Head Sport is no longer public. It stopped trading on Vienna's stock exchange in March 2015. All the assets, liabilities and legal relationships were transferred last December to a new company called Head Sales BV, and we have just discovered that it posted an annual report of its operations for 2016 on one of its websites a few weeks ago.
The report shows a small decline of 1.5 percent in the group's total revenues for the year, down to €411.4 million, mainly due to lower revenues from its important winter and racquet sports businesses, partly offset by higher sales of diving products.
While Europe accounted for 54.6 percent of the total turnover, up from 52.6 percent in 2015, the contribution from North America fell to 29.7 percent from 31.6 percent. Asia continued to represent 10.8 percent of total revenues.
Recovering from their poor performance in previous years, Mares and other diving operations raised their sales by 8.1 percent to €71.7 million last year. The increase came from higher sales of diving equipment and swimming products, plus higher revenues from the Scuba Schools International (SSI) business, which was bought at the beginning of 2014.
Winter sports revenues eased down by 3.7 percent to €165.3 million, due to lower volumes and an unfavorable product mix for ski boots and bindings. The snowboard business was particularly tough. Head's performance in the winter sports equipment sector appears to be relatively good, considering estimates that deliveries to the trade for the autumn/winter 2016/17 were off by about 3 percent in volume for alpine skis and bindings, and 7 percent in volume for ski boots.
Head's sales fell by 3.5 percent in the racquet sports segment, down to €166.1 million. The drop was mainly due to lower volumes for tennis racquets, above all in the U.S., and lower sales of Penn tennis balls, partly offset by higher volumes of Head branded balls. The prices of tennis racquets sold were lower.
Head's sportswear segment remained relatively low at a level of €10.7 million, but it showed a strong increase of 15.9 percent, driven by the brand's summer ranges. The group's apparel business was previously licensed.
With the expiration or non-renewal of licensing contracts, Head's revenues from licensing fell by 16.6 percent to €7.8 million.
The group's net earnings declined to €13.3 million last year from €19.5 million in 2015. The group's gross margin remained nearly stable at 42.9 percent. The operating profit dropped to €29.1 million from €33.8 million in the previous year, partly due to higher selling costs in the diving and racquet sports division, plus the release of a bad debt provision taken in 2015.
Head spent €12.2 million on R&D and made capital investments on facilities and equipment of €11 million in 2016, slightly more than in 2015. The related budgets for the next three years are €38.7 million and €34.7 million, respectively.
