Amer Sports is still confident that the synergies with Salomon, acquired in October 2005, will help it to post higher earnings in 2007 and 2008, despite the warm weather.

For the Finnish-based group, which is now by far the world’s biggest supplier of sports equipment, net earnings grew last year slightly to €70.5 million, compared with €62.4 million in the previous year. Net consolidated revenues rose by 3.5 percent to €1,792.7 million. The group’s gross profit grew by 2 percent to €697.4 million. Profit before interest and tax (EBIT) was up by 3 percent to €120.2 million.

Salomon performed better overall last year. On a pro forma basis, its turnover rose by 6 percent to €661.4 million, and its earnings before interest and taxes (EBIT) rose to €23.6 million, as compared to €18.1 million in 2005. Geographically, the segment’s total sales increased by 7 percent in the Europe, Middle East and Africa (EMEA) region, by 6 percent in the Americas and by 3 percent in Asia Pacific. Within the division, equipment sales slid by 1 percent to €345.6 million, but were more than offset by an 18 percent increase in turnover for apparel and footwear to €208.0 million. Mavic’s sales were up by 9 percent to €107.8 million.

Salomon ran into trouble when deliveries scheduled for September were delayed and rolled over in to the 4th quarter. In the 4th quarter, the division’s sales were up by 11 percent to €282.1 million. EBIT grew by 6 percent to €40.3 million.
Atomic’s operations, which are fully dependent on the winter business, instead fell short of Amer’s expectations, as sales for the division fell by 4 percent to €204.8 million in 2006. They would have been flat as compared to the year-ago level if Atomic had not stopped distributing ASICS products in Austria, reducing net turnover by €11.3 million. On top of that, unfavorable winter conditions hurt the business, as the amount of re-orders was reduced toward the end of the year. Atomic’s sales dropped by 4 percent in the EMEA region, which represented 76 percent of the division’s turnover. They fell by 3 percent in the Americas and by 13 percent in Asia. The division’s EBIT decreased by 25 percent to €16.6 million.
Turnover in the 4th quarter, when Atomic’s business was most impacted by the lack of re-orders, slid by 4 percent to €82.2 million. EBIT for the quarter plummeted by 22 percent to €14.8 million. As 2007 rolls on the segment is still being hurt by the unseasonable warmth. Atomic’s key objective for the current year is to improve profitability through cost savings and higher efficiencies through cooperation with Salomon in all its major product groups.

Precor’s net sales in 2006 were up by 9 percent to €275.6 million, growing by 18 percent in EMEA, which still accounts for just 16 percent of the total. Overall the division’s turnover was driven by high demand for its new Experience aerobic equipment. Its EBIT rose by 12 percent to €34.8 million. For the 4th quarter Precor’s sales were up by 3 percent to €83.0 million, while EBIT fell by 7 percent to €12.7 million.

Net turnover for Wilson was basically flat at €569.6 million in 2006. Golf turnover sank by 19 percent to €114.7 million, with declines in Europe and Japan. Team sports were up by 8 percent to €219.6 million and racquet sports turnover increased by 4 percent to €235.3 million. In racquet sports, footwear grew by 16 percent and accessories by 14 percent. Geographically, sales in EMEA were flat, but 67 percent of the division’s turnover was generated in the Americas, where sales grew by 2 percent. Wilson’s EBIT rose by 5 percent to €54.6 million, growing strongly in the USA but weakening in Japan.

In the 4th quarter Wilson’s sales dipped by 7 percent to €111.5 million. Racquet sports fell by 9 percent to €41.9 million and golf sales dropped by 23 percent to €17.4 million. Team sports sales were up by 2 percent to €52.2 million. Despite the sliding sales, Wilson’s EBIT climbed by 79 percent to €5.2 million. The company expects this trend to continue into 2007, with the racquet sports segment leading the way through new product releases and expansion into new markets.
Suunto’s turnover grew by 13 percent to €81.3 million in 2006, led by a strong increase in sales of diving equipment, particularly wrist-top computers. Sales increased across all regions, and in EMEA, which represents 55 percent of the total, the turnover grew by 17 percent. Suunto’s EBIT jumped by 106 percent to €7.0 million, but it includes €2.5 million from an insurance payout for lost sales margins related to a fire on a supplier’s premises in 2005. In the 4th quarter Suunto’s turnover grew by 34 percent to €22.8 million. EBIT for the period reached €1.2 million, as compared to a loss of €700,000 in the year-ago quarter. For the current year Suunto anticipates further sales growth driven by new product launches, while it aims to bolster its core businesses and step up growth in sports instruments. It expects profitability to improve.

The current winter season, or the lack thereof, dominated the management’s discussions with the financial community at a presentation earlier this week of Amer Sports’ results. The unusually warm weather at the end of the year caused many-an-analyst to question everything from how it affects Amer’s business all the way to global warming. Amer Sport’s president and chief executive, Roger Talermo, said that when weak winters impact snow sports sales, turnover from products related to warmer weather picks up. In a previous conference, after the cancellation of the World Ski Cup in Sölden, he had previously stated that he did not expect any major changes in weather patterns over the next 20 years, but this time he refused to comment on global warming, saying he would leave that to the scientists and politicians to squabble over.
Besides, Talermo argued, it takes at least two bad winters in a row to impact the industry. Suppliers should be careful, he warned, because if they scale back production too early there could be a shortage next year.