Supported by soaring demand in emerging markets, the Amer Sports group's sales inched up by 1 percent to €493 million for the first three months of this year, amid cautious buying in Europe and destocking of team sports products in the North American market. The Finnish group's quarterly sales were up by two percent in constant currencies.

Heikki Takala, Amer's chairman and chief executive, described the group's performance in a conference call as a satisfactory start to the year, despite a drop in quarterly profits. He said the overall market continued to be tight with retailers ordering more timidly, which led to a consistent shift from pre-orders to re-orders, particularly in footwear. The company's figures were also hit in the short term by investments for the longer term, such as the establishment of company-owned operations in markets previously covered by distributors. However, Takala said that the group was still on track to reach its profit improvement targets this year.

Amer Sports Consolidated Income Statement

(Million Euros, Quarter ended March 31)

2013

2012

% Change

Winter and Outdoor

266,5

256,5

3,9

Ball Sports

164,0

173,6

-5,5

Fitness

62,5

59,7

4,7

NET SALES

493,0

489,8

0,7

Cost of Goods Sold

273,5

273,5

0,0

Licence Income

1,4

2,0

-30,0

Other Operating Income

1,9

0,5

280,0

R&D Expenses

18,7

17,0

10,0

Selling & Marketing

139,2

132,2

5,3

Admin. and Other Expenses

36,7

40,0

-8,2

Net Interest

6,7

5,4

24,1

Pre-Tax

19,7

24,2

-18,6

Tax

4,9

5,4

-9,3

NET

14,8

18,8

-21,3

Euro/Share (Diluted )

0,13

0,15

-13,3

The group's turnover in Europe, the Middle East and Africa (Emea) amounted to €240.5 million for the quarter, up by 6 percent in euros and in constant currencies. Amer's reported turnover in Asia-Pacific was flat at €57.2 million but it increased by 6 percent in constant currencies. And its sales in the Americas dipped by 5 percent to €195.3 million, off by 4 percent in constant currencies, on account of the retail stock issues in ball sports.

Beyond this regional split, the Amer group's turnover was supported by sales hikes of 34 percent in Russia and 26 percent in China. Its own retail sales, including home retail and online sales, were up by 30 percent.

The Finnish group's winter and outdoor division lifted its turnover by 4 percent to €266.5 million, an increase of 5 percent in constant currencies. On the same basis, the division's sales advanced by 6 percent in Emea but they climbed by just 2 percent for both the Americas and Asia-Pacific. The turnover of Amer's winter and outdoor division was inflated by an underlying increase of 25 percent in apparel sales, led by the Salomon and Arc'teryx brands, amounting to a rise of 23 percent in reported terms to €63.1 million.

Driven by the Salomon and Atomic brands, the winter sports equipment unit had nearly stable sales in constant currencies, as sales of alpine skis decreased but cross-country skis and snowboard equipment enjoyed some gains. A slight sales rise in Europe made up for declines in other regions. The company said that inventories of winter sports equipment products appeared to be healthy at the end of the season.

Footwear was another unit with stable underlying sales in Amer's winter and outdoor division. Its turnover reached €102.3 million for the quarter, down by 2 percent in euros. The group pointed to growing sales of trail running and outdoor performance footwear in North America, Russia and Japan, but decreases in Central Europe. The unit was also impacted by the end of a distribution agreement in South Korea, which is expected to quickly pay back.

Sales of cycling products under the Mavic brand inched up by 1 percent excluding exchange rate changes, spurred by cycling helmets and footwear. Meanwhile Suunto's sports instruments expanded their turnover by 4 percent in constant currencies for the quarter.

The group's gross profit margin was exactly stable at 44.2 percent, as improvements in footwear and apparel were offset by a drop in the margin for fitness equipment, attributed to a shift in the timing of rebates and product mix. However, earnings before interest and tax (Ebit) contracted by 11 percent to €26.4 million, amounting to an Ebit margin of 5.4 percent against 6.0 percent in the first quarter of 2012. This was blamed on a hike of about €10 million in operating expenses, often relating to structural investments.

Some of the decline came from the ball sports division, which saw its Ebit shrink by 13 percent to €17.4 million. Yet the fitness division was worst hit with a negative Ebit of €0.4 million, against an operating profit of €3.9 million for the same quarter last year. That was only partly compensated by a rise of 33 percent in the Ebit of the winter and outdoor division to €14.2 million. Amer Sports ended the quarter with a net profit of €14.8 million, down by 21 percent compared with the same period last year.

For the full year, Amer Sports expects that its sales should increase by at least 5 percent in constant currencies, while its Ebit margin excluding non-recurring items should be up compared with 2012 (more already published in SGI Europe).