Amer Sports Corp. improved both its top and bottom line in the third quarter ended Sept. 30. The Finnish sporting goods company reported that net sales increased by 14% to €466.9 million ($602.4 mm). In local currencies, net sales increased by 5%.
Sales increased particularly in Footwear, pushing up growth in the overall Apparel and Footwear portfolio by 10%. Fitness had good development as sales increased by 7% and EBIT improved markedly. Also Cycling had a strong quarter and net sales increased by 14%. On the other hand, Racquet Sports net sales declined by 8% reflecting the sluggish global tennis market. The company's key outdoor brands include Salomon, Atomic, Suunto and Arc’teryx. It also owns the Wilson team sport brands, the Precor fitness brand and the Mavic cycling brand.
Gross profits margin rose 310 basis points to 44.8% of revenues. Earnings before interest and taxes (EBIT) reached €55.8 million ($72.0), after non-recurring expenses of €3.5 million, up 37% from €40.7 million in the year earlier quarter. EBIT as a percentage of net sales rose 210 basis points to 12%.
Earnings per share totaled rose to €0.38 (49 cents) from €0.29 (35 cents). The company burned more than three times as much cash during the quarter as a year earlier. Net cash flow from operating activities totaled -€85.0 million ($109.7 mm) compared to -€25.4 million (-$36.3 mm) a year earlier. The company normally reports negative cash flow in the quarter as it builds inventory for the Winter Sports Equipment business.
The progress on both the top and bottom lines was broad based with all business segments improving their EBIT margins and prompted the company to confirm its 2010 guidance, said President and CEO Heikki Takala. The company still expects 2010 net sales to be approximately €1.7 billion, up from €1.5 billion in 2008, but edged up its forecast for EBIT margin to approximately 6% excluding non-recurring items.
Below is a break down by business group.
In July-September, Winter and Outdoor net sales totaled €300.3 million ($262.4), an increase of 7% in local currencies. The breakdown of net sales by business area was as follows: Winter Sports Equipment 44%, Apparel and Footwear 39%, Cycling 9%, and Sports Instruments 8%. EMEA accounted for 63% of net sales, the Americas for 28%, and Asia Pacific for 9%.
- Apparel and Footwear: In July-September, Apparel and Footwear (Salomon, Arc' teryx) net sales totaled € 117.3 million ($99.3 mm) and were 10% up in local currencies. Strong growth continued in footwear. The order book for the apparel and footwear fall/winter season is strong.
- Cycling: In July-September, Cycling's (Mavic) net sales totaled €25.2 million ($21.5 mm) and were 14% up in local currencies. The good development is due to high pre-season deliveries for 2011 product ranges.
- Sports Instruments: In July-September, Sports Instruments (Suunto) net sales totaled € 24.7 million ($22.0 mm), an increase of 5% in local currencies. Sales of outdoor products continued strong.
In July-September, Ball Sports (Wilson) net sales totaled €114.0 million ($103.4 mm) and were flat in local currencies. Growth in Team Sports was offset by declining sales in Racquet Sports. The breakdown of net sales by business area was as follows: Racquet Sports 47%, Team Sports 39% and Golf 14%.
The Americas accounted for 63% of net sales, EMEA for 22% and Asia Pacific for 15%. In local currency terms, the Americas increased by 4%. Sales in EMEA and Asia Pacific were down by 7%, mainly as a result of a soft tennis market.
In July-September, EBIT improved by € 1.1 million to €3.5 million ($2.4 mm). Higher gross margins contributed € 3.0 million to the EBIT growth. The improvement in gross margin is the outcome of less price discounting. Operating expenses increased by € 1.8 million.
- Racquet Sports: In July-September, Racquet Sports net sales totaled € 53.3 million ($52.8 mm). In local currencies, net sales were down 8% with the Americas down by 8%, EMEA down by 10% and Asia Pacific down by 7%. The decline is due to an overall low demand in the tennis market. The Americas accounted for 43% of net sales, for EMEA 32% and Asia Pacific for 25%.
- Team Sports: In July-September, Team Sports net sales totaled € 44.6 million ($35.8 mm) and were 11% up in local currencies. Growth was driven by the Americas, which accounted for 94% of total sales and grew by 13% in local currencies. Solid growth was achieved among all major product categories.
- Golf: In the seasonally low July-September period, Golf net sales totaled € 16.1 million ($14.8 mm) and were at a similar level to the previous year in local currencies.
In July-September, Fitness (Precor) net sales totaled €52.6 million ($44.8 mm) and were 7% up in local currencies. The Americas accounted for 67% of net sales, EMEA for 24%, and Asia Pacific for 9%. In local currency terms, EMEA increased by 27% and Asia Pacific by 7%. Sales in the Americas were at last year's level.
In July-September, EBIT increased by €4.2 million to €2.8 million. Higher gross margins contributed €1.4 million to EBIT growth and increased sales volumes contributed €1.3 million. Operating expenses were down by € 1.0 million (all in local currencies).
Commercial business (clubs and institutions) was up in all regions. Sales of premium consumer equipment for home use continued to be sluggish.