Amer Sports’ consolidated sales declined by 2 percent to €462.8 in the 3rd quarter ended Sept. 30, but they would have been better if some of Wilson’s sales of team sports products had not been shifted to the 4th quarter because of the implementation of an SAP platform. For the first nine months of the year, total sales were off by 5 percent to €1,154.9 million, but were essentially flat in terms of local currencies.
Amer's board brand portfolio allowed the group to offset big declines in the winter sports equipment sector due to the poor snowfall in the past winter season. In local currencies, sales rose in the quarter by 11 percent for Salomon, by 28 percent for Precor, and by 21 percent for Suunto. They declined by 4 percent at Wilson and by 31 percent at Atomic. For the first nine months, the rates of decline in local currencies were 2 percent at Wilson and 33 percent at Atomic. The growth rates were 2 percent for Salomon, 14 percent for Precor and 15 percent for Suunto.
The Finnish group’s pre-tax earnings were off by 24 percent to €38.5 million for the 9-month period, but up slightly to €59.1 million for the quarter. There is no change in the management’s forecast for the full financial year, which calls for a decline in profits, with the winter sports business in the red. Looking further into the future, an economic slowdown in the USA could have a small negative impact on the company’s results, considering that half of its sales are in the Americas.
However Roger Talermo, president and chief executive, stresses that all the ski companies are losing money right now. He told the investment community yesterday that he expected further consolidation in the industry, particularly if there is again little snow in the coming season, and that the reorganization of the group’s ski production could yield big profits in snow-rich years from 2009 onwards. Leading key retailers to test out the group’s new ski models, the current season has started relatively well, with snow in the alpine glaciers, in Central Italy and in the Rocky Mountains.
While they have been affected by different delivery problems at different times, Atomic and Salomon are showing similar performance in ski products on comparable terms. Atomic, which had an operating loss of €13.2 million in first nine months on sales of €80.5 million, has relatively low inventories and is coming out with many new high-margin products.
Salomon benefited in the first nine months of the year from a 23 percent increase in its sales of apparel and footwear to €142.2 million, which offset a 13 percent drop in winter sports equipment to €138.2 million. They were driven by Salomon’s clothing and its new trail running shoes and by Arc’teryx. Mavic also performed relatively well, with a 7 percent sales increase to €78.0 million. Salomon’s operating losses were reduced by 68 percent to €5.4 million.
Wilson registered strong sales increases in local currencies of 4 percent in racquet sports and 7 percent in tennis racquets during the first nine months of 2007. Sales declined by 5 percent Wilson’s team sports division and by 10 percent in its golf division, but the drop in golf was limited to the U.S. market where the company has decided to concentrate on irons and balls. Wilson’s operating profit fell by 19 percent to €40.2 million.
Sales continued to develop favorably at Precor, whose operating profit improved by 10 percent to €24.2 million on sales of €205.8 million during the 9-month period. The brand began to draw a good response in the USA to the introduction of its new Adaptive Motion Trainer and of a wider range of elliptical cross-trainers and treadmills for home use. Other countries will follow.
Suunto, which delivered operating profit of €5.8 million on sales of €65.4 million in the nine months, offset a small decline in diving instruments with a 32 percent increase in sales of wristop computers, boosted by its new outdoor and women-specific products.
The group indicates that some important new changes in management will take place shortly. The first announcement concerned today the promotion of Pekka Paalanne to the rank of executive vice president of Amer Sports. The Finnish executive, who has been with the group since 1997, will continue to be responsible for finance and treasury, communications and brand management, legal affairs, investor relations, competitor analysis and human resources.
