Amer Group PLC would have seen declines across the board again this quarter had it not been for the inclusion of $48.2 million in Precor sales and $23.0 million, or €20.5 million, from a favorable U.S. patent litigation case involving Precor and Brunswick's Life Fitness unit. The company would have seen an 8.9% sales decline for third quarter and a 32.1% drop in net profits if not for the Precor gains.

The parent company of the Wilson, Atomic, Suunto and Precor brands was able to report positive total growth numbers also due to an improving picture in some of its other businesses, but Golf is still a significant drag on the overall results. The stronger Euro reportedly reduced sales for the quarter by €17 million ($19.2 million). Constant currency sales would have increased 12.2% versus the year-ago period, but would have been down 3.0% without Precor in the numbers.

The Precor benefit worked together with a healthier Racquet Sports business in the North America to push Q3 sales up 10.7% to €135.5 million, or $152.7 million. Measured in U.S. dollars, the North America business jumped 26.8% in the quarter.

In the U.S., much of the focus has been on the ongoing reorganization of the Wilson business. (See SEW_0343)
The weakness in the Europe business was driven by a 3.5% decline in the parent company’s home country in the period. The balance of Europe inched up 1.2% to €97.7 million ($110.1 million). In Asia, Japan grew 7.1% to €16.6 million ($18.7 million) while Asia Pacific surged 23.2% to €12.2 million ($13.7 million).

The Racquet Sports Division saw sales for the YTD nine-month period decline 15.4% to €173.1, down 3.0% in local currencies. There is an obvious hangover from the first half numbers that saw the business off 6.0% in local currencies. Sales in Europe and Japan were flat to last year’s YTD period, but reported sales declined 6.0% in North America due primarily to the weaker dollar and the poor first half. Third quarter sales in N.A. gained 4.0%.

For the YTD period, sales of Wilson tennis racquets decreased 4%, tennis balls 4% and footwear 5%.
Golf Division net sales and operating profit were “significantly below expectations” in the YTD period, declining 16% in local currencies and down 26.5% to €135.9 million in Euros. North America sales fell 24%, while Europe dipped 3.0% and declined 4.0% in Japan. The division has still not recovered from the 17% decline in the first half.

Sales of Wilson golf clubs decreased 14% and Wilson golf ball sales declined 24% for the YTD period, similar to the first half numbers. Operating profit also declined due to lower prices, especially for golf balls.

The Winter Sports Division kicked off its biggest shipping quarter by declining in excess of 11% in both Q3 and YTD. Sales of alpine skis declined 8%. The company said that while the pre-season order book was “close” to last year’s level “in volume terms”, lower price-point products increased as a proportion of total sales. More orders were also pushed to the fourth quarter this year.

Deliveries in September were said to be “similar to 2002 levels”, but Atomic's full-year net sales are expected to decline slightly from 2002.

Amer also reported that, commencing with the 2004/2005 season, Atomic will be distributed in Japan through Amer Sports' local organization, instead of by ASICS Japan as is now the case.

Fitness Equipment net sales in local currencies were flat to last year's level, but pro forma sales were down 12.5% in Euros to €128.6 million. Sales of treadmills and cycles grew, whereas sales of elliptical cross-trainers declined slightly.

The company said a new line of upright and recumbent cycles for club and commercial markets were brought to market, increasing sales in the third quarter.
Suunto saw net sales for the nine-month YTD period decline 5.0% in local currencies, while operating profit declined 12%. North America sales were “similar to 2002”, but declined in Europe by 9%, due primarily to a “general decline in demand for diving instruments”.

Sales of wristop computers grew 6%, while sales of diving instruments declined 12%. Wristop computers and diving instruments accounted for 61% of Suunto's net sales.