The Amer Sports group has predicted a small decline for this year in the sales of its winter sports equipment, comprising the Atomic and Salomon brands, after the unfavorable previous winters and a 3 percent drop in orders for the coming season. But this comes after a sales hike in the second quarter and robust reorders for many of the Finnish company's other products groups, allowing it to uphold its positive forecast.

Among its expansion projects for the months ahead, Amer pointed to strong joint business plans with its retail partners, continued growth in own retail sales and product launches across its brands. Despite uneasy market conditions, the group predicted increases in constant-currency sales and operating (Ebit) margin, excluding one-off items.

The Finnish group has made significant investments in digital technology, retailing and infrastructure to support its expansion, which pushed up operating expenses by about €14 million in the second quarter. Amer expanded its distribution centers in both the U.S. and Europe, and moved Arc'teryx into a larger production facility in Canada. It invested in retailing, mostly for the Arc'teryx brand, with store openings in the U.S., China, Japan and Austria, and it has more stores opening shortly, again in China and the U.S., along with Italy and Canada. The group's online retail operations are expanding as well, most recently in Canada and Japan.

The entire Amer group's turnover has been on the rise so far this year, with a gain of 4 percent to €477.4 million in the seasonally small second quarter. This amounted to a rise of 6 percent in constant currencies, with organic growth of 5 percent driven by apparel and footwear. However, outdoor was the only category that contributed significant growth in the Finnish group's sales.

Demand remained buoyant for outdoor footwear and apparel, including double-digit sales rises for the Arc'teryx and Salomon brands. Apparel sales in the outdoor division soared by 24 percent in constant currencies, while footwear raced ahead with a 15 percent sales increase.

Winter sports equipment sales slipped by 3 percent but Amer managers said in a conference call that it was performing relatively well given the market situation. Sports instruments were down by 6 percent in constant currencies, on account of a shift in product launches. Suunto is currently implementing the launch of its Spartan range, which is adding to sales for the third quarter.

The cycling division and its Mavic brand saw a sales rise of 20 percent for the quarter, both in reported terms and constant currencies, with 18 percentage points coming from the acquisition of Enve Composites. This high-end brand of carbon wheels, components and accessories for road and mountain biking has annual sales in the range of $30 million.

Amer Sports Consolidated Income Statement

(Million Euros, Quarter ended June 30)

 

2016

2015

% Change

Winter and Outdoor

231.0

209.7

10.2

Ball Sports

165.5

169.4

-2.3

Fitness

80.9

82.0

-1.3

NET SALES

477.4

461.1

3.5

Cost of Goods Sold

263.8

257.6

2.4

Licence Income

1.6

1.5

6.7

Other Operating Income

1.4

0.8

75.0

R&D Expenses

22.6

17.0

32.9

Selling & Marketing

163.7

162.0

1.0

Admin. and Other Expenses

42.4

42.4

0.0

Net Interest Expense

(8.0)

(9.4)

-14.9

Pre-Tax

(20.1)

(25.0)

-19.6

Tax

5.4

7.0

-22.9

NET LOSS

(14.7)

(18.0)

-18.3

Euro/Share, Diluted

(0.13)

(0.16)

-18.8

The whole outdoor division's turnover advanced by 10 percent to €231.0 million, a rise of 13 percent in constant currencies, with organic growth of 9 percent. The underlying growth was strongest in the Americas, with a sales rise of 21 percent in constant currencies, compared with 18 percent for Asia-Pacific and 8 percent for EMEA. The outdoor division was again loss-making in this seasonally small quarter, with an operating loss of €16.0 million, compared with a loss of €18.7 million in the year-ago period.

Affected by the retail tensions in the U.S. market, sales of the ball sports division, led by Wilson, were flat in constant currencies and they dipped by 2 percent in reported terms to €165.5 million.

The fitness division's turnover and its Precor brand ended the quarter down 1 percent to €80.9 million, although sales were up by 1 percent in constant currencies.

The group's overall gross margin moved up by 0.6 percentage points to 44.7 percent. Its operating loss (Ebit) before one-off items widened to €12.1 million, compared with a loss of €9.0 million in the second quarter of 2015. The group ended the quarter with a net loss of €14.7 million, compared with a loss of €18.0 million in the prior-year period.

For the first half of the year, the group's sales climbed by 7 percent to €1,112.9 million, up by 9 percent in constant currencies, with 6 percent of organic growth. Outdoor contributed the strongest growth, with a rise of 12 percent in constant currencies, compared with 7 percent for ball sports and 3 percent for fitness.

Amer's gross margin was up 1.2 percentage points to 46.3 percent for the half-year and operating profit before one-off items surged by 38 percent to €33.9 million. Amer ended the six months with a net profit of €8.5 million, compared with a loss of €0.8 million in the prior-year quarter.

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