Amer predicts lower winter sports pre-orders

Buoyant apparel and footwear sales pushed the Amer Sports group's sales up by 9 percent to €489.8 million for the first quarter, with an increase of 7 percent in constant currencies, but the company's winter sports unit was hurt by the mild winter and the group warned that its pre-orders of winter sports products would decline this year.

The group's turnover inflated by 4 percent in constant currencies in Europe, the Middle East and Africa (Emea), compared with increases of 7 percent in the Americas and 16 percent in Asia Pacific. Amer's management was encouraged by particularly fast expansion in markets like Russia, Latin America and China.

Amer's winter and outdoor sales were up by 10 percent to €256.5 million for the quarter. This amounted to a rise of 8 percent in constant currencies, with increases of 18 percent in the Americas and 15 percent in Asia Pacific but only 4 percent in Emea.

However, the expansion of the winter and outdoor unit included a decline of 7 percent to €43.7 million in the group's sales of winter sports equipment, driven by the Atomic and Salomon brands. This amounted to a drop of 9 percent in constant currencies, which was attributed to unfavorable weather conditions.

The winter and outdoor unit's sales increase was driven by Salomon footwear, which lifted its sales by 14 percent to €104.1 million, up by 13 percent in constant currencies. Buoyed by trail running and other outdoor performance footwear, this category enjoyed the fastest expansion in North America and emerging markets.

Apparel sales were equally fast, soaring by 32 percent to €51.2 million, and by 29 percent in constant currencies, with expansion in all regions. The Amer group's managers were just as upbeat about product introductions in footwear and apparel, particularly an ultra-light trail running footwear range and compression running apparel.

Sales jumped by 6 percent for Mavic's cycling products, to €36.3 million, chiefly owing to helmets and apparel. Sales declined by 5 percent €21.2 million for sports instruments, with the Suunto brand, but this was only due to divestments. Excluding them, sales of sports instruments expanded by 9 percent, with a strong contribution from the Ambit GPS watch.

Aided by apparel and footwear, the Ebit of the winter and outdoor division climbed by 15 percent to €10.7 million. Operating expenses were cut by €13.0 million, while the unit benefitted from higher volumes and gross margins. The company continues to invest in the efficiency of its operations in the winter and outdoor market, particularly to make production more flexible – and less vulnerable to weather conditions.

In the area of balls sports, Amer's turnover increased by 9 percent to €173.6 million. This amounted to an increase of 6 percent in constant currencies, buoyed by a rise of 17 percent in Asia Pacific, while sales increased by 6 percent in Emea and by 4 percent in the Americas.

The improvement was driven by racquet sports and golf, with sales up by 11 percent to €97.6 million, equivalent to a rise of 8 percent in constant currencies. The Wilson brand enjoyed strong recovery in the tennis market, particularly in Japan. On the team sports side, sales inflated by 7 percent to €76.0 million, up by 3 percent in constant currencies, with strong sales of baseball bats. Ebit for the ball sports unit advanced by 12 percent to €19.9 million.

As for fitness, sales of the Precor brand inched up by 1 percent in constant currencies, but reached an increase of 5 percent in reported terms to €59.7 million. The fitness unit's sales in constant currencies declined by 21 percent in Asia, while they increased by 16 percent in Emea and remained flat in the Americas.

Sales of commercial fitness equipment improved by 3 percent in constant currencies, while home equipment sales were still weak, down by 7 percent for the quarter. Ebit for the fitness division, which has been a headache for several quarters, jumped by 18 percent to €3.9 million.

Unlike many other companies, Amer Sports managed to improve its gross profit margin, which was up by 0.9 percentage points to 44.2 percent for the quarter. The company's Ebit advanced by 13 percent to €29.0 million, and it ended the quarter with a net profit of €18.7 million, up by 9.4 percent.

Amer Sports has invested in its operations by taking over its own business in several countries. This applies to Mavic in Spain, Italy and South Korea, and to Wilson's tennis business in China. It is further investing in its capability in fast-growing markets like Russia, China and Latin America.

The Amer Sports group's managers estimate that the company's sales will increase by about 5 percent in constant currencies this year. They predict broad-based improvements in sales and profitability, albeit warning that pre-orders of winter sports equipment will probably decline, which should affect the sales as well as the profits of this unit. The impact should be felt mostly in North America and Southern Europe. However, the company points out that the mitigation plans it launched two years ago will start to have an impact this year.