The company reported a net loss of €2.4 million on a pro forma basis in the 1st quarter, down from a pro forma loss of €5.0 million in the year-ago period, but it must be said that, excluding Salomon, the group had reached a positive net income of €14.2 million in the 1st quarter of 2005. The 3-year turnaround initiative for Salomon is progressing as planned, but 2006 will be a year of transition and the effects of its reorganization should be more evident in 2007.
Total sales on a pro forma basis rose by 8 percent to €417.4 million, but on a currency-neutral basis the gain was just 3 percent. Gross profit was up by 7 percent to €153.8 million, while operating earnings before interest and taxes (EBIT) reached €1.6 million as compared to a loss of €3.0 million in last year’s quarter.
Salomon’s turnover grew by 15 percent to €123.3 million in the period, increasing by 12 percent in local currencies with growth in every region. EBIT for this new segment was a seasonally normal loss of €22.4 million, down from €24.5 million in the year-ago quarter. Winter sports equipment sales, which comprised 35 percent of Salomon’s net turnover, were up by 13 percent to €43.4 million and grew by 12 percent on a currency-neutral basis. The growth stemmed from good winter conditions in almost all markets. Cross-country skiing equipment was said to be one of the main growth drivers.
Sales of Salomon’s apparel and footwear increased by 17 percent to €50.8 million, or by 12 percent at constant exchange rates, thanks to favorable winter conditions and a solid product portfolio for Arc’teryx. Turnover for the Mavic brand rose by 15 percent to €29.1 million and was up by 13 percent in local currencies.
The end of ASICS’ distribution in Austria hurt the Atomic division in the quarter, as its net sales fell by 11 percent to €23.7 million and by 13 percent at constant exchange rates. Excluding ASICS, which sucked €5.2 million out of sales, turnover would have increased by 8 percent. The division had an operational loss of €9.4 million, as compared to a loss of €8.4 million in the year-ago period. By region, sales dropped by 13 percent in the Americas, by 12 percent in EMEA and by 26 percent in Asia Pacific. The Atomic segment continues to explore production synergies with Salomon for cross-country and alpine skis and alpine ski boots.
Wilson’s revenues increased by 3 percent to €178.3 million, but on a currency-neutral basis they fell by 3 percent. EBIT dropped by 7 percent to €24.3 million due to continuously poor earnings for the golf division. Sales dropped by 1 percent in the Americas, by 3 percent in EMEA and by 13 percent the Asia/Pacific region.
Wilson’s turnover in racquet sports grew by 8 percent to €65.8 million, and was up by just 2 percent in local currencies. Sales for the team sports division rose by 18 percent to €75.3 million and increased by 8 percent on a currency-neutral basis. Sales growth was seen in several product groups, but the company singled out baseball as being a strong driver. The golf division’s sales decreased by 22 percent to €37.2 million, and fell by 26 percent at constant exchange rates, while a new distribution strategy focusing on major customers was being implemented in the USA.
There was a solid performance from Precor in the quarter, as its divisional sales rose by 24 percent to €72.9 million and increased by 15 percent on a constant currency basis. EBIT jumped by 107 percent to €12.0 million. The fitness equipment division’s sales outpaced the market’s growth in the period. From the turnover, 82 percent was generated in the Americas, 12 percent in EMEA and 6 percent in Asia Pacific. Sales in these markets increased by 14 percent, 16 percent and 18 percent, respectively.
Despite favorable sales of diving instruments and wrist-top computers, total turnover for the Suunto division slid by 4 percent to €19.2 million and decreased by 9 percent in local currencies. Poor sales of diving suits and water sports apparel dragged down the segment’s performance. Delivery problems also weakened sales. Turnover in the Americas dropped by 19 percent and made up 38 percent of the total, sales in EMEA slid by 3 percent and stood for 51 percent of turnover, while in Asia Pacific sales rose by 5 percent and comprised just 11 percent of net turnover. Suunto’s EBIT plummeted by 35 percent to €1.1 million.
Overall, Amer Sports noted that the demand for sports equipment was strong in 2005 and sees the trend continuing in 2006. The company expects to generate net sales of €1.8 billion this year, as compared to €1.732 billion in 2005.
