Globe’s Half Yearly Results

Globe actually released these back in February. As far as I can tell everybody, including me, missed them. There’s never a lot of information in these Australian six month results. Still, I thought a brief look might be in order. You can download the report yourself if you want to see it.

Globe’s revenues fell 8% from $46.4 million Australian Dollars (all numbers in Australian Dollars) in the six month ended December 31, 2010 to $42.7 million for the six months ended December 31, 2011. Earnings before interest, tax, depreciation and amortization (EBITDA) fell from $1.9 million to $1.5 million and net profit was down from $924,000 to $761,000.
Those numbers include, “…net $1.0 million in other income relating to proceeds from the settlement of a legal case.” Obviously without those proceeds EBITDA is a million bucks lower and net income is down net of the tax affect by something less than a million.
The company reduced its selling, distribution and administrative expenses by 7.1% to $11.9 million. 
They note that the decline in sales was “…largely due to the strengthening of the Australian Dollar.” In constant currency, sales were flat. The further note that, “The underlying profitability of the group versus the prior corresponding period is most significantly affected by downward pressure on gross margins as a consequence of changes in the sales mix.” I can’t tell what the actual gross margins were and there’s no information on the specifics of the change in the sales mix. 
They do provide us with some information by geographic region. Europe was the best performing segment, with revenues rising 9.4% from $6.96 million to $7.6 million. North America fell 17.6% from $25.9 million to $21.4 million. Australasia revenues rose 2% from $13.4 million to $13.6 million. Those are as reported numbers- not constant currency.
I tracked down the balance sheet from December 31, 2010 to compare it to the December 31, 2011 one. Cash has declined from $12.4 million to $8.9 million. Receivables rose 2.3% 17.7% from $13.2 million to $13.5 million. Inventories were up at well, rising from $12.4 million to $14.6 million.
There’s no discussion of any of those items, but with sales down you’d generally like to see receivables and inventory falling as well. The inventory increase is pretty significant, but of course there may be some timing issues or other stuff we don’t know about.
Globe has no long term debt, and its current liabilities have fallen from a year ago by 10.2% to $12.7 million. Almost all of that is due to the decline in trade and other current payables, which I like to see.
The current ratio has improved a bit to 2.95 times from a year ago and total liabilities to equity is only 0.37, slightly better than the 0.39 of a year ago.
For the second half, CEO Matt Hill says, “…we anticipate continued stability for the Group and expect profitability to be largely consistent with the first half, excluding the settlement proceeds.” They expect some of their longer term product and sales investments to start to pay off in the 2013 financial year.
Well, that’s all I’ve got because that’s all they gave me to work with. Globe (and lots of other companies) needs Europe to not head south economically. Equally important to Globe, they need to recreate some sales momentum in the North American market.       



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