Amer Sports Corporation reported that net sales for the first quarter rose 2% to 277.8 million ($364.6 mm) from 271.6 million ($339.3 mm) in the year-ago period. In local currencies, net sales grew by 5%. With the exception of the Winter Sports Division and Golf Division, sales of all business areas grew in local currency terms.
Net sales by geographical market were as follows: the Americas (including Latin America) 63%, EMEA (Europe, Middle East, Africa) 26%, and Asia Pacific 11%. Sales in the Americas and EMEA remained at the same level as in the corresponding period of last year. In Asia Pacific, net sales grew by 26% thanks to surging sales in Japan. In local currencies, net sales in the Americas grew by 4% and in Asia Pacific by 29%. In EMEA, net sales were unchanged.
The Group's EBIT totaled 21.5 million ($28.2 mm) versus 27.4 million ($34.2 mm) in Q1 last year, due primarily to investments made in sales and marketing especially in Fitness Equipment and Winter Sports Divisions. Net earnings for continuing operations were down 15% to 14.2 million, compared to 16.7 million in the year-ago period. Earnings per share were 0.20 versus 0.24 in Q1 last year.
The Racquet Sports Division saw net sales increase 4% to 61.0 million ($80.1 mm) from 58.7 million (73.3 mm) in the year-ago quarter. In local currencies, the Racquet Sports Division's net sales grew by 6% compared to the corresponding period of last year. Sales grew by 6% in the Americas and by 22% in Asia Pacific. In EMEA, sales declined by 2%.
EBIT grew by 25% and was 9.0 million. Better gross margins contributed to this good performance.
In the review period, the U.S. tennis markets remained at previous year's level.
Wilson remained strongly positioned as the global market leader in tennis rackets. During the period under review, sales of Wilson's tennis rackets grew by 10% as sales of premium rackets increased by 6%. The new nCode rackets that feature nanotechnology continue to be popular the world over. Sales of tennis balls increased by 5%. Sales of footwear declined by 8%.
In the Golf Division, net sales declined 2% to 47.4 million ($62.2 mm) from 48.6 million ($60.7 mm) Q1 last year, but were flat when measured in local currencies. Sales declined by 6% in the Americas and by 2% in EMEA. In Asia Pacific, sales grew by 30%.
According to the companys own estimates, the overall size of the global golf market remained about the same as last year. In January – March, overall sales of golf equipment to the trade declined by 3% in the US compared with the corresponding period of the previous year and the number of rounds played fell by 3.5% (January – February).
Sales of golf clubs rose by 4%. Global shipments of the new Wilson Staff product line started. Sales of these premium clubs increased by 23%, which in turn benefited EBIT in the first few months of the year. The golf ball market continued to be extremely competitive, and Wilson golf ball sales were similar to last year.
Team Sports sales rose 4% in the period to 63.9 million ($83.9 mm) from 61.5 million ($76.8 mm) last year. Stated in local currencies, the Divisions net sales grew by 9%. Sales rose by 7% in the Americas, 9% in EMEA, and 120% in Asia Pacific. Outside the United States, sales saw exceptionally buoyant growth in Japan. EBIT grew by 7% in local currency terms.
The fastest growing product categories in Team Sports were baseball and softball bats (34%). In the US, baseball continued to grow in popularity. The DeMarini bats have been well-received the world over.
The Winter Sports Division's net sales decreased 8% in Q1 to 26.5 million ($34.8 mm) from 28.9 million ($36.1 mm) in the year-ago period. In line with its business cycle, the Winter Sports Divisions deliveries are heavily weighted towards the latter part of the year, the busiest months for deliveries being September and October. Sales fell by 4% in EMEA and 27% in the Americas. Poor weather conditions reduced the amount of additional orders received in the U.S.
EBIT loss expanded to (8.4 million) versus (5.1 million) in Q1 last year. Two of the main factors affecting EBIT were increased investment in sales and marketing as well as the sales decline in North America.
The Winter Sports Division will continue to develop innovative products. During the period under review, Atomic launched the IZOR ski line, which utilizes nanotechnology.
From the beginning of the year, sales of Winter Sports' products in Italy and Russia have been handled by its new locally based Amer Sports sales and distribution companies.
The Fitness Equipment Division net sales increased 7% in Euro terms to 59.5 million ($77.4 mm) from 55.1 million ($68.8 mm) last year, or a 12% increase in local currency terms. The fastest growing product categories were treadmills and stationary cycles. Sales of audio/video entertainment, hardware, and systems have all developed positively.
The Fitness Equipment Division is investing heavily in developing its business outside the U.S. market. During the period under review, sales outside the Americas grew by 14%.
Stated in local currencies, the Fitness Equipment Divisions EBIT declined by 36% due to investment in sales and marketing. In addition, the company hasn't been able to pass on in full increased steel and freight costs in its selling prices. The profitability of the businesses that were integrated last year has not as yet reached its objective.
The fitness sector continued to grow in North America. Growth was seen in sales of fitness equipment to fitness clubs and for home use. The division's position as a major international full-line supplier of fitness equipment was bolstered by expanding its product range into commercial strength, entertainment systems and services.
The Sports Instruments Division posted a 6% increase in sales to 20.0 million ($26.2 mm) in Q1, compared to 18.8 million ($23.5 mm) in the prior-year quarter. Net sales in the January – March period grew by 7% in local currency terms. Sales rose by 10% in EMEA and 5% in the Americas.
Sales of Suunto's diving instruments grew by 15% during the review period. Sales were boosted especially by the Suunto D9 dive computer, which has attracted great interest in the market. Sales of wristop computers grew by 2%. Wristop computers and diving instruments accounted for 62% of Suunto's net sales in the review period. Diving and Watersports Suits grew by 10%.
For the year, Amer Sports comparable net sales in local currencies are expected to grow by 3% to 5% compared with 2004. Earnings per share for 2005 are expected to be 0.90 to 1.05.
