Amer Sports Q1 Sales up 20.5 Percent

JANUARY-MARCH 2011

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  Net sales totaled EUR 449.1 million (January – March 2010: EUR 372.6 million). In local currencies, comparable net sales increased by 12%.
  
  
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  EBIT was EUR 25.7 million (9.5).  

  
  
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  Earnings per share were EUR 0.13 (-0.01).  

  
  
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  Net cash flow after investing activities was EUR 87.1 million (93.9). 

  
  
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  Gearing was 35% (December 31, 2010: 37%). 

OUTLOOK AND GUIDANCE 2011
Amer Sports' strategic development programs continue to contribute positively to the Group performance in 2011 and the company will continue investing into executing the new strategy and sustaining the growth. In Footwear and Apparel, fall/winter pre-orders are indicating that the strong momentum will continue. In Winter Sports Equipment, Amer Sports' operational efficiency measures are expected to have a positive impact on the full-year profitability. The sporting goods market is estimated to continue to grow modestly in 2011, with sports specific and regional differences.

In 2011, Amer Sports expects its net sales to continue to clearly exceed the Group's long-term financial target of 5% annual currency-neutral growth. EBIT margin excluding non-recurring items is expected to improve from the level of 2010 (2010 net sales EUR 1,740 million, EBIT margin excluding non-recurring items 6.2%).

The 34% growth in Footwear and 28% growth in Apparel are a result of the execution of our strategy to grow faster in softgoods. The improvement in Fitness reflects both an improvement in market conditions and our strong commercial gains. The solid progress in EMEA and Americas, and in most parts of Asia, reflect our strategic programs to strengthen the commercial footprint and better delight the consumer.

Our business in Japan, especially Racquet Sports where the season was just about to start, was hit due to the earthquake and tsunami. In the first quarter, we were able to mitigate the impact, however we do foresee an on-going business risk in the country. 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.

We improved gross margin by 0.6 percentage points in the first quarter. Cost inflation is a challenge but we have mitigation actions in place to protect the 2010 gross margin level. On operational expenses, we continued to invest in our new strategy to ensure we have strong building blocks in place for the future. We invested especially into our category based operations, Go to Market resources including geographic expansion, better customer service, and own retail.

The first quarter was good and a logical part of our long term improvement program. We continue to steer the company towards the long-term targets. Hence, as we now stay the course, we look forward to a positive continuous development.”

Net sales by business segment

*) In local currencies

Geographic breakdown of net sales

*) In local currencies

Group EBIT was EUR 25.7 million (9.5). In local currencies, increased sales volumes contributed EUR 28.7 million to EBIT growth, while higher gross margins contributed EUR 3.0 million. Operating expenses increased by EUR 14.9 million, driven by increased sales and distribution costs. Operating expenses as a percentage of net sales were 37.9% (40.7%).

EBIT by business segment

Net financial expenses totaled EUR 4.3 million (9.1) including net interest expenses of EUR 4.5 million (3.2). Net foreign exchange gains totaled EUR 0.2 million (5.9 losses). Earnings before taxes totaled EUR 21.4 million (0.4) and taxes totaled EUR 4.3 million (0.1). Earnings per share were EUR 0.13 (-0.01).

CASH FLOW AND FINANCING
Net cash flow after investing activities (free cash flow) was EUR 87.1 million (93.9). Working capital in total was reduced by EUR 73.4 million (83.3). Net cash flow from investing activities was EUR -9.1 million (-4.8). In March the company paid dividend of EUR 36.4 million (19.5) and purchased own shares by EUR 9.2 million.

At the end of March, the Group's net debt amounted to EUR 257.4 million (December 31, 2010: 294.8).

Interest-bearing liabilities amounted to EUR 375.5 million (December 31, 2010: 379.5) and consisted of short-term debt of EUR 98.8 million and long-term debt of EUR 276.7 million. The average interest rate on the Group's interest-bearing liabilities was 4.4% (4.4%).The EUR 60 million hybrid bond is accounted as equity.

Short-term debt includes repayments of long-term loans totaling EUR 96.1 million (December 31, 2010: 97.0). Amer Sports has a commercial paper program of EUR 500 million. At end of the review period, Amer Sports had not issued commercial papers in the Finnish markets.

Cash and cash equivalents totaled EUR 118.1 million (December 31, 2010: 84.7).

The loan syndicate signed in 2005 consists of a EUR 325 million revolving credit facility and a term loan of USD 100 million. Amer Sports had not used any of the revolving credit facility at the end of the review period.

In April, Amer Sports Corporation issued a SEK 500 million floating rate bond with a loan period of five years targeted at Nordic institutional investors. Amer Sports will apply for listing of the bond on the NASDAQ OMX Helsinki Ltd stock exchange. The proceeds of the bond will be used to repay debt and for general corporate purposes.

The equity ratio at the end of March was 47.4% (December 31, 2010: 47.8%) and gearing was 35% (December 31, 2010: 37%).

CAPITAL EXPENDITURE
Capital expenditure totaled EUR 9.3 million (5.1). Depreciation totaled EUR 9.0 million (9.0). The whole year capital expenditure is expected to be approximately EUR 50 million (39.9). The increase is