Amer Sports had a 3 percent drop in sales to €482 million for the fourth quarter, but it reported a 106 jump in net income to €36.6 million. A strong winter sports market in Europe, as well as a currency-neutral 10 percent increase in fitness equipment, helped offset a poor performance in North America.
Amer expects the group’s profitability to improve in 2010, led by gains in the apparel/footwear segment and because inventories in the winter sports business are clean. Amer said it would expand its direct to consumer business in apparel/footwear.
By category, winter sports (Salomon, Atomic, Mavic and Suunto) rose by 1 percent in the quarter ended Dec. 31 to €329.2 million; ball sports (Wilson) fell by 14 percent to €94.7 million; and fitness (Precor) was flat at €58.9 million.
For the full fiscal year sales were down by 3 percent as well, to €1,533.4 million, with an 8 percent drop in net income to €31.4 million. Winter sports had flat sales of €862.6 million as the operating profit (Ebit) rose by 13 percent to €46.5 million. Ball sports sales fell by 4 percent to €476.7 million as Ebit dropped by 36 percent to €23.5 million. Fitness sales fell by 4 percent to €194.1 million with an Ebit loss of €7.5 million against income of €3.8 million the previous year.
Sales in the Europe/Middle East/Africa region rose by 2 percent to €735.0 million, and Asia-Pacific rose by 1 percent to €177.9 million. However, sales in the Americas declined by 8 percent to €620.5 million, (a 12 percent decrease in constant currencies).
In the past year, the winter sports segment’s equipment business fell by 2 percent against last year to €371.7 million, with declines in alpine and snowboard nearly offset by gains in cross country. Sales of Salomon apparel and footwear rose by 10 percent to €304.7 million, led by trail-running.
Mavic’s sales fell by 12 percent to €100.4 million due to lower orders from original equipment manufacturers and the recall of the R-Sys front wheel. Suunto fell by 4 percent to €85.8 million as gains in wrist-top computers were offset by declines in diving.
At Wilson, racquet sports sales fell by 2 percent to €222.7 million, with ball sales flat and racquet sales down by 9 percent as the K-Factor line has aged. Team sports sales fell by 1 percent to €187.3 million, with footballs down by 10 percent, baseballs and gloves up by 2 percent, bats flat and basketball down by 4 percent. Golf sales, mainly through Wal-Mart, fell by 15 percent to €66.7 million.
Amer sees a slight profit improvement for ball sports this year, in part from expanded distribution of golf and team sports but also from the introduction of a new BLX racquet line. It also predicts some re-stocking by the retail trade.
The fitness segment had a 14 percent decline in its commercial business and a 19 percent decline in its home fitness business for the year. In addition, it took a €5 million reserve in the fourth quarter to cover its exposure to the financially strapped specialty fitness market. Amer sees sales in the segment becoming more predictable and believes it is well-positioned to benefit from a pick-up in demand. Overall, it still sees the outlook for the group as “uncertain” but believes it will improve sales in the strength training market and notes it has expanded its relationship with two hotel chains.
Amer noted that it had significantly improved its balance sheet during the year with a reduction in net debt by €333.1 million to €282.5 million. The improvement was the result of a working capital reduction of €136.7 million, the recent rights offering of €151.5 million and the earlier hybrid bond offering of €60 million.
The company, currently being led by Pekka Paalanne as acting chief executive, who will be succeeded by Heikki Takala on April 1, said it did not expect to see a quick recovery in sporting goods and would seek to improve profitability through gross margin improvements and cost controls. Most of the improvements in costs are expected to come from a better supply chain and a reorganization of the sales force.
