Amer Sports continued to suffer through the first quarter due to the exceptionally warm winter and slow re-orders of Salomon and Atomic snow sports equipment. However, in spite of the heavy declines in the top line for these two segments, the company was able to make considerable progress in returning Salomon to profitability and its non-snow-dependent divisions reported much stronger results.

Overall, Amer’s winter sports brands were down in the strong double-digits for the quarter. The company still feels there are more synergies to be leveraged and the efficiency of its winter sports operations can still be improved. With a combined Atomic and Salomon market share in the 30% range, Amer management feels that they can be the “cost leader” in this category.

Salomon sales were down 10% during the first quarter and down 8% in local currencies. Salomon made the strategic decision to exit the in-line skate business last year, and sales would have been flat this year excluding those numbers from last year’s results. In spite of the decline in sales, the division’s EBIT loss was basically flat, expanding slightly to a loss of €22.6 million ($29.6 mm) compared to a loss of €22.4 million ($26.9 mm) in Q1 last year.

Winter sports equipment sales were down 54% to €19.8 million ($25.9 mm) for the quarter, but this was partially offset by a 23% increase in apparel and footwear to €60.5 million ($79.3 mm) driven by trail running footwear and Salomon’s spring apparel collection. Mavic also contributed with a 6% increase in sales to €30.2 million ($39.6 mm). Management said that inventory levels and mix are “healthy.” For the full year 2007, Salomon winter sports equipment sales are expected to decline in the 15% to 20% range.

Atomic first quarter sales were down 47% in Euros and down 46% in local currencies. The division’s EBIT expanded 41% to a loss of €13.3 million ($17.4 mm) compared to a loss of €9.4 million ($11.3 mm) last year. Amer is reacting to the shrinking market by lowering its cost structure and reducing the workforce. Atomic sales are also expected to decline 15% to 20% during 2007.

Management is keeping the costs tight in the wintersports segment and is expecting €10 million to €20 million in cost saving synergies in 2007 with a total of €40 million by the end of 2008. Amer stated that Atomic will take the lead in gliding products, like cross country skis, alpine skis and snowboards, while Salomon will take the lead in footwear and binding products.

With the weather-induced slow-down in the winter market, Amer’s CEO Roger Talermo feels that it is vital to hold at least a 30% market share in winter sports in order to survive going forward. He also said that “the big battle,” between brands going forward will be in the mid-low-end, high volume product.

Wilson first quarter net sales were down 8% in Euros, but only fell 2% on a currency-neutral basis and were flat at $214 million in U.S. dollars where the vast majority of Wilson’s sales are currently produced. In U.S. dollars, Wilson’s racquet sales increased 7.8% to $85.3 million compared to $79.1 million last year. Golf sales fell 6.8% to $41.7 million with slow club sales offset by strong sales of Wilson’s 50/50 ball. Team sports sales declined 3.5% to $87.4 million on delivery timing issues. In Euros, Wilson’s EBIT for the quarter fell 18.5% to €19.8 million compared to €24.3 million. In U.S. dollars, the same metric was down 11.2% to $25.9 million.

The decline in profitability was mainly due to the change in timing of deliveries of team sports equipment, but also because of the implementation of SAP and some additional marketing costs. Amer expects Wilson to continue to grow its top- and bottom-lines in 2007. They saw strong results out of the U.S. sporting goods industry last year, with overall market growth approaching 10% in 2006, but the company is now predicting that this rate will drop off slightly for 2007.

Precor sales inched up 1% when measured in Euros, but increased 9% on a currency-neutral basis with North American sales fueling growth in both the commercial and the consumer segments. In U.S. dollars, sales increased 10.3% to $96.7 million. The division is expecting less quarter-to-quarter variability in earnings this year and management is expecting to take market share. The division’s EBIT slipped 18% during the quarter to €9.9 million, because costs are front loaded during Q1 of the year. In U.S. currency, Precor's EBIT slipped 10.1% to $13.0 million compared to $14.4 million last year.

Suunto was Amer’s fastest growing division with overall sales growing 11% in Euros and 16% on a currency-neutral basis. Sales of wristtop computers increased 43%, boosted by the launch of the “t-series” heart rate monitors. Diving instrument sales slipped 5% during the quarter. EBIT increased 36% to €1.5 million ($2.0 mm) compared to €1.1 million ($1.3 mm) last year.

Amer lowered its guidance for the full year 2007 due to the high retail inventory levels. The company now expects sales to be slightly lower than last year with flat EBIT. Previously Amer management was expecting flat sales and an improved EBIT. All business segments other than winter sports equipment are expected to “develop positively.”