Winter sports equipment sales at Amer Sports, the Finnish group that owns Salomon and Atomic, ended the past year with a drop of 5 percent to €425 million, which was a decline of 8 percent in constant currencies. The company previously indicated that its pre-orders for winter sports equipment had fallen by 13 percent, but it enjoyed an increase in reorders in the last quarter. Sales of winter sports equipment contracted by just 1 percent to €203.2 million for the quarter, a drop of 3 percent in constant currencies.

The weakness of winter sports equipment was easily compensated by other parts of Amer's business, led by apparel from Salomon and Arc'teryx, among others. The group's managers prided themselves on achieving record sales and stable comparable earnings in spite of the tough market situation caused by the warm winter in 2011, and while continuing to invest in the group's brands and operations.

For the full year, currency-neutral sales of alpine ski equipment shrank by 7 percent, and they declined by 17 percent in cross-country ski equipment and by 13 percent for snowboards. However, Amer's sales increased by 17 percent for active protection equipment: The company said it was part of its strategy to provide a full range of equipment for skiers, with smaller products such as helmets and goggles.

Winter sports equipment sales were off by 8 percent in constant currencies in Europe, the Middle East and Africa (EMEA) and by 16 percent in the Americas, where the winter has been warmer, while they inflated by 5 percent in Asia-Pacific. The Finnish group was still encouraged by the resilience of its earnings in winter sports equipment, owing to the restructuring measures launched three years ago.

The group's entire winter and outdoor division achieved a sales rise of 7 percent to €402.8 million for the last quarter. This was a rise of 5 percent in constant currencies, with jumps of 17 percent for footwear, 12 percent for apparel, 7 percent for cycling with the Mavic brand, and 25 percent for sports instruments sold by Suunto.

The ball sports unit, represented mainly by Wilson, contributed a sales rise of 17 percent to €127.7 million for the quarter. This amounted to an increase of 13 percent in constant currencies, mixing a rise of 16 percent for individual ball sports and 15 percent for team sports. The Finnish group's fitness division, which sells the Precor brand, lifted its turnover by 21 percent to €88 million for the quarter, up by 17 percent in constant currencies.

Amer Sports Consolidated Income Statement

(Million Euros, Year Ended Dec. 31)

2012

2011

% Change

Winter and Outdoor

1,221.2

1,137.6

7.3

Ball Sports

569.7

511.0

11.5

Fitness

273.1

232.2

17.6

NET SALES

2,064.0

1,880.8

9.7

Cost of Sales

1,163.4

1,063.4

9.4

License Income

7.5

8.7

-13.8

Other Operating Income

6.0

5.4

11.1

R & D Expenses

72.2

64.2

12.5

Selling & Marketing

527.8

475.9

10.9

Admin. & Other Expenses

177.6

155.9

13.9

Finance Expense

29.9

20.5

-3.8

Pre-Tax

81.8

115.0

-28.9

Tax

24.3

24.1

0.8

Minority Interest

-

-0.1

-

NET

57.5

90.9

-36.7

Euro/share (diluted)

0.48

0.71

-32.4

Amer ended the quarter with a gross margin of 41.9 percent, down by 0.5 percentage points compared with the same period the previous year. The group attributed this to inventory sell-out, as well as some increases in production costs for winter sports equipment.

Excluding non-recurring items, the group's earnings before interest and tax (Ebit) landed at €46.5 million for the quarter, almost stable from €46.3 million for the same quarter in 2011. This comparable Ebit was down by 7 percent to €41.7 million for the winter sports and outdoor division. It remained at a paltry €1.0 million for ball sports, which was still better than the loss of €0.7 million suffered at the same time in 2011. But the strongest improvement came from the fitness division, which delivered comparable Ebit of €9.0 million for the quarter, up from €6.2 million for the last three months of 2011.

The Finnish group's net income was down sharply to €5.3 million for the quarter, down from €31.1 million for the same months in 2011, but this was due to onetime costs of €24.8 million related to the restructuring program announced a few months ago. The costs for the program, which is meant to yield savings worth €20 million from the end of 2014, were entirely booked in the last quarter.

For the full year, Amer's turnover improved by 10 percent to €2,064 million, which was an increase of 5.1 percent in constant currencies. The winter and outdoor division chalked up sales of €1,221 million, up by 7 percent. Its sales climbed by 4 percent in constant currencies, as the fall of 8 percent in winter sports equipment sales was compensated by advances of 23 percent for apparel, 7 percent for footwear, 5 percent for cycling and 12 percent for sports instruments. The division's sales were up by just 2 percent in EMEA in constant currencies, while they expanded by 6 percent in the Americas and by 12 percent in Asia-Pacific.

The ball sports division's turnover reached nearly €570 million for the year, up by 11 percent. The increase amounted to 5 percent in constant currencies, with a contribution of 7 percent from individual ball sports and 3 percent from team sports. The division's sales in constant currencies inched up by 2 percent in EMEA, but they inflated by 4 percent in the Americas and by 13 percent in Asia-Pacific.

The group enjoyed a rise of 14 percent in sales of tennis racquets, due to Wilson's new performance range, Japan's recovery from the devastating earthquake of 2011 and the company's move to take over its distribution in China. Sales of tennis balls were up by 6 percent. On the team sports side, all product categories did well except for baseball bats, which saw their sales decline as retailers cleaned up inventories.

The fitness division ended the year with a turnover of €273.1 million, up by 18 percent in euros and by 10 percent in local currencies. The rise was driven by the EMEA region, where sales jumped by 28 percent for the year in constant currencies, compared with increases of 21 percent in Asia-Pacific and 3 percent for the Americas.

The group's gross margin for the year crawled up by just 0.1 percentage point to 43.6 percent. Excluding onetime items, the company's Ebit was also nearly stable, up by €1 million to €136.5 million. It declined by 4 percent to €113.8 million for the winter and outdoor division, but climbed by 12 percent to €28.0 million for ball sports and jumped to €17.0 million for fitness, compared with €10.3 million in 2011. As in the last quarter, the group's net income for the year was reduced by its restructuring costs: It reached just €57.5 million, down from €90.9 million in 2011.

Amer's managers said that market conditions should remain challenging this year, but they still expected the group's sales in local currencies and Ebit excluding restructuring costs to increase this year.

Amer will continue to focus on the expansion of its softgoods business, investments in emerging markets and retailing. On the back of this strategy, sales increased by an average of 19 percent in Russia, China and Latin America last year, to make up 8 percent of the entire group's sales. The number of mono-brand stores inflated from 172 to 201 stores, although most of them are run by independent partners, and the group now has 23 online stores.