Our worst fears for Billabong International have been realised. The company reported another profit downgrade today, blaming European woes and poor summer weather. Instead of the forecast ‘strong’ growth in earnings before interest, tax, depreciation and amortisation (EBITDA) in 2012, Billabong now expects first half EBITDA to fall by at least 20%.
We estimate Billabong will be lucky to produce a net profit of more than $40m (or earnings per share of 15.7 cents) in 2012. Dividends will almost certainly be cancelled this year.