Following strategic changes begun last year, the balls sports business at Amer Sports contributed a sharp rise in the group's sales for the third quarter, while the company's turnover continued to advance briskly in apparel, footwear, own retailing and China.

The Finnish group's sales increased by 11 percent to €713.7 million for the quarter, up by 5 percent in constant currencies and 4 percent excluding acquisitions. Its own retail sales were up by 28 percent. For the first three quarters of the year, total revenues climbed by 15 percent to €1,750.7 million, up by 6 percent in constant currencies and by 5 percent without acquisitions.

The gross profit margin amplified by 2.3 percentage points to 47.0 percent for the quarter, and it was up by 1.5 percentage points to 45.9 percent for the nine months. The underlying operating profit (Ebit) jumped by 18.1 percent to €103.5 million for the quarter, amounting to a margin of 14.5 percent, up by 0.9 percentage points. For the nine months the operating margin before one-off items reached 7.3 percent, up from 5.9 percent. Extraordinary items of €8.0 million related to the restructuring program launched in July last year.

Amer Sports Consolidated Income Statement

(Million Euros, Third Quarter ended Sept. 30)

 

2015

2014

%
Change

Outdoor

476.6

452.2

5.4

Ball Sports

147.8

112.9

30.9

Fitness

89.3

80.7

10.7

NET SALES

713.7

645.8

10.5

Cost of Goods Sold

378.5

357.3

5.9

License Income

2.2

1.9

15.8

Other Operating Income

0.8

1.0

-20.0

R & D Expenses

19.8

18.0

10.0

Selling & Marketing Expenses

163.3

141.2

15.7

Administrative & Other Expenses

51.6

44.6

15.7

Net Finance Expense

7.7

8.8

-12.5

Pre-Tax

95.8

60.5

58.3

Tax

26.7

17.2

55.2

Net Result

69.1

43.3

59.6

Earnings/Share (Diluted)

0.59

0.36

63.9

With products for sports ranging from skiing to hiking and cycling, the outdoor category delivered a sales increase of 5 percent to €476.6 million for the quarter, amounting to 3 percent in constant currencies. However, several product categories were impacted by shifts in the timing of deliveries and product launches.

The group's turnover in outdoor footwear and apparel, led by Salomon and Arc'teryx, was inflated by a shift in deliveries from the fourth to the third quarter. Footwear sales surged by 20 percent to €141.2 million, up by 19 percent in constant currencies. Apparel sales were up by 14 percent in constant currencies, driven by the Arc'teryx brand.

On the other hand, the turnover for winter sports equipment tumbled by 13 percent in constant currencies for the quarter, as sales shifted from September to October. Amer Sports still predicts flat sales of winter sports equipment for the full year, driven by the Atomic and Salomon brands.

Sales declines of 10 percent for sports instruments and 5 percent for cycling in constant currencies related to the timing of product launches. Sports instruments saw the launch of the Ambit3 in the third quarter last year, while the launch of the Kailash and Traverse this year are taking place in the last quarter. When it comes to cycling, a key wheel launch for Mavic has been delayed until 2016.

The group's turnover in the outdoor category advanced by 10 percent in the Americas and by 17 percent in Asia–Pacific but declined by 3 percent in Europe, the Middle East and Africa (EMEA), all in constant currencies. The category's operating profit excluding one-off items reached €92.9 million, up by 11.8 percent. For the nine months, outdoor sales were up by 8 percent in constant currencies.

The ball sports business, focused on the Wilson brand, was buoyed by strategic changes adopted last year. Sales for this category soared by 31 percent to €147.8 million for the quarter, an increase of 16 percent in constant currencies and 10 percent excluding the acquisition of Louisville Slugger.

Excluding exchange rate changes, sales were up by 5 percent for individual ball sports, driven by tennis racquets and balls. The team sports category delivered a sales increase of 28 percent in constant currencies, or 15 percent excluding Louisville Slugger.

Amer Sports Net Sales by Region

(Million Euros, Third Quarter ended Sept. 30)

 

2015

2014

%
Change

EMEA

319.3

321.9

-0.8

Americas

302.0

249

21.3

Asia Pacific

92.4

74.9

23.4

Total

713.7

645.8

10.5

Geographically, the sales uptick for the entire ball sports category was widely spread, with increases of 17 percent in EMEA, 18 percent in the Americas and 4 percent in Asia–Pacific, in constant currencies. The turnover for ball sports was up by 5 percent in constant currencies for the nine months.

The strategic changes apparently helped to raise profits in the ball sports business unit, with Ebit before one-off items coming in at €8.8 million for the quarter, compared with €3.9 million in the year-ago period. Heikki Takala, Amer's chief executive, said the adjustments made the business more robust but their impact should weaken in the coming months.

Sales were sluggish in the fitness category, increasing by 11 percent to €89.3 million in euros, but declining by 3 percent in constant currencies. This drop was caused entirely by the Americas, where comparable sales shrank by 15 percent, whereas they increased by 26 percent in Asia–Pacific and by 16 percent in EMEA. Fitness sales dropped by 1 percent in constant currencies for the nine months.

Built around the Precor brand, the Amer group's fitness category continues to focus on improving profits. Its underlying operating profit improved to €9.1 million for the quarter, up from €7.3 million, aided by a decrease of about €1 million in operating expenses and exchange rate changes, which added another €1 million.

Amer's fitness category is preparing for faster expansion next year, after several strategic deals. In July the company acquired Queenax, a supplier of functional training systems, and in September it teamed up with Mad Dogg Athletics, the company behind the Spinning indoor cycling program and Spinner bikes. Under an exclusive multi-year global licensing deal, they will co-develop a range of indoor cycling equipment, with Precor taking charge of manufacturing and distribution.

Amer Sports ended the third quarter with net profit of €69.1 million, up from €43.3 million. The net profit more than doubled to €68.3 million for the nine months, up from €32.4 million. The group's outlook remains unchanged for the full year, as the management predicts increases in sales in constant currencies and in the underlying operating margin compared with 2014. In August the company outlined a long-term plan to reach sales of at least €3.5 billion by 2020, with organic expansion and acquisitions, and faster operating profit increases.

To support its expansion in connected devices, Amer announced last week that it has hired Heikki Norta as group digital officer. He previously worked at Nokia and Microsoft, focusing on wireless products and digital services. Norta is reporting to Takala and he will be a member of Amer's executive board.