Amer Sports Narrows Q2 Loss on Strength from Wilson Brand, EMEA Region

 

Meanwhile, Amer’s net loss in the quarter totaled €4.5 million ($5.7 mm), compared with a net loss of €5.4 million ($7.4 mm) a year earlier,  which management called the company’s worst year in more than a decade.

The Helsinki, Finland-based manufacturer reported that its Ball Sports (Wilson) segment surged 6% in local currencies on strength from all of its sub segments. Management said Racquet Sports (+2% currency-neutral) improved on sales of performance tennis rackets while Team Sports (+7% C-N) was boosted by baseball gloves and DeMarini bats and Golf (+16% C-N) was aided by significant strength from the U.S. region.  By region, Ball Sports saw low- to mid-single digit growth in its Americas and EMEA sectors with a slight drop from the Asia Pacific region.

For the company’s Winter and Outdoor segment, sales improved 4% currency-neutral during a quarter that traditionalyl yields low sales due to an increased focus on order intake in preparation for the winter season. Regionally, currency-neutral sales for the Winter and Outdoor segment dropped 8% in the Americas while improving 9% in EMEA and remaining flat in the Asia Pacific. Pre-orders for Winter Sports Equipment were up about 15% on strength from the Central Europe regions and strong sales from XC products. Traditionally, sales have followed a “10-80-10” principle, meaning 10% in the beginning of the year, 80% based on pre-orders and 10% from re-orders. Citing the 15% improvement in pre-orders, management said it appears that the winter equipment market has recovered due to good snow conditions during the previous winter season.

Likewise, management noted “strong growth” from the Apparel and Footwear sub-segment, which has seen 10% improvement on strong footwear sales. According to the company, Fall/Winter pre-orders in Apparel and Footwear are indicating stronger net sales growth in the second half of 2010 than in the first half of 2010. Specifically, management said growth has come from Europe, Russia, Canada and Asia with the most productive sub categories being Trail Running, Outdoor Performance and Skiwear.

Among other sub-segments of the Winter and Outdoor category, Cycling sales hovered around flat due to poor spring weather conditions while sales of Sports Instruments improved by 4% on strength from Outdoor products.

For the Fitness (Precor) category, which management admitted has been “unpredictable,” revenues improved 5% in local currencies on regional growth from EMEA (+21%) and Asia Pacific (+28%), which easily offset weakness from the Americas region (-3%). Management said growth was driven by commercial elliptical cross-trainers, bikes and strength and well as consumer treadmills and parts/service.
With regards to the Fitness category, company President and CEO Heikki Takala said Amer will continue to focus on North America, which is its key market. “…as long as North America continue to struggle, it is difficult to cause significant performance increase,” said Takala. “We expect just about zero profitability from Fitness this year.

Wilson EBIT jumped 115% for the quarter in U.S. dollar terms to $22 million, while the Precor business saw its EBIT loss expand 58% in U.S. dollar terms to a loss of $4.7 million. The Winter and Outdoor division EBIT loss narrowed 17% in euro terms to a loss of €24.2 million.
Regarding outlook, the company said it will encourage organic growth by expanding select distribution channels, increasing certain capabilities and achieving “clearly defined key performance indicators.”  In a statement, management said it expects the sporting goods market to “recover moderately,” but with significant regional and sports area specific differences.

Amer Sports expects its 2010 net sales to be approximately €1.7 billion and EBIT margin to improve to the mid-single digit level.