Amer’s results get a hit in tennis and golf

The sluggishness of the golf and tennis markets badly deflated sales of the Wilson brand in the second quarter. The racquet sports unit of the Amer Sports group, which owns Wilson, saw its sales decline by 17 percent to €58.5 million for the three months, down by 12 percent in constant currencies. The drop partly stemmed from the disasters that struck Japan, the second-largest tennis market for Wilson.

Amer Sports' managers told analysts that the global tennis market had been in the doldrums in the quarter, perhaps due to a shortage of product launches. On the other hand, it appeared from sales of tennis balls that participation was not declining.On the golf side, Wilson's sales declined by 15 percent to €23.3 million for the quarter, down by 10 percent in constant currencies. Again, the weak performance was chiefly blamed on the market's anemia. This applies mostly to the American market, where the weather contributed to a decline in the number of rounds played.

Sales of the Amer group's team sports products dipped by 2 percent to €54.5 million for the quarter but they increased by 8 percent in constant currencies, driven by bats and American football products.

The group's entire ball sports unit saw its sales slide by 11 percent to €136.3 million, although the decline only amounted to 4 percent in constant currencies. Its sales were weakest in Asia Pacific, down by 14 percent in constant currencies, but the unit also saw its sales decline by 7 percent in Europe, the Middle East and Africa (EMEA) and by 2 percent in the Americas.

Amer's winter and outdoor unit fared better, as its sales increased by 15 percent to €133.4 million for the quarter, up by 18 percent in constant currencies. Sales of this entire unit enjoyed an underlying growth of 30 percent in the Americas and 18 percent in Emea, while they inched up by 3 percent in Asia Pacific.

Salomon drove the unit's expansion, by contributing to hefty sales increases for footwear and apparel. Driven by hiking and trail running, footwear sales were up by 29 percent to €54.9 million for the quarter, a rise of 32 percent in constant currencies. Apparel sales jumped by 17 percent to €17.4 million, up by 27 percent in constant currencies. Furthermore, orders were up by about 30 percent for footwear and by 23 percent for apparel.

Almost insignificant in this quarter, winter sports equipment sales, mostly consisting of the Salomon and Atomic brands, jumped by 9 percent, whicle cycling sales climbed by 11 percent in reported terms. Orders of winter sports equipment increased by 5 percent, with the highest growth coming from cross-country skiing. Amer Sports has reshuffled its production arrangements and ordered much earlier than last year, in order to improve its service and profitability.

Still part of the same winter and outdoor unit, sales of sports instruments declined by 6 percent to €22.1 million, down by 4 percent in constant currencies, but this was only due to the fact that the group divested two small companies. TackTick, a marine technology firm, was sold to Raymarine, a subsidiary of the Flir Group, in June. Earlier it divested another company selling diving suits. The Amer group wants to focus on the Suunto brand, in the diving and outdoor categories.

As for the Finnish company's fitness unit, selling the Precor brand, its sales eased by 3 percent to €45.9 million for the quarter, but they increased by 9 percent in constant currencies. Sales to clubs and institutions climbed by 11 percent. The upswing was strongest in the Americas, where sales of the fitness unit jumped by 14 percent in constant currencies, compared with a rise of 9 percent in EMEA and a drop of 12 percent in Asia Pacific.

Amer Sports ended the quarter with a turnover of €315.6 million, down by 1 percent, although its sales would have increased by 6 percent in constant currencies. On the same basis, they increased by 7 percent in the Americas and by 10 percent in EMEA, but they declined by 7 percent in Asia Pacific.

The group's gross margin slid to 42.3 percent, down by 0.4 percentage points, due to the weakness of the racquet sports unit. Amer reported a negative Ebit of €10.9 million for the quarter, which represented an improvement of €6 million compared with the previous year.

The winter and outdoor unit suffered negative Ebit of €15.1 million, which was still much better than the €24.2 million operating loss reported for the same quarter last year. The operating loss of the fitness unit also narrowed significantly to €0.3 million, after an operating loss of €3.7 million at the same time last year. The ball sports unit managed Ebit of €9.1 million but this was down from €17 million for the same quarter last year. The entire group's net loss for the quarter landed at €12.6 million, down from a loss of €16.9 million for the same period last year.

For the first half of the year, Amer's sales jumped by 11 percent to €764.7 million, up by 9 percent in constant currencies. The gross profit margin crept up by 0.2 percentage points to 42.9 percent and Ebit reached €14.8 million, compared with an operating loss of €7.4 million at the same time last year. Net income for the six months landed at €4.5 million, after a loss of €16.6 million for the same period in 2010.

On the back of its sales and orders, the Amer group expects that its sales for the full year will increase at about the same rate as in the first half. It added that its gross margin for the full year should remain stable and that the Ebit margin excluding non-recurring items would improve by about 1 percentage point compared with last year.