The Winter & Outdoor segment of Amer Sports, which comprises brands such as Salomon, Arc'teryx and Suunto, among others, enjoyed a nice sales increase of 12 percent in terms of local currencies during the first quarter of 2014, with gains of 14 percent in footwear, 21 percent in apparel, 8 percent in cycling and 23 percent in sports instruments.
However, an 8 percent decline in the value of the Russian ruble against the euro and other currency movements reduced the growth of the segment to 7.9 percent for a total turnover of €287.5 million for the period. The quarterly operating profit (Ebit) of the segment was slashed down by 33 percent to €9.5 million.
In terms of euros, footwear revenues increased in this segment by 11.1 percent to €113.7 million, with progress in all the regions. Apparel went up by 12.4 percent to €70.9 million million and cycling by 6.6 percent to €39 million. Suunto sported the highest growth, rising by 19.4 percent to $25.9 million on the strength of its outdoor instruments.
By contrast, within the same segment, sales of winter sports equipment took a negative turn because of the mild winter in Northern Europe. They declined by 7 percent in local currencies and by 11.2 percent in euros, down to $38 million for this seasonally weak quarter.
Amer pointed out that the winter sports equipment sector of the company showed “remarkable resilience” and good growth in some areas, however. While sales of alpine ski equipment rose slightly in the quarter, cross-country ski equipment and snowboards recorded a decline.
On a geographical basis, Winter & Outdoor sales rose on a currency-neutral basis by 9 percent in Europe, the Middle East and Africa, driven by softgoods, and by 10 percent in the Americas. In these two regions, they reached levels of €194.1 million and €55.8 million, respectively. In the Asia-Pacific region, they jumped by 24 percent to €37.6 million, up by 32 percent in local currencies.
Including Wilson, Precor and other operations, the group's total sales increased by 6 percent in local currencies but only by 1.7 percent in euros, reaching €501.5 million.
| Amer Sports Consolidated Income Statement | |||
| (Million Euros, Quarter ended March 31) | |||
| 2014 | 2013 | % | |
| Winter and Outdoor | 287.5 | 266.5 | 7.9 |
| Ball Sports | 150.7 | 164.0 | -8.1 |
| Fitness | 63.3 | 62.5 | 1.3 |
| NET SALES | 501.5 | 493.0 | 1.7 |
| Cost of Goods Sold | 279.2 | 275.3 | 1.4 |
| Licence Income | 1.0 | 1.4 | -28.6 |
| Other Operating Income | 1.4 | 1.9 | -26.3 |
| R&D Expenses | 19.0 | 18.7 | 1.6 |
| Selling & Marketing | 140.6 | 139.2 | 1.0 |
| Admin. and Other Expenses | 44.5 | 36.7 | 21.3 |
| Net Interest | 9.2 | 6.7 | 37.3 |
| Pre-Tax | 11.4 | 19.7 | -42.1 |
| Tax | 3.2 | 4.9 | -34.7 |
| NET | 8.2 | 14.8 | -44.6 |
| Euro/Share (Diluted ) | 0.07 | 0.13 | -46.2 |
The Ball Sports segment, which is represented essentially by Wilson, suffered a decline of 4 percent in constant currencies, with drops of 3 percent in the Americas, 6 percent in EMEA and 7 percent in Asia-Pacific. The segment's Ebit fell by 24.1 percent to €13.2 million.
Individual Ball Sports (golf and tennis) recorded a 7 percent decline in local currencies. Tennis fell because of a cleanup of unprofitable sales.
Currenc-neutral sales increased by 4 percent in Amer's Fitness segment, led by Precor, generating a small operating profit of €3.4 million against a loss in the year-ago period. Before currency cnversions, sales were off by 6 percent in EMEA but went up by 2 percent in the Americas and by 49 percent in Asia-Pacific.
Amer managed to keep its gross margins relatively flat at 44.3 percent of total sales in the quarter, ended on March 31, as compared to 44.4 percent in the same period a year ago, but the operating margin fell to 4.1 percent from 5.4 percent, mainly because of currencies. The group's net income fell by 44.6 percent to €8.2 million.
The management is confident that the group's sales will meet this year the longterm annual 5 percent growth target, in spite of ongoing challenging market conditions, with operating margins improving before extraordinary items. Some regional improvements are on the horizon, it added (more in Sporting Goods Intelligence Europe).
