Billabong

1. Billabong Presented by Josi Price, Kiri Linseth, Fun Wu, Emma Ma, Summer Lang

2. Introduction • History • Global Market • SWOT Analysis • Industry & Competitor Analysis • Financials • Recommendations • Conclusion

3. 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 History

4. 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

5. 1990’s • Professional surfing products • skate and snow • No.1 status in Australian waters

6. 2000 • August 11th, Australia Stock Exchange • Billabong International Ltd ASX: BBG • Strong promotion in finance

7. After 2000 • 2004 • Sunglasses brand—Von Zipper • Element Skateboards brand • Honolua Surf Company • Kustom Footwear and Palmers Surf • 2005 • Beach culture airport-retail business

8. After 2000 • 2006 • Nixon watches and accessories • Element Footwear range the California-based Beachworks retail business

9. Current • Clothing, accessories, eyewear, wetsuits and hardgoods • Youth culture (12-20 year-old) • Marketing, distribution, wholesale and retail • Special technique

10. 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

11. Current • Slogan –“only a surfer knows the feeling” • Pushing all kinds of surfing

12. Global Business

13. Expand The Global Market— U.S. & Europe • Annexed Xcel Hawaii • Bought Nixon • Opened the flagship in Time Square

14. Expand The Global Market— Asia-Pacific & Africa • Set supply chain in China • Licensed business in South Africa

15. Other Instruments • Sponsor athletes and track events • Launch a pan-Europe digital sports channel • Distribution channels

16. SWOT Analysis • Strengths • Weaknesses • Opportunities • Threats

17. Strengths • Billabong Brand Name • Robust Revenue Growth • Strong Profitability

18. Weaknesses • Low Returns • High Dept-Equity Ratio • High Dependence to the Billabong Brand

19. Opportunities • Strategic Acquisitions • Positive Outlook for Sporting Goods • Growth in the Footwear Industry

20. Threats • Competition in Global Surf, Skate and other Apparel • Rising Costs of Raw Materials • Slowdown in Consumer Spending

21. 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

22. Competition in Surf Industry • Barrier of entry • Production (design, quality, distribution channel, price) • Activities of the company

23. 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

24. Competitor Analysis(1) Hurley: • Different market segment • Concentrate on grassroots marketing • Unique company culture

25. 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

26. 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

27. 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

28. Competitor Analysis (3) Rip Curl: • Reform products in design and needs. • Expand the international market actively and widely.

29. 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

30. 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

31. 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

32. 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

33. Billabong Balance Sheet

34. Recommendations • Distribution channel • Make the products individuated • Make good use of the international human resource

35. 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

36. Are There Any Questions?