Stressing that the immediate outlook is more uncertain than normal for this time of the year, Amer Sports’ management is predicting a decline in its operating profit this year to somewhere between €80 and €90 million, compared with €92 million in 2007, excluding a €13 million extraordinary gain on the sale of its headquarters in Helsinki. It had previously targeted an operating profit in the range of €90-105 million for the year.
The group’s loss-making winter sports and outdoor division is certain to continue to improve its profitability, and significant further progress is expected in 2009. The company reported a 13 percent year-on-year drop in operating income (EBIT) for the third quarter to €51.5 million on 6 percent lower overall revenues of €433.2 million. At constant exchange rates, the declines would have been of 9 and 2 percent, respectively. For the first nine months, sales were flat in local currencies. In euros they were off by 6 percent to €1,081.3 million and they generated EBIT of €43.7 million, 14 percent better than in the first nine months of 2007, but this was after the €13 million gain from the sale of its corporate headquarters in the second quarter. The gross margin improved, especially in winter sports equipment, footwear, apparel and golf. Net profit declined by 15 percent to €32.9 million for the quarter and by 5 percent to €16.3 million for the nine months, due also to a mounting debt load that the management is setting out to reduce in the next months. The equity ratio was down to 30.9 percent at the end of the quarter.
The winter and outdoor sports division, which comprises mainly Atomic and Salomon, suffered a 7 percent drop in operating income to €45.7 million in the latest quarter, leading to EBIT of €4.4 million for the nine months against a loss of €14.3 million in the same period of 2007.
The order book for the fourth quarter in the winter sports sector is up by 14 percent, however, with orders from the mountain resorts up by 20 percent and those from the plains flat or slightly down, and the management is convinced that company inventories will by sharply lower at year-end. While ski boots are the fastest-growing product category, cross-country skis are still on a downward trend. The apparel and footwear segment of the division showed a 26 percent sales increase to €87.4 million for the quarter, driven by Arc’teryx outerwear and by a good sell-in of Salomon shoes, particularly in the USA. Salomon was described as the fastest-growing brand of outdoor footwear in Central Europe. Sources say that Salomon is probably No. 3 in the region behind Lowa and Meindl, possibly on the same level with Hanwag. Due to Salomon’s clear focus on the trail-running business, it is expected that the brand has the highest potential for future growth in the outdoor-inspired footwear category. Pre-orders for Spring/Summer 2009 are up in the double digits. Because of rising manufacturing costs in China, the group is planning to move a large part of the sourcing to other Asian countries in the next few years. Suunto’s sales of sports instruments sales rose by 5 percent to €21.9 million, but good gains in outdoor and training products were offset by declines in diving computers.