Chairman's address to annual general meeting of Billabong

30 Oct '07

5 min read

Chairman's address to annual general meeting of Billabong International:

A consistent, long-term growth performer ... this is what Billabong International Limited has been driving to establish a reputation for since its listing on theAustralian Securities Exchange in August 2000.

Those of you that have been long term shareholders would be familiar with this goal and our success to date in its achievement.

Growth was again evident in the 2006-07 financial year, with the Company delivering its seventh straight year of strong profit. As a Board of Directors, the most we can ask of management is to deliver long-term growth on both the top and bottom lines. I think you will agree our team has been very successful in delivering that over a number of years.

With this track record, shareholders could well question why Billabong is experiencing a volatile period in its share price. Let me make some observations based on the fact that within Billabong the North American business currently contributes more than 45% of Group sales and more than 40% of Group EBITDA.

With the business experiencing a strong growth profile, both organically and by acquisition, these percentages may increase over time.

Firstly, the market has a view of an economic slowdown in the USA and general consumer sentiment in the US being relatively subdued. Secondly, there is the strong appreciation of the Australian dollar against the US dollar.

So, what is the impact of all this on Billabong? In relation to consumer sentiment and a cooling in the US economy, I'm happy to report that our business in the US boardsports sector remains resilient.

In relation to the strong Australian dollar against the US dollar, our constant currency guidance will remain unaffected but our reported numbers will be impacted as your CEO will detail in his address.

Overall, however, management is charged with delivering strong constant currency growth; exchange rates are certainly not within their control.

Moving to other matters, through the 2006-07 year there was much effort invested into the extension or development of the Group's social and environmental initiatives. This ranged from the ongoing support of the SurfAid International medical mission and the development of an associated educational program in Australian schools, through to the evaluation of the Group's global carbon footprint.

While Billabong is not subject to any regulation in relation to the reporting of its carbon footprint, the Company is voluntarily disclosing its emissions as part of a move to build awareness of the environmental debate and provide a benchmark from which future performance can be assessed.

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