Amer Group’s net sales in fourth quarter declined 1.7% to 261.0 million ($338.3 mm) from 265.4 million ($316.0 mm) in the year-ago period. Full year net sales declined 3.2% to 1.06 billion ($1.32 bn), compared to 1.09 billion ($1.24 bn) in 2003. Foreign exchange rate movements reduced net sales by 10.0 million during the quarter and 50.0 million for the year, due mainly to strengthening of the euro against the U.S. dollar. Excluding foreign currency exchange fluctuations, Amer Group sales would have increased 2.1% for the quarter and 1.3% for the year.
The declines in the quarter and the year were due primarily to the sale of the Tobacco business. Excluding the effect of currency and the loss of the Tobacco business, full year sales would have actually increased 10.3% and fourth quarter sales would have jumped 13.1% for the period.
On a regional basis, Q4 sales in the Americas increased 11.6% to 136.4 million ($176.9 mm) from 122.2 million ($145.5 mm) in Q4 last year. In U.S. Dollar terms, sales in the region increased 21.6% for the period. The EMEA region, which includes Europe, Africa, and the Middle East, saw revenues take a 19.2% dive for the quarter due to the loss of the Tobacco business. The remaining Sports business rose 2.6% to 97.7 million, compared to 95.2 million in the year-ago period. Full year EMEA sales would have increased 6.1% to 372.2 million, excluding the Tobacco impact on sales.
Fourth quarter net income jumped 91.3% to 24.3 million ($31.5 mm) from 12.7 million ($15.1 mm) in the year-ago period. Full year net income rose 8.2% to 84.5 million, or 1.19 per share, from 78.1 million, or 1.12 per share, in 2003.
The Winter Sports division, which includes the Atomic and Volant business, contributed more than 58% of total net operating profit for the company in the quarter and represented nearly 31% of sales for Q4. The division posted an 11.8% sales increase to 80.5 million ($104.4 mm), or 30.8% of total sales, versus 72.0 million ($85.7 mm), or 27.1% of sales, in the year-ago period. Sales increased 13% in local currency.
Winter Sports operating income increased 28.1% to 20.5 million (26.6 mm) from 16.0 million ($19.1 mm) in Q4 last year. Full year net sales increased 9.2% to 205.6 million ($255.7 mm), compared to 188.2 ($213.1 mm) in 2003. The Americas represented about 20% of Winter Sports sales for year, or about 41 million ($51 mm), while EMEA made up 75% of sales, or 154 million and Asia Pacific contributed 5.0% of sales.
The company sees the winter sports market growing 3% in the 2004/05 season versus growth of just 2% in last years season. Management said that average selling prices in the market declined last year. Amer said comp sales, measured in local currencies, are expected to rise in 2005, while EBIT is forecast to be flat to 2004.
The Fitness Equipment division saw the biggest increase in revenues for the quarter and the year, due primarily to acquisitions. Conversely, the division was hurt by rising steel prices and a settlement paid out in a litigation case.
Revenues for the Fitness Equipment division increased 22.9% in the quarter to 58.6 million ($76.0 mm), compared to 47.7 million ($56.8 mm) in the year-ago period. In local currencies, sales were up 32% for the quarter. EBIT was up just 1.3% to 7.6 million ($9.9 mm) from 7.5 million ($8.9 mm). In U.S. Dollar terms, sales increased 33.8% and EBIT rose 10.4% for the period. The division contributed 22.5% of total company revenues in Q4, up 450 basis points from Q4 last year, and delivered 21.7% of EBIT for the period.
Comparable net sales in local currencies rose by 31% for the full year. The Americas represented 79% of Fitness Equipment sales for the year, while EMEA contributed 15% and Asia delivered 6% of sales. The strongest growth was in sales of elliptical trainers, treadmills, and stationary cycles. Sales in the Americas increased 32% for the year.
Suunto net sales in fourth quarter declined 5.8% in reporting Euros to 19.5 million ($25.3 mm) from 20.7 million ($24.6 mm) in the year-ago quarter.
Suunto net sales in local currencies declined 5% for the fourth quarter. EBIT for Q4 was up 56 .3% to 2.5 million ($3.2 mm) from 1.6 million ($1.9 mm) in Q4 last year. EBIT had sunk 57% in Q4 last year.
Full year sales inched up just 0.8% to 77.2 million ($96.0 mm) from 76.6 million ($86.7 mm) in the prior year. Wristop and Diving Instruments were 64% of sales. Suunto net sales in local currencies increased 3% for the year. EBIT was up 3.9% to 8.0 million ($10.0 mm) from 7.7 million ($8.7 mm) last year.
The Wilson business, which is based in the U.S., increased 3.1% for the quarter to $132.8 million from $118.2 million in the year-ago period. When measured in the reporting Euro terms, sales increased 3.1% to 102.4 million for the quarter.
The Wilson group, which includes the Racquet Sports, Golf, and Team Sports divisions, swung to an EBIT profit in Q4 to $9.5 million versus a loss of $6.4 million in Q4 last year. Big gains in the Racquet Sports business and Team Sports were supported by a significant reduction in the loss in the Golf division.
Golf Division sales declined 5.8% in the quarter to 21.1 million ($27.4 mm) from 22.4 million ($26.7 mm) in Q4 2003. Sales were off 1.0% in local currencies, but were up 2.6% when measured in U.S. Dollars. The division posted a 2.9 million ($3.8 mm) loss for the period, a significant improvement from the 11.5 million ($13.7 mm) loss from the year-ago period.
The Golf division was 8.1% of company sales in Q4 and 13.9% of total sales for the full year.
For the year, net sales for the Golf division were down 2% in local currencies. Reported net sales declined by 5.4% to 147.7 million ($183.7 mm).
Amer said that competition continued to be tough in the golf equipment market and prices were under pressure. Sales of golf clubs were flat to last year and Wilsons global market share was 4%. Wilson also had a 4% market share in golf balls, flat to last years share.
Sales rose by 22% in Japan and 1% in the Americas. Sales were down 13% in EMEA. The Golf Division achieved its objective for 2004 to get back in the black, swinging to an EBIT profit of 0.5 million ($0.6 mm) for the year versus a 12.4 million ($14.0 mm) loss in 2003.
Profitability was improved by the reorganization of Wilson in the U.S., a process that commenced in 2003, and by the related realignment of its cost structure to better match its business operations.
Team Sports has continued to “perform well”, posting a record quarter as operating profit for the division improved by nearly 36% in Q4 to 5.7 million ($7.4 mm). In U.S. Dollars, EBIT improved 47.8% for the quarter and 16.0% for the year. Comparable EBIT in local currencies was up 18% for the year.
Amers Team Sports sales rose 5.3% to 42.0 million ($54.5 mm) from 39.9 million ($47.5 mm) in Q4 2003. Measured in U.S. Dollars, the Team Sports group saw sales increase 14.7% for Q4 and 12.3% for the year. In local currencies, net sales for the quarter grew 15% for the quarter and increased 13% for the year. The division derived 89% of its sales from the U.S. market. Sales outside the U.S. increased 16% for the year. Amer said that baseball and softball bats, which increased by 25%, were the key growth drivers.
Global sales of other products under license from Wilson totaled approximately 115 million ($143.0 mm), an increase of 5.3% when measured in U.S. Dollars, but a 4.2% decline when measured in the reporting Euros.
At the companys annual meeting held last week, Amer approved growth objectives that call for “currency-neutral organic growth of an average 5% per annum and to at least match average annual growth in the sports equipment market.” They also said that the annual target is to at least achieve 10% operating profit.
For 2005, Amer Groups comparable net sales in local currencies are expected to grow by 3% to 5% compared with 2004. Earnings per share for 2005 are forecast to be in the 0.90 to 1.05 per share range.
