Global surfwear label Rip Curl has ridden a wave of improving retail trading conditions from America to Indonesia as well as the benefits from a restructure in 2012 to swing back to profitability. It reported an after-tax profit of $14.12 million for fiscal 2013.
Although revenues declined slightly for the year, the surfwear group founded in the Victorian seaside town of Torquay nearly 45 years ago did manage a robust 41 per cent boost in pre-tax earnings with favourable currency movements also bolstering its sizeable offshore business.
The rebound for Rip Curl comes at a tough time for most retailers, especially those involved in surfwear, with Billabong racking up billions of dollars in losses over the past few years and Quiksilver - also founded in Torquay and now listed on the New York stock exchange - posting four successive years of losses.
Rip Curl's earnings turnaround in 2013 is from a loss of $4.056 million in 2012 when challenging trading conditions crimped profitability. Its accounts went further into the red when the privately owned group also had to swallow $4.5 million of costs for a restructure as well as incurring substantial acquisition accounting charges. But Rip Curl, chaired by Australia Post managing director Ahmed Fahour, said its 2013 result had shown a "significant improvement" on the previous year.
In financial documents obtained by BusinessDay, it said most of its regions had reported better trading conditions during fiscal 2013.
"Whilst our European business continued to feel the effects of the tough economic conditions in the region, our Australian, north American, Indonesian and South African businesses all performed strongly and in line with management expectations."
Revenue for the year to June 30, 2013, fell from $412.53 million to $398.34 million, but pre-tax earnings remained strong.
"Despite consolidated revenues declining 3.4 per cent this year due to expense rationalisation across the business and a significant reduction in abnormal items this year the group has recorded a 41 per cent growth in EBITDA."
Rip Curl said its restructure activities were complete and the costs to date had been covered by provisions raised in the previous year. No dividends were declared for the 2013 financial year.
The 2013 accounts show Rip Curl has assets of $259.2 million and liabilities of $173.2 million, including nearly $95 million in short and long-term borrowings.
In September BusinessDay reported that the founders of Rip Curl, Doug Warbrick and Brian Singer, had stepped down from the company they created in the late 1960s in a garage and with a pre-World War II sewing machine.
The two retain a 72 per cent stake in the company.
The retailer recently abandoned a planned $400 million sale due to tough market conditions.