Although its sales and operating profits soared, Fila saw its net income for the fourth quarter of 2018 tumble by 74 percent from the year-ago period, down to 3,872 million Korean won (€3.0m-$3.4m).
Including the results of Acushnet, the golf company in which Fila holds a 53 percent stake (see the article below), the group's total sales increased by 24 percent to KRW 761,678 million (€590.6m-$672.9m), and its operating income rose by 61 percent to KRW 82,604 million (€64.1m-€72.9m).
No explanation was given for the difference between the development in the quarterly operating and net results. The bottom line looked better for the full year, as net earnings jumped by 94 percent to KRW 210,050 million (€163.0m-$185.6m). The group's revenues rose by 17 percent to KRW 2,954,643 million (€2,293m-$2,610m), while the gross margin inched up by 0.7 percentage points to 49.7 percent.
The Fila brand, which is positioned as a leading authentic sports brand with an Italian heritage, is riding on a strong retro trend. Excluding the results of Acushnet, the standalone Fila business saw its revenues climb by 52 percent to KRW 1,157,060 million (€897.8m-$1,022m), while the operating margin improved by 7.3 percentage points to 15.1 percent.
The figures include the royalty income from the brand's 37 licensees around the world, including Ochsner Sport for much of Europe, but not its 15 percent stake in a joint venture with Anta Sports Products for China.
Royalties for the year jumped by 44 percent to KRW 53,241 million (€41.3m-$47.0m), with EMEA accounting for half of them, up by 67 percent from the year-ago quarter. Meanwhile, royalties grew by 29 percent in Asia, by 14 percent in North America and by 68 percent in South America.
The 15 percent-owned joint venture with Anta in China, which pays a 3 percent design fee to Fila, generated a jump of 95.8 percent in income for Fila to KRW 20,918 million (€16.2m-$18.5m). The indicated turnover of Fila in China grew by 96 percent to around $616 million, making it the brand's biggest market.
As Fila gets royalties of between 6 and 7 percent of sales, we can estimate Fila's total aggregated turnover at around $2.18 billion for the year, including direct sales of $400 million in the U.S., $442 million in South Korea and $724 million through its licensees around the world except in China.
The company's two directly owned sales operations for Fila in the U.S. and South Korea performed well in the latest quarter. The U.S. subsidiary had net income of KRW 11,835 million (€9.2m-$10.5 m) – against a loss of KRW 529 million for the fourth quarter of 2017 – on sales of KRW 169,604 million (€131.6m-$149.8 m), up by 83 percent.
In Korea, sales rose by 46 percent to KRW 499,913 million (€387.9m-$440.9m). Net income reached KRW 59,017 million (€45.8m-$52.1m), against a loss of KRW 3,389 million for the year-ago period.