Amer Groups net sales for the full year 2004 declined 3.2% to 1.06 billion ($1.32 bn) from 1.09 billion ($1.24 bn) in 2003). The divestment of the tobacco business in March reduced net sales by 8%. Net sales of the sports equipment business rose by 5.2% to $1.04 billion ($1.29 bn). The comparable net sales of this business in local currencies grew by 11.4%. With the exception of the Golf Division, sales of all sports business areas grew in local currency terms.
Foreign exchange rate movements reduced Amer Groups net sales by 50 million, which was due to the strengthening of the euro, particularly against the US dollar.
Sales in the Americas grew by 4.2% to 597.1 million ($742.7 mm) in 2004 and Asia Pacific sales increased 8.2 to 111.6 million ($138.8 mm). EMEA sales declined by 16.2% to 350.1 million ($435.5 mm) due to the divestment of the tobacco business. Excluding the tobacco business, EMEA sales rose 6.1% to 327.2 million ($574.3 mm).
Comparable net sales in local currencies rose by 14% and 15% in the Americas and Asia Pacific, respectively, and declined by 17% in EMEA.
The Groups EBIT amounted to 122.0 million ($151.8 mm), including the consideration received from Philip Morris due to the premature termination of the license to manufacture and sell Philip Morris products. The divestment of the tobacco business improved EBIT by 10.1 million ($12.6 mm). Exchange rate movements had a slightly negative effect on EBIT. The Groups EBIT as a proportion of net sales was 11.5% (10.8%). Net earnings rose 84.5 million ($105.1 mm) from 78.1 million ($88.4 mm) last year. Earnings per share were 1.19 ($1.48) versus 1.12 ($1.27) in 2003.
FOURTH QUARTER RESULTS
Amer Groups Q4 net sales declined by 1.7% to 261.0 million ($338.6 mm) from 265.4 million in Q4 last year. The divestment of the tobacco business reduced net sales by 25.7 million and foreign exchange rate movements by 10 million. However, underlying net sales of the sports equipment business in local currencies rose by 13.1%.
The Groups Q4 EBIT was 35.1 million ($45.5 mm) versus 19.8 ($23.6 mm)in Q4 2003. Exchange rate movements had a minimal impact on EBIT in the fourth quarter. Net earnings jumped 91.3% to 24.3 million ($32.5 mm) from 12.7 million ($15.1 mm) in Q4 last year.
The fourth quarter is high season for Winter Sports, which thus accounts for a larger share of the Groups net sales in Q4. Atomics fourth-quarter net sales rose by 11.8% to 80.5 million ($104.4 mm) and EBIT rose 28.1% to 20.5 million ($26.6 mm) compared with the same period last year.
The last and first quarters of the year are typically the most notable ones for the fitness equipment business. Precors fourth-quarter net sales rose by 22.9% to 58.6 million ($76.0 mm). Comparable net sales in local currencies were up 32%.
DIVISIONAL REVIEWS
Racquet Sports Divisions net sales rose by 1.4% to 210.3 million ($261.6 mm) in 2004. Comparable net sales in local currencies were up 6%. Sales rose by 7% in the Americas, 2% in EMEA, and 12% in Asia Pacific. EBIT increased by 31% to 26.9 million ($33.5 mm). Premium tennis racquets in particular boosted sales.
The Golf Divisions net sales declined by 5% to 147.7 million ($183.7 mm). Competition continued to be tough in the golf equipment market and as a result prices were under pressure. Sales of golf clubs were similar to last year and Wilsons global market share was 4%. Wilson also had a 4% market share in golf balls.
Comparable net sales in local currencies declined by 2%. 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. Profitability was improved by the reorganization of Wilson in the United States, a process that got under way in 2003, and by the related realignment of its cost structure to better match its business operations.
Team Sports continued to perform well, breaking its previous earnings record. Net sales were up 2% to 185.0 million $230.1 mm). Comparable net sales in local currencies rose by 13%. The products that particularly improved sales performance were baseball and softball bats; their sales increased by 25%. Of net sales, 89% were generated in the US market. Sales outside the United States grew by 16%. EBIT increased by 6% to 24.6 million ($30.6 mm). Comparable EBIT in local currencies was up 18%.
In addition to sales of racquet sports, golf, and team sports equipment, global sales of other products manufactured under license from Wilson totaled approximately 115 million.
The Winter Sports Divisions net sales grew by 9.2% to 205.6 million ($255.7 mm). Comparable net sales in local currencies rose by 11%. Sales grew by 13% in EMEA and 5% in the Americas. EBIT increased by 5% to 29.6 million ($36.8 mm). Average product prices declined due to an increasing proportion of sales being derived from lower price-point products.
The first indications are that the total market for winter sports in the 2004/2005 season will grow by 3%, compared to 2% growth in the 2003/2004 season.
The Fitness Equipment Divisions net sales increased by 19.7% to 210.1 million ($261.3 mm). Comparable net sales in local currencies were up 31%. The products that saw the greatest sales growth were elliptical fitness equipment, treadmills, and stationary cycles. Of net sales, 78% came from North America, where sales increased by 32%. EBIT declined by 10.8% to 23.9 million ($29.7 mm). A settlement paid in a fitness equipment litigation case reduced EBIT; its non-recurring impact was 2.5 million. The result was also weakened by the rising price of steel as well as the integration of the acquired businesses.
During the year under review, the fitness market grew by about 5% in North America. Price competition continued intensively in Europe.
Suuntos net sales rose by 0.8% to 77.2 million ($90.6 mm). Comparable net sales in local currencies increased by 3%. The Americas generated 40% of net sales and EMEA 50%. Sales grew by 13% in the Americas and declined by 6% in EMEA. EBIT grew by 3.9% to 8.0 million ($10.0 mm).
Sales of Suunto wristop computers grew by 2% during the year under review. Sales of diving instruments remained at 2003s levels. Wristop computers and diving instruments accounted for 64% of Suuntos net sales.
