Conzzeta Group, the Swiss holding company that controls the Mammut Sports Group, reports that the Swiss outdoor company's operating result and operational cash flow will be adversely affected in the years ahead by the implementation of a five-year strategic program to improve its performance, after a drop in sales and operating result last year. Then again, the program should enable it to expand the scope of its international business and thus reduce the share of its business in Switzerland and Germany.

Conzzeta's sporting goods segment saw its sales decline by 5.8 percent to 235.3 million Swiss francs (€216.1m-$245.4m) last year. Growing sales in North America and China partly compensated for a sales decline in Europe, but comparable sales were still down by 1.7 percent. The operating result reached just CHF 0.1 million (€0.09m-$0.10m), down from CHF 20.8 million (€19.1m-$21.7m), with strong impact from currency exchange rate changes.

Apart from hurting input costs, the currency situation affected sales in Eurozone countries as well as in Switzerland, where Mammut had to implement price reductions, and all of this was aggravated by the mild winter weather and weak snowfalls. Conzzeta further pointed to signs of saturation in the outdoor market, all the more so in the German-speaking countries, which make up more than 50 percent of Mammut's sales volume.

As previously reported, the Swiss outdoor group responded with measures such as the closure and outsourcing of its rope manufacturing operations, which will become effective around the middle of this year, and the concentration and regionalization of the sales organization. The ensuing restructuring costs amounted to CHF 2.4 million (€2.2m-$2.5m).

At the same time, Mammut has been investing in a five-year strategic program involving reinforced partnerships with some wholesale customers, more active management of sales space and expansion of its international multi-channel sales network – through online investments and more mono-brand stores. Another part of the plan is to broaden the target group of customers without compromising its “absolute Alpine” tagline.

The entire Conzzeta group, which includes industrial activities such as chemical specialties and glass and metal sheet processing, generated sales of CHF 1,140.8 million (€1,047.7m-$1,189.8m) last year, amounting to a decline of 4.6 percent. The company said the drop was chiefly attributable to adverse currency exchange rate changes, in the amount of CHF 53.5 million (€49.1m-$55.8m). On a comparable basis and in constant currencies, the group's turnover increased by 1.7 percent. Sales were up in the Americas while exchange rate changes most affected sales in Switzerland and Europe, and Asian sales were impacted by economic uncertainties in the second half.

The group's operating profit reached CHF 80.8 million (€74.2m-$84.3m) last year, amounting to an operating (Ebit) margin of 7.1 percent, which is a decline of 0.7 percentage points compared with the adjusted operating margin for 2014. The reduction was blamed on unfavorable exchange rate changes after the Swiss National Bank's decision to discontinue the minimum Euro rate. The group pointed to related one-time adverse valuation effects of CHF 9.1 million and restructuring costs of CHF 4.1 million, which were largely offset by one-off short-term cost-saving measures. The costs arising from the targeted expansion of the group's activities were also in the mix. Conzzeta ended the year with income of CHF 59.3 million (€54.5m-$61.8m), down by 3.4 percent.

While outlining its prospects, the Swiss group pointed to opportunities to broaden its regional scope in North America and Asia. At least one of them materialized a few days later, as Conzzeta announced an agreement to acquire DNE Laser in China as part of its sheet metal processing business. Conzzeta agreed to buy a stake of 51 percent with a long-term option to increase that position in the Chinese company, which employs about 400 people and reported a turnover of 335 million yuan renminbi (€45.5m-$51.7m) last year. Conzzeta expects a slight improvement in Ebit this year.