BillabongPresented by

Josi Price, Kiri Linseth, Fun Wu,Emma Ma, Summer Lang

Introduction

History Global Market SWOT Analysis Industry & Competitor Analysis Financials Recommendations Conclusion

History

• Stagnant pool of water • Billabong founded

• Burleigh ,the heart of Australian surfing, 1973

• Gordon Merchant • Boardshorts, durable and well price• get credits from famous surfers

1980’s

• Stable Australian market• Global expansion

• First –North America large comsumptive groups• Japan, South Africa and New Zealand got licenses• New land— Europe

• More international surfers credits

1990’s

Professional surfing products

skate and snow

No.1 status in Australian waters

2000

August 11th, Australia Stock Exchange

Billabong International Ltd ASX: BBG

Strong promotion in finance

After 2000

2004• Sunglasses brand—Von Zipper • Element Skateboards brand • Honolua Surf Company • Kustom Footwear and Palmers Surf 2005• Beach culture airport-retail business

After 2000

2006• Nixon watches and accessories Element Footwear range the California-based Beachworks

retail business

Current

Clothing, accessories, eyewear, wetsuits and hardgoods

Youth culture (12-20 year-old) Marketing, distribution, wholesale and

retail Special technique

Current

CEO – Derek O'Neill 1,750 employees worldwide Gets licenses and distributions in

more than 100 countries About 8,000 stores around the world

Current

Slogan –“only a surfer knows the feeling”

Pushing all kinds of surfing

Global Business

Expand The Global Market— U.S. & Europe

Annexed Xcel Hawaii Bought Nixon Opened the flagship in Time Square

Expand The Global Market— Asia-Pacific & Africa

Set supply chain in China Licensed business in South Africa

Other Instruments

Sponsor athletes and track events Launch a pan-Europe digital sports

channel Distribution channels

SWOT Analysis

Strengths Weaknesses Opportunities Threats

Strengths

Billabong Brand Name

Robust Revenue Growth

Strong Profitability

Weaknesses

Low Returns

High Dept-Equity Ratio

High Dependence to the Billabong Brand

Opportunities

Strategic Acquisitions

Positive Outlook for Sporting Goods

Growth in the Footwear Industry

Threats

Competition in Global Surf, Skate and other Apparel

Rising Costs of Raw Materials

Slowdown in Consumer Spending

Current Situation in Surf Industry

North America, Europe, Australia On the mature stage of the product life cycle In US market, sales is close to one billion

dollars in 2005 and 2006. Asia, South America and Africa Absence on surf culture Huge potential market

Competition in Surf Industry

Barrier of entry Production (design, quality,

distribution channel, price) Activities of the company

Competitor Analysis(1)Hurley: Located in the United States One of the biggest surf sport brands Seperated from Billabong USA as a

independent license in 1982 In 1998, Bob Hurley set up his own

brand-Hurley Was sold to Nike in 2002

Competitor Analysis(1)

Hurley: Different market segment Concentrate on grassroots marketing Unique company culture

Competitor Analysis(2)

Quiksilver: Located in Australia Set up distribution center in the mid

1970’s Was brought to Europe in 1984 Built a subsidiary brand -Roxy

Competitor Analysis (2)

Quiksilver: Based on the needs of consumers A series of newly conception stores －

“ boardrider ” and “ outlet ”. Join in surfing activities and extreme

sports

Competitor Analysis (3)

Rip Curl: Located in Australia Founded in 1969 In 1974, sponsored the first Australian

professional tour with Coca-Cola $150 million of net income and 70%

of products export abroad each year

Competitor Analysis (3)

Rip Curl: Reform products in design and needs. Expand the international market

actively and widely.

Billabong Key Numbers

Company Type: Public Fiscal Year End: June 2006 Sales: $750.2 Million USD 1-Year Sales Growth: 15.7% 2006 Net Income: $106.3 Million

USD 1-Year Net Income Growth: 11.3% 2006 Employees: 1,750

Billabong Financials Billabong was originated out of Australia and

bases its accounting practices in accordance to Australian Accounting Standards

Uses Australian dollars in all of its financial statements and all foreign currencies are translated into Australian

Australian currency is the company’s functional and presentational currency

Any gains or losses made between foreign currency exchanges are stated in the income statement

Translating Foreign Currencies

Foreign currencies that are different from Australian dollars are translated to the functional currency.

3 Steps: Assets and liabilities for each balance sheet are

translated using the closing rate at the date of the balance sheet.

Income and expenses for each income statement are translated at average exchange rates.

All resulting exchange differences are recognized as a separate component of equity.

The differences in exchanges from transactions are placed in to shareholder’s equity

Investment Classification

Billabong classifies its investments in to groups depending on the purpose of the investments

The 4 groups are: Financial Assets at Fair Value through Profit

and Loss Loans and Receivables Held-to-Maturity Investments Available-for-Sale Financial Assets

2007 Australasia Americas Europe Rest of the World Total

Sales to External Customers 353,628 604,567 264,716 ---- 1,222,911

Other Revenue, Including Interest 2,696 1,305 ---- 3,601 7,602Total Segment Revenue 356,324 605,872 264,716 3,601 $1,230,513

Segment Result 93,223 111,948 50,310 3,601 259,082

Inter-company Royalties & Sourcing Fees 108,409 -74,371 -34038 ---- ----

Less: Depreciation & Amortization -5,920 -9,226 -6632 ---- -21,778

Less: Interest (expense)/ Income (net) -3,970 -9,428 -2092 ---- -15,490Profit Before Income Tax 191,742 18,923 7,548 3,601 $221,814

Consolidated Profit Before Income Tax 221,814

Less: Income Tax Expense (54,207)Consolidated Profit For The Year $167,607

Segment Assets 1,031,315 602,760 183,263 ---- 1,817,338

Elimination (426,760)Total Assets $1,390,578

Segment Liabilities 43,845 117,946 59,409 ---- 221,200

Elimination (252,358)

Unallocated Liabilities 662,053 Total Liabilities $630,895

Billabong Balance Sheet

Recommendations

Distribution channel Make the products individuated Make good use of the international

human resource

Recommendations

Pay attention to Asia market (warm-up and create the needs)

Launch a series of new brand covered different market segment

Pursue other way to increase the brand recognition.

Improve Weak Management

Are There Any Questions?