Elan, the Slovenian ski brand, wants to expand its counter-seasonal business, invest in its production and rebuild its OEM business, after its takeover last year by an arm of VR Capital Group, an asset management company, backed by Merrill Lynch International.
While the Elan group managed to raise its sales last year, the new owners acknowledge that managers have been distracted by the uncertainties around the sale and that the acquisition allows Elan to entirely focus on its development again.
Preliminary results indicate that the entire Elan group lifted its sales by about 5 percent to €74 million in 2015. Although the figures haven't been finalized, it appears that the company again managed a profit last year, after an operating profit of nearly €1.9 million and net profit of about €840,000 in 2014.
Just over half of the group's sales came from Elan's winter sports business and the remainder from its activities in the marine business, wind energy and sports facilities. The winter sports business alone managed a low single-digit sales increase in 2015, as OEM sales suffered another slight decline, while sales of Elan-branded equipment were on the rise. The group reported a decrease in pairs of Elan-branded skis sold last year, from about 300,000 pairs in 2014, but the turnover for the brand's winter sports products was still up on the back of an improved mix.
Elan has consistently upgraded its product range, which has earned it multiple awards for innovation in recent years. Among the latest, Elan obtained the Plus X Award for the most innovative brand in the sports equipment category in 2015, for the third time in the last four years. The Slovenian brand was also the winner of the 2016 Ispo Award in the “ski off piste” category for its Ripstick skis.
The growth for the Elan brand was driven by the U.S., where the company says it has been gaining market share. Sales of Elan-branded skis advanced at double-digit rates in Germany and Austria, while they declined in Russia and Japan.
Uncertainty about Elan's financial stability has been cleared since the buyer says it has settled two outstanding disputes. The first of them related to an order issued by the European Commission to repay €10 million in financial aid received in 2008, which was regarded by the commission as unlawful state aid. The new owners say they have entirely repaid the sum, with interest. Elan had another dispute with a former chairman, who has been claiming performance-related bonus payments for his contribution to the reorganization of the company many years ago, but VR Capital said this dispute has been settled.
Oleg Obrezkov from VR Capital Group, who attended Ispo Munich with Elan's management, added that last year's transactions leave Elan with a robust balance sheet: After Merrill Lynch acquired long-term debt of €14.3 million from Bank Assets Management Bank (BAMC), Slovenia's state-owned “bad bank,” Elan's external long-term debt amounts to less than one time its operating profit (Ebitda).
Among the strategic developments for the coming years, Elan is considering wide-ranging investments to optimize its efficiency. This involves its production plant in Begunje, in northern Slovenia, as well as other aspects of its operations and logistics. Elan said the moves should not lead to any reductions in its permanent workforce.
When it comes to counter-seasonal business, Elan is already active in the marine industry and it has more recently started a division selling wind turbines. Elan previously had a bicycle division, which hasn't been active for several years.
VR Capital also intends to beef up the Slovenian company's management, by adding one or more non-executive board members who could provide strategic insights for the coming years.
