Amer Sports’ profitability is apparently improving faster than that of the rest of the Anta Sports Group. In a profit warning, Anta, which heads up the joint venture that took over the group two years ago, says it expects a decline in the losses of a joint venture, which we assume refers to Amer, for the first six months of 2021.

Anta reported a loss of 1,365 million yuan renminbi for Amer in the first half of 2020, contributing to a decline of 27 percent to RMB1.66 billion in the net profit of the group, due also in part to the strong impact of the Covid pandemic on Anta’s operations in China during the period. Excluding the joint venture, the group made a profit of RMB2.38 billion during the same period in 2020.

In its latest update, Anta said it expects to post an increase of at least 110 percent in consolidated earnings for the first six months of this year including its share in the loss of the joint venture. Operating income is expected to increase by no less than 55 percent from the year-ago level of RMB3.60 billion.

Without taking into account the joint venture’s lower losses, the group’s net earnings should record a lower increase of at least 65 percent for the first half of 2021, said the group. The improvement will stem from a growth of at least 50 percent in overall revenues, driven by higher retail sales for the Anta brand and a faster increase in the retail sales of Fila and other brands for which the group has the distribution rights for China.

All the group’s brands have been offering lower retail discounts than during the 2020 pandemic, resulting in overall higher gross margins. Fila and other brands have also benefitted from better operating efficiencies.

For Amer Sports, which owns Salomon, Atomic, Wilson and other brands, Moody’s has predicted an overall sales increase of 10 percent for Amer Sports in 2021, thanks mainly to progress in the U.S. and Chinese market. It indicated that its recovery started in the second half of last year, but pointed out that its profitability will be constrained this year by some one-off costs.

Anta’s profit warning, issued on June 17, has contributed to raise its stock market price by 22 percent in the last five days, raising the group’s market capitalization to a 52-week record of more than 475 billion Hong Kong dollars (€51.3bn-$61.2bn).