Amer Sports booked solid sales growth of 29 percent in the first nine months of 2019 and reduced its debt, according to Moody’s, prompting the rating agency to raise its outlook from stable to positive for the parent company of Arc’teryx, Salomon, Wilson, Peak Performance, Suunto and Atomic, which has been majority controlled by a consortium led by the Chinese sportswear giant Anta Sports Products since 2019. Moody’s also affirmed the company’s B3 corporate family rating and other debt ratings.
Amer’s revenues for the trailing 12 months until Sept. 30 amounted to €2.5 billion, generating adjusted Ebitda of €299 million, Moody’s revealed. Its improved rating followed a decline in Amer’s gross debt load in the past year to an adjusted ratio of around 7.2 times Ebitda from 10 times in 2020. Moody’s sees the leverage declining further to below 6.5 times over the next 12 to 18 months.
Last year’s sales gains were driven by DTC growth in the Chinese market, where Amer is expected to have generated sales of €300 million in 2021, up from €190 million in 2019. Moody’s forecasts that Amer’s sales will continue to grow strongly this year, largely due to the expansion of its retail network in China. Moody’s says that consumer demand has been stronger than expected in Amer’s sports apparel, footwear and individual ball sports equipment segments.
The rating agency also cited Arc’teryx’ rapid growth as an important factor. It noted that the company plans to invest in the development of Salomon in China this year, but warns that Amer’s expansion in China will be capital-intensive, and that free cash flow is expected to be negative until at least 2023, including negative cash flow of €100-150 million in 2022. It says the group’s liquidities should be sufficient to meet planned capital expenditures of €150-190 per year, but mentions possible execution risks linked to the Covid epidemic and supply chain disruption.
A few days ago, Amer Sports announced that it would sell Suunto, the Finnish manufacturer of sports watches, dive computers and precision instruments, to the Chinese technology company Liesheng within the first half of 2022, after regulatory and other required approvals.
