A few days after Jarden Corporation, parent company of K2 and Völkl, announced a new $40 million investment in ski manufacturing (we understand that the investment will be made in China, but we could not find out more about it at this stage), Black Diamond reported that it has set up a new state-of-the-art ski manufacturing plant in Zhuhai, China. The 43,000-square-foot factory has already started producing samples of Black Diamond's 2013-14 ski collection for its salespeople.

Higher levels of performance and quality control are expected from the use of new manufacturing processes. With this investment, Black Diamond is raising the ratio of proprietary products made in-house from the current level of 30 percent to 35 percent. The factory is located in the 8-year-old Asian campus of Black Diamond Equipment, which has nearly 200 employees at the moment.

Black Diamond registered sales of $48.7 million in the third quarter ended Sept. 30, up by 15.9 percent from the year-ago quarter. Net income declined slightly to $700,000, but before non-cash items, it increased by 37 percent to $5.5 million.

Commenting on the group's results, its chief executive, Peter Metcalf, said they were weighed down by difficulties in the European market. He felt that the deceleration in Black Diamond's European sales has stopped and that the retail situation has stabilized, but pointed out that retailers have been asking for later deliveries of winter sports products, while distributors have been wary of selling to them unless they know that they are going to get paid.

The growth in the group's quarterly sales was primarily attributed to the acquisition of Poc Sweden in July. It was partially offset by the effect of foreign exchange rates and the termination of deliveries to the former Japanese distributor of Gregory, in a transaction that will require repurchase of its inventories.

During the quarter, the company completed the acquisition of Poc Sweden for approximately $44.9 million. On Sept. 28, Black Diamond signed an agreement to acquire the Japanese distribution assets of Gregory from A&F. Also during the quarter, Black Diamond agreed to acquire Pieps Holding, a leading Austrian designer and marketer of avalanche beacons and snow safety products.

The group's gross margin in the quarter declined to 37.9 percent from 38.1 percent in the year-earlier period, but it actually improved by 2 percentage points to 40.1 percent excluding accounting adjustments related to the acquisition of Poc. Adjusted operating income before amortization (Ebitda) grew by 9 percent to $5.6 million from the year-ago quarter.

For the remainder of 2012, the company plans to continue investment in Black Diamond's operational platform in preparation for a much larger organization, and to continue progress on the integration of Poc, which has been advancing according to expectations. The company's management expects the 49 percent gross margin that Pieps generated in its most recent fiscal year to augment Black Diamond's overall gross margin. The same goes for Poc, for the new Japanese subsidiary of Gregory and Black Diamond's new ski factory in China.

The latest acquisitions should contribute to lift revenues by more than 20 percent next year, but the management will be focusing more on organic growth, including the planned launch of its Black Diamond apparel line, instead of continuing to hunt for new acquisitions.