HONG KONG SAR -
Media OutReach - 24 November 2023 -
HONMA Golf Limited ("HONMA"; together with its subsidiaries, the "Group"; HKEx stock code: 6858), one of the most prestigious golf brands in the world, announces the unaudited consolidated interim results for the six months ended 30 September 2023 (the "Period").
Financial Highlights- Due to increased market competition and adjustments in consumers' willingness to spend resulted from economic slowdown, total revenue was JPY13,194.8 million (equivalent to USD93.9 million), a decrease of 11.6% versus the same period of FY2022/23
- Net profit for the Period was JPY3,329.5 million (equivalent to USD 23.7 million), an increase of 7.8% versus the same period of FY2022/23. Net profit margin for the Period was 25.2%, up 4.6 ppt YOY.
- Net operating cash flow remained positive and stood at JPY3,251.3 million (equivalent to USD23.1 million) for the Period.
- An interim dividend of JPY1.5 per share represented approximately 27.3% of the Group's distributable profits as at 30 September 2023
Major Achievements For the six months ended 30 September 2023, the Company steadfastly followed its growth strategies while carefully protecting its financial strength and cash flow by implementing efficiency improvement initiatives through distribution channel and retail operation optimization in the face of challenging market conditions. As a result, the Company not only achieved sales growth in the apparel business and self-operated channels during the Period, but also recorded strong net profit growth and improved net profit margin, demonstrating the Group's excellent management capabilities and business resilience in a volatile environment.
Steady growth in the Japanese market, adjustments in the Chinese and Korean markets Geographically, the Group's main markets recorded different sales momentum versus the same period last year. Revenue from Japan and Hong Kong rose by 5.6% and 11.2%, respectively, on the back of a strong rebound in consumer demand, continued marketing activities to drive HONMA brand and product awareness, and successful activation of various HONMA products. Mainland China, on the other hand, showed a revenue decline of 13.0% as the overall economy and retail market experienced significant slowdowns. Korea also recorded a sales decline of 7.0%, reflecting the Group's decision to optimize its distribution network prior to its new products launch in the first quarter of 2024.
Continued growth in the apparel business; Golf club performance hampered by the Chinese market Product wise, the Group has been actively fostering the growth of the apparel business and shifted channels of the Group's apparel business in China to self-operated stores. During the Period, revenue from apparels rose by 2.1% YOY, in particular, apparel sales from China rose by 21.4%, despite the weak consumer sentiment in China. Revenue from golf clubs however, showed a decline of 12.5% during the Period, mainly due to a 26.3% decline in China's golf club sales. Nevertheless, revenue from golf clubs in Japan rose significantly by 20.1%. Revenue from specialized models also grew by 34.5% as the younger golfers opted for individualism that has been reflected in specialized models. Sales from golf balls remained stable and edged lower by only 2.2% following upward retail price adjustment to cope with Japanese Yen depreciation over the past few years.
Extended retail presence with upgrading self-operated stores, while continued with channel adjustment in north America and Europe From the perspective of channel, the Group continued to maintain an extensive sales and distribution network that allowed it to address a broad customer base in its target markets. Throughout the Period, the performance of self-operated stores remained strong, posting a steady increase of 13.2% from the six months ended 30 September 2022, mainly due to robust increase in Japan and China by 30.7% and 23.6%, respectively. Revenue from third-party retailers and wholesalers decreased by 22.5% for the same period, primarily due to sales decrease in China owing to challenges the industry was facing as well as channel shifting of the Group's apparel business towards self-operated channels. North America and Europe continued to enjoy the largest golfer demographics but with varied market conditions. For the six months ended 30 September 2023, the Group continued to reprioritise its distribution strategy in North America and Europe by focusing on a smaller but premier group of accounts that are most capable to represent HONMA and to pursue the consumers in super-premium and premium-performance segments. At the same time, the Group continued optimising its organisational set up and cost base in both markets to properly anchor their near to mid-term growth amid economic uncertainties. Following such strategic adjustment, in North America, the Group opened six points of sales ("POS") and closed 116 points...
