Billabong reveals profit downgrade due to Japanese quake as nuclear crisis, global sharemarket panic continue

Surfwear company Billabong has become the first Australian firm to reveal a direct profit hit from the Japanese earthquake and tsunami, telling investors that 2010-11 profit could be as much as 6% lower.

The announcement comes as the situation in Japan continues to worsen, with fresh fires at the badly damaged nuclear facility at Fukushima. The fire comes as crews at the facility attempt to prevent the further spread of radiation, which has been detected in very low levels in Tokyo, 240 kilometres to the south of the plants.

Billabong’s announcement, which immediately pushed its shares 4% lower to about $7.45 in morning trade, says that 18 of the company’s 44 company-owned stores in Japan remain closed after the quake disaster.

Two of these closed stores were badly damaged by the tsunami, three suffered unspecified major damage and the remaining 13 have been closed due to power shortages or access problems.

Billabong also says many of its 500 wholesale account holders remain closed or have been severely disrupted by the quake and tsunami.

After telling the market that it expected net profit in 2010-11 to be flat before currency movements, it now says net profit is likely to be 2-6% lower than last year’s result of $145.99 million.

Despite the sharp fall in Billabong shares, the benchmark ASX 200 has been flat in morning trade, after falling 2.5% as shares were sold off across the Asia-Pacific region.

The Japanese benchmark sharemarket index, the Nikkei, plunged another 10% yesterday, taking its two-day fall to 20% and wiping $680 billion off the value of the market.

At one point yesterday, the Nikkei had fallen by as much as 14% after Japanese Prime Minister Naoto Kan said the risk of nuclear contamination was rising at the Fukushima nuclear facility.

While fears of radiation spreading to Tokyo appear to have receded this morning, it is clear the nuclear plant operators and the Japanese Government face a battle to cool the fuel rods in the reactors at Fukushima and prevent further explosions and leaks.

This morning, the Japanese Government said a new fire at the building housing the number four reactor at Fukushima had been brought under control, although authorities have also revealed two workers are missing after blasts at the facility yesterday. Authorities say up to 70% of the fuel rods at Fukushima may have been damaged.

Almost 150 Australians believed to be in the quake zone at the time of the disaster remain unaccounted for, while the list of the missing remains above 10,000. More than 3,300 people have been confirmed as dead.