago. For the full six-month period, there was a drop of only 1 percentage point to 41.0 percent.

Advertising expenditures and some administrative costs were reduced in the first half of the year, leading to a small improvement in adjusted operating earnings. Higher interest expenses were partly offset by lower foreign exchange losses during the six-month period.

After accounting for share-based compensation and other items, the company posted a net loss of €5,282,000 for the quarter, down from a loss of €8,740,000 in the year-ago period. For the six-month period, net losses increased to €12,995,000 from €11,225,000.