Amer gears up for expansion in ball sports and fitness

Amer Sports ended last year with a robust fourth quarter, again fueled by sharp rises in apparel and footwear sales. The turnover of the Finnish group, with brands from Salomon to Atomic, Arc'teryx, Wilson and Precor, among others, increased by 11 percent to €783.7 million, with a rise of 6 percent in constant currencies and 5 percent without exchange rate changes and acquisitions. The sales hike was driven by the outdoor and balls sports divisions, while comparable sales of the fitness division weakened for the quarter.

The outdoor division's turnover jumped by 10 percent to €501.9 million for the quarter, which was an increase of 8 percent in constant currencies. Apparel sales jumped by 12 percent while footwear sales improved by 8 percent and sales of sports instruments advanced by 18 percent. Sales of winter sports equipment from Salomon and Atomic, among others, moved up by 5 percent in constant currencies, chiefly due to a shift in deliveries, while cycling sales slipped by 4 percent.

When it comes to ball sports, with the Wilson brand, the division's sales advanced by 21 percent to €165.7 million, an increase of 10 percent in constant currencies and 2 percent excluding the acquisition of Louisville Slugger. The rise came entirely from team sports, while individual ball sports sales were stable in constant currencies.

As for the fitness division, led by the Precor brand, its sales improved by 4 percent to €116.1 million, but declined by 6 percent in constant currencies. The company invested in the fitness equipment market in July with the acquisition of Queenax and then a partnership with Mad Dogg Athletics in September.

The entire Finnish group's gross margin for the quarter amplified by 0.8 percentage points to 43.8 percent. Earnings before interest and tax (Ebit) amounted to €84.0 million, up from €77.7 million excluding non-recurring items. While the operating profit excluding one-offs moved up by 19 percent to €65.6 million for the outdoor division and by 5 percent to €15.7 percent for fitness, it declined by 34 percent to €8.2 million for ball sports. Amer Sports more than doubled its net profit for the quarter to €53.3 million.

For the full year, the Finnish group's sales climbed by 14 percent to €2,534.4 million, with an increase of 6 percent in constant currencies and again a rise of 5 percent without acquisitions. Heikki Takala, Amer's chief executive, said in a statement that the rise was driven by improvements in ball sports and winter sports equipment, while further growth should materialize in fitness and cycling this year, after restructuring measures and adjustments of the company's business approach.

As many European markets suffered from a mild winter, the Amer group's winter sports equipment sales crawled up by 1 percent, and cycling sales dipped by 2 percent in constant currencies for the year. Sales of winter sports equipment hit €400.2 million, up by 3 percent in euros. However, the outdoor division still managed a sales hike of 12 percent to €1,530.1 million, amounting to a rise of 8 percent in constant currencies, with increases of 15 percent for apparel, 14 percent for footwear and 7 percent for sports instruments.

The ball sports division's turnover reached €647.0 million for the year, up by 21 percent. That was equivalent to a rise of 6 percent in constant currencies, with an increase of 15 percent in team sports more than making up for a dip of 2 percent in individual ball sports. Performance tennis racquets delivered double-digit growth. Without Louisville Slugger, the division's comparable sales were up by 1 percent for the year.

The fitness division's sales landed at €357.3 million for the year, up by 11 percent in reported terms but down by 3 percent in constant currencies, as the company restructured its business for expansion around existing activities and acquisitions.

Amer Sports' gross margin reached 45.2 percent for the year, which was an increase of 1.3 percentage points. Ebit excluding non-recurring items amounted to €212.1 million, equivalent to 8.4 percent of sales, an increase of 0.8 percentage points. This included Ebit rises of 28 percent for outdoor, 30 percent for ball sports and 5 percent for fitness, excluding one-offs. Just as in the last quarter, the group more than doubled its profit for the full year to €121.6 million, up from €55.4 million.

Takala pointed out that the year marked many achievements after several years of improvements at Amer Sports. The group's soft goods business hit sales of €900 million, up by about €600 million from six years ago. Own retail sales have grown to 7 percent of the company's turnover, against one percent in 2010. Chinese sales have multiplied five-fold since 2009. Built from scratch, sales of connected devices amount to 7 percent of the group's turnover. Meanwhile, its gross margin surpassed 45 percent, the profitability of the winter sports equipment division has improved in a mild winter and Wilson is enjoying an early turnaround.

Amer Sports is projecting an increase in its sales in constant currencies and its Ebit margin excluding non-recurring items in 2016. The company will continue to focus on apparel and footwear, the U.S. and China, own retail sales and digitally connected devices and services, while continuing its search for acquisitions.