Amer Sports Q1 Sales up 12.0 Percent

President and CEO Heikki Takala said the Finnish companys strategic focus on soft goods lead to 34 percent growth in Footwear and 28 percent growth in Apparel sales. The improvement in Fitness reflects both improving market conditions and strong commercial gains.
 
Growth in Asia-Pacific was dampened by the effects of the earthquake and tsunami in Japan, which hit just as the Racquet Sports season there started.

 

“In the first quarter, we were able to mitigate the impact, however we do foresee an on-going business risk in the country,” said Takala. “Importantly, we remain committed to driving sustainable, long-term business in Japan, together with our trade partners and our own Amer Sports Japan organization. As part of this commitment, Amer Sports employees and the company made product, monetary and motivational donations to the disaster area.”

 

Gross profit rose 22.2 percent in euro, and reached 43.3 percent of net sales, up 60 basis points in the first quarter. “Cost inflation is a challenge,” but Amer Sports had taken action to protect the 2010 gross margin level, said Takala. The company continues to invest in its categories, geographic expansion, better customer service and owned retail.
 
Group EBIT was €25.7 million ($35.0mm), up 170.5 percent in euro terms. In local currencies, increased sales volumes contributed €28.7 million to EBIT growth, while higher gross margins contributed €3.0 million. Operating expenses increased by €14.9 million, driven by increased sales and distribution costs, but declined 280 basis point as a percentage of net sales to 37.9 percent. Net income reached €17.1 million ($23.0mm), compared to €300,000 a year earlier. 
 
Net financial expenses totaled €4.3 million including net interest expenses of €4.5 million. Net foreign exchange gains totaled €200,000. Earnings before taxes totaled €21.4 million and taxes totaled €4.3 million. Earnings per share were €0.13.
 
Winter and Outdoor
Winter and Outdoor’s net sales in the review period totaled €233.5 million, an increase of 20 percent in local currencies. Net sales growth was driven by Footwear and Apparel. In geographic terms, the strongest growth was in the Americas. EBIT was €9.3 million. In local currencies, increased sales volumes contributed €21.3 million to EBIT growth. Operating expenses increased by €12.4 million due to increased sales and distribution costs.
 
Winter Sports Equipment net sales totaled €46.9 million, an increase of 6 percent in local currencies. Sales were up in all the main product categories. In regional terms, North America experienced the highest growth rate, fueled by good snow conditions. Footwear net sales totaled €91.1 million, an increase of 34 percent in local currencies. Growth came from hiking and trail running, and was strongest in EMEA. Apparel net sales totaled €38.9 million, an increase of 28 percent in local currencies. Growth occurred in all geographical regions.
 
Cycling net sales totaled €34.4 million, an increase of 8 percent in local currencies. Sales were up in all the main product categories. The strongest growth was in cycling apparel and shoes. Sports Instruments net sales totaled €22.2 million, an increase of 7 percent in local currencies. Sales of outdoor and training products grew double-digit.
 
Ball Sports
Ball Sports net sales totaled €159.0 million, an increase of 2 percent in local currencies. Growth in the review period was driven by Team Sports. Net sales in EMEA and the Americas increased by 5 percent and 3 percent, respectively. In Asia Pacific, sales declined by 11 percent, driven by the soft tennis market and the aftermath of the earthquake and tsunami in Japan, the region’s largest market.

 

EBIT in the review period totaled €17.7 million, an increase of 23 percent. In local currencies, increased sales volumes contributed €4.1 million to EBIT growth. Operating expenses increased by €1.2 million due to increased sales, distribution and marketing costs.
 
Racquet Sports net sales totaled €67.1 million, a decrease of 3 percent in local currencies. Racquet Sports was adversely impacted by the earthquake and tsunami in Japan where Wilson has a strong market position. Growth in EMEA offset the sales decline in Asia Pacific. Team Sports net sales totaled €71.3 million, an increase of 9 percent in local currencies. Growth in Team Sports was driven by bats, basketballs and ball gloves, the three largest product categories during the quarter.
 
Golf net sales totaled €20.6 million, a decrease of 5 percent in local currencies.

 

Fitness/Precor
Fitness net sales totaled €56.6 million, an increase of 14 percent in local currencies. Sales were up in all geographic regions. The commercial business (clubs and institutions) sales were up by 13 percent in the review period. Consumer business (home use) was up by 21 percent in local currencies. In the North American fitness market, the commercial business started to show some early signs of recovery during 2010 and the market continued to improve through the first quarter of 2011. Fitness EBIT was €3.3 million. In local currencies, increased sales volumes contributed €3.7 million to EBIT growth while higher gross margins contributed €2.0 million. Operating expenses were €1.7 million higher than in the corresponding period last year mainly because of increased sales and distribution costs.
 
Outlook for 2011