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- Consumer goods distributor Globe International (GLB) says the first half of FY22 was a “mixed bag” amid challenging operating conditions
- The company’s total sales grew 15 per cent to almost $143 million with North American and European sales rising 32 and 24 per cent, respectively
- However, profits dipped to $12.5 million which Globe attributes to higher logistics costs and major shipping delays
- These delays prompted the company to invest more in inventory, however, it experienced cancelled orders and a softened demand for hardgoods like skateboarding gear
- In terms of dividends, Globe will pay shareholders a fully franked final dividend of 16 cents per share on March 25 which is 33 per cent higher than last year’s interim dividend
- Globe shares end Thursday’s session 1.86 per cent in the red to close at $5.20
Globe International (GLB) has reported solid sales growth and strong profitability for the half-year to December 31, 2021, despite challenging operating conditions.
As its name suggests, Globe International produces and distributes, clothing, footwear, and skateboard hardware goods around the world.
According to Managing Director Matt Hill, the first half of FY22 was a “mixed bag.”
“On the one hand, demand for our key brands held up well during Q1 and continued into Q2, with the exception of the hardgoods market which softened towards the end of the calendar year,” he said.
However, the consumer discretionary stock saw a dip in net profit after tax (NPAT) from $15.3 million to $12.5 million. Globe attributed the lower profits to “surging logistics costs”, mainly in the US, and major shipping delays which resulted in cancelled orders.
As a result, the company invested more in inventories during the second quarter. In addition, margins were negatively impacted by higher costs and a shift in sales mix.
Positively, however, Globe saw a 15 per cent increase in sales to nearly $143 million which the company believes reflects the “more diverse and robust business model that we now have.”
Globe’s four main brand pillars: FXD, Impala, Salty Crew and Globe contributed to the sales result. Regionally speaking, the most significant contributor was, once again, North America which experienced a 32 per cent sales growth. Sales in Europe also grew by 24 per cent while Australian sales were flat with a very slight growth of one per cent.
The company reported an earnings before interest and tax (EBIT) of $18.2 million which generated a 12.7 per cent return on net sales, compared to 16.8 per cent in the first half of FY21.
GLB said the reduced profits were higher than expected, again due to extensive shipping delays and an increase in freight costs.
In terms of expenditure, Globe reported a $19 million increase in working capital costs which was driven by the $16.3 million increase in inventory — a cost it felt necessary to combat shipping delays however it then faced cancelled orders and a softened demand for hardgoods.
CAPEX was $12.9 million which included the acquisition of a property close to its Australian headquarters to serve as extra warehouse space. The $12.9 million also covered fit-out costs for the office and warehouse at the new North American headquarters.
As a result of increased costs, Globe ended the half year with $10.3 million compared to the $36.1 million it started with.
The directors have confirmed a fully franked final dividend of 16 cents per share will be paid to shareholders on March 25 which is 33 per cent higher than last year’s interim dividend of 12 cents.
Globe shares ended Thursday’s session 1.86 per cent in the red to close at $5.20.
