The management of Amer Sports is generally pleased with the results of its outdoor brands, including Salomon, Arc'teryx and Suunto. It sees further potential for the development of the footwear and apparel categories within the group, and it is taking action to boost the sales and profitability of its only underperforming brand, Wilson.
These were some of the highlights of a presentation made by Amer's management at its recent annual Capital Markets Day, where it laid out and updated its objectives through 2016. Among other goals, it wants to achieve an operating margin (Ebit) of 10 percent across the group, with sales continuing to grow at an average currency-neutral rate of 5 percent.
Based on this scenario, the group's revenues should reach €2.5 billion by 2016. Growth rates are expected to accelerate afterwards. Heikki Takkala, president and chief executive of the group, said he would prefer organic growth to acquisitions to achieve its revenue goals. He would also prefer growth to cost-cutting measures in order to improve profits.
In terms of constant currencies, the group's sales have increased at a compound average annual rate of 7.5 percent since 2009. They rose by 5 percent in 2012 and by 8 percent in 2013, and they are expected to grow by about 5 percent in 2014, judging from the pre-orders for winter sports equipment and softgoods.
Profitability has been lagging behind, however, as the Ebit margin stood at 6.7 percent in 2012 and 7.3 percent in 2013. It should be higher this year. Only about 50 percent of the group's portfolio is generating profit margins of 10 percent or more.
The underperforming areas are Wilson's ball sports division, winter sports equipment and the overall apparel sector, where Amer needs to reach higher economies of scale.
Wilson's sales have been growing by only 2 percent a year since 2009, and its gross margins have remained negative. No improvement is expected for its Ball Sports unit this year, but Amer hopes that it will grow again with higher-margin products after the elimination of lower-margin product lines. The division will absorb one-third of €60 million in restructuring expenses allocated for the second half of this year.
Much of the recent growth has come from the development of softgoods for various brands of the group. Sales of shoes and clothing have both been rising at a compound annual growth rate of 17 percent since 2009.
Amer Sports would like these two categories to represent 50 percent of the group's total sales in the future. It also wants to push the share of multi-channel retailing in its revenues to more than 10 percent.
The management is pleased with the company's turnaround in sports instruments, which have been growing by 11 percent per year since 2009.
Amer Sports restated its commitment to Russia and Latin America as strategic growth areas in the long term, despite their recent poor contribution to the company's results. Both represent about 3 percent of the group's total sales.
