Billabong shares crash 34% after profit downgrade: Midday Roundup

Shares in surf retail group Billabong have crashed over 34% this morning after the company announced a sharp profit downgrade, blaming the European debt crisis and low consumer confidence.

In a statement to the Australian Securities Exchange, Billabong said these issues of global debt are dragging down confidence and that while results depend on Christmas trading, it expects EBITDA of between $70-75 million, down from $94.6 million in the previous corresponding period.

“Given the poor macroeconomic and trading environment, the company is not able to provide guidance for the full 2011-12 financial year, however, strong underlying EBITDA growth compared to the previous corresponding period in constant currency terms for the full year is not expected.”

Billabong said it expects sales revenue for the six months to December 31 to be 3% down from last year. It also announced an operational review of the business.

“In addition, a strategic capital structure review is under way with the company’s advisor, Goldman Sachs,” Billabong said.

“This review includes an assessment of all potential alternatives to strengthen the company’s capital structure in light of the existing operating environment and the risk for further deterioration.”

“The review encompasses all of the company’s balance sheet alternatives. It would be premature to speculate on the most likely outcome of this review and, while nothing has been ruled out, raising equity is not the preferred path at this time as the company is reviewing other options.”

The company said the biggest hit to sales was in Europe, although sales had improved slightly towards the end of October.

“With the lower sell through from the late start to winter and limited snowfalls, European retailers are pushing back early summer December deliveries to later in the year,” Billabong said.

Billabong shares were down 36% to $2.29 at 12.00 AEST.

Shares fall 2% after France outlook downgrade

The Australian sharemarket has fallen over 2% this morning after ratings agency Fitch announced a downgrade for France’s economic outlook to “negative”.

The benchmark S&P/ASX200 index was down 2.2% or 86 points to 4072.6 at 12.00 AEST, while the Australian dollar was trading at $US0.99c.

AMP shares were down 3.25% to $4.17, while Commonwealth Bank shares lost 1.36% to $48.46. Westpac shares lost 2.44% to $20.01 as NAB fell 1.71% to $23.03.

In the United States, the Dow Jones Industrial Average remained flat late last week, falling just 2.4 points to 11,866.5.

Qantas reaches agreement with engineers

Qantas has reached an agreement with the engineers’ union as it continues to work out deals with workers’ groups to avoid more industrial disputes that led to the company’s entire fleet being grounded.

According to Fairfax, a deal has been made with the engineers’ union just as the company prepared to appear in front of Fair Work Australia today.

However, it has been reported that the union has not been successful in its bid to win an A380 maintenance hangar located in Australia.

ALH Group purchases 31 pubs

Woolworths’ hotel group has bought 31 new hotels in New South Wales from the Laundy, Waugh and De Angelis Groups.

“ALH considers that these hotels have the capacity to achieve good trading growth, utilising our capacity to inject further capital into the business and our management expertise,” chief executive Bruce Mathieson Jnr said in a statement.