Callaway Golf’s Profit Rises 34% on Demand for Clubs, Surge in Japan

Golf equipment maker Callaway Golf Co. said Thursday that second-quarter profit rose 34%, helped by strong demand for putters and irons and rebounding business in Japan.

The maker of the Big Bertha line of clubs said net income rose to $18.4 million, or 27 cents a share, from $13.7 million, or 20 cents, a year earlier.

The company, based in Carlsbad in San Diego County, said sales rose to $323.1 million, an increase of 8.5% from a year earlier.

“In general, we are pleased with the progress to date and feel there is good momentum around our brands this year,” Chief Financial Officer Brad Holiday said during a conference call.

Excluding charges related to its 2003 acquisition of golf ball maker Top-Flite, Callaway said, its profit was $20.4 million, or 30 cents a share.

On that basis, analysts on average were expecting the company to post a per-share profit of 29 cents, according to Reuters Estimates.

Holiday said the company, which has received unsolicited takeover offers, had hired an investment bank and was conducting a full review of its alternatives. He declined to give further details.

The improved quarter comes as Callaway works to turn around its business after lower-priced rivals had sliced away at its market share. The company also has struggled with costs related to its purchase of Top-Flite, which Callaway bought in a bid to reverse losses in its own golf ball business.

Sales of irons in the quarter rose 28% to $111.7 million, reflecting strong demand for its new X18, Fusion and XTour models, the company said. Net sales in the United States grew 6% to $181.5 million, and business in Japan surged 82% to $30.3 million after the company introduced new products.

Callaway said it did not anticipate the kind of issues that forced it to cut prices in 2004 to clear inventories.

As a result, the company forecast year-over-year improvements in third-quarter sales and earnings.

Shares of Callaway, which reported results after the market closed, fell 19 cents to $14.95 in regular trading.