In the January June 2005 first half, Amer Sports' net sales rose by 3% to EUR 511.0 million versus last year when the company reported sales of EUR 496.5 million. Earnings before interest and taxes (EBIT) amounted to EUR 33.6 million (32.7), including EUR 5.9 million in capital gains from the sale of properties. Earnings per share were EUR 0.29 (0.29).
In 2005, comparable net sales in local currencies from Amer Sports' current operations are expected to grow by 5% compared with the previous year. Earnings per share from current operations for 2005 are forecast to be EUR 0.901.00.
In May, Amer Sports Corporation made an agreement with adidas-Salomon AG to acquire Salomon. The acquisition is subject to customary conditions including regulatory approvals. When consummated, the transaction will have a significant impact on Amer Sports net sales in the last quarter of 2005 (Salomon's net sales were EUR 253 million in October-December 2004). The acquisition is estimated to have no significant impact on earnings per share in the current fiscal year.
Roger Talermo, President and CEO, Amer Sports said, “The sports equipment market has developed in line with expectations. The
seasonality of the Groups businesses was clearly in evidence in the second
quarter, which is the high season for Golf but the low season for Winter Sports,
whose deliveries are weighted towards the latter part of the year. During the
second quarter, the Winter Sports Division focused on manufacturing products for
the coming winter sports season.
On the whole, the trend in Amer Sports operations in the review period was in
line with the objectives. In January June, net sales grew by 3%. In local
currency terms, net sales rose by 6%. The fastest sales growth was seen in Asia
Pacific; net sales in this area grew by 16% in local currency terms.
The Team Sports Division remained on a buoyant growth track. Its net sales in
local currencies rose by 10%. In addition, the Racquet Sports Division continued
to perform well. Its net sales in local currencies rose by 8%.
It is estimated that the global golf market remained at the previous years level.
Heated competition continues in the market. The Golf Division's sales did not
measure up to expectations, decreasing by 4% in local currencies. The Golf
Division's main goal is to improve profitability by boosting operational
efficiency and reducing costs during the second half of the year.
In Winter Sports, deliveries are heavily weighted towards the latter part of the
year, the busiest months for deliveries being September and October. In local
currency terms, the Winter Sports Division's net sales decreased by 5% in January
– June compared with the corresponding period of 2004.
The Fitness Equipment Division's net sales increased by 16% in local currency
terms. In line with its strategy, Amer Sports has begun to harness more fully its
global sales organization; this yielded results, leading to sales growth of 21%
outside the Americas.
In the Sports Instruments Division, net sales in the January – June period
declined by 2% in local currency terms. Mr Juha Pinomaa, M.Sc. (Eng.), MBA, was
appointed President of Suunto Oy effective September 1, 2005.
In May, we agreed with adidas-Salomon AG to acquire Salomon, including the brands
Salomon, Mavic, Bonfire, Arc'Teryx, and Cliché. Salomon fits perfectly with our
own portfolio. Its leading freedom action sport brands open up great new potential
for Amer Sports. Furthermore, the two companies and their brands complement each
other well in geographical terms, providing better balance in our geographical
coverage. It is expected that the transaction will be completed by the end of
September 2005.”
In the January June period of 2005, Amer Sports' net sales were EUR 511.0
million (January June 2004: EUR 496.5 million). Earnings before interest and
taxes (EBIT) amounted to EUR 33.6 million (32.7). Earnings before taxes were EUR
30.8 million (31.7) and earnings per share were EUR 0.29 (0.29).
In 2005, comparable net sales in local currencies from Amer Sports' current
operations are expected to grow by 5% compared with the previous year. Earnings
per share from current operations for 2005 are forecast to be EUR 0.901.00 (2004,
current operations: EUR 0.96).
When consummated, the Salomon acquisition will have a significant impact on Amer
Sports net sales in the last quarter of 2005 (Salomon's net sales were EUR 253
million in October-December 2004). The acquisition is estimated to have no
significant impact on earnings per share in the current fiscal year.
APRIL JUNE NET SALES AND EBIT
April-June is the quietest period of the year. The seasonality of the Groups
businesses is clearly in evidence in the second quarter. During the period, the
Winter Sports Division focuses on manufacturing products for the coming winter
sports season, for which deliveries mainly take place in the latter part of the
year. The second quarter is the high season for Golf.
In the April June period of 2005, the Group's net sales were up 6% in local
currency terms and amounted to EUR 233.2 million (April June 2004: EUR 224.9
million). The Fitness Equipment Divisions sales increased by 21% in local
currency terms. As competition remained severe, the Golf Divisions sales
underperformed its objectives, declining by 9% in local currency terms.
The Group's EBIT totaled EUR 12.1 million (5.3). The sale of properties affected
EBIT by EUR 5.9 million. Earnings before taxes were EUR 10.0 million (6.0).
JANUARY JUNE NET SALES AND EBIT
Net sales in January June 2005 rose by 3% to EUR 511.0 million (January June
2004: EUR 496.5 million). In local currencies, net sales grew by 6%. The Fitness
Equipment Divisions net sales increased by 16% in local currency terms. Sales by
the Golf and Winter Sports Divisions and Sports Instruments declined in local
currency terms, while Team Sports and Racquet Sports posted higher sales.
Net sales by geographical market were as follows: the Americas (including Latin
America) 63%, EMEA (Europe, Middle East, Africa) 25%, and Asia Pacific 12%. In the
Americas, sales grew by 1%, in EMEA by 3% and in Asia Pacific by 16%. In local
currencies, net sales in the Americas grew by 5%, in EMEA by 3% and in Asia
Pacific by 16%.
The Group's EBIT totaled EUR 33.6 million (32.7). The sale of properties affected
EBIT by EUR 5.9 million. The gross profit margin was somewhat lower than in the
previous year, particularly due to cost pressures in the Fitness Equipment
Division. Investments in the expansion of the sales and distribution organization
also continued to burden the result slightly.
Earnings before taxes were EUR 30.8 million (31.7) and earnings per share were EUR
0.29 (0.29).
Return on capital employed (ROCE) was 17.3% (January June 2004: 20.7%).
The Group's gross expenditure amounted to EUR 7.2 million (5.4) during the period
under review. The Group's depreciation was EUR 7.4 million (8.2).
A total of EUR 15.2 million (15.4) was invested in research and development,
representing 3.0% of net sales.
The Group's net financial expenses totaled EUR 2.8 million (1.0) during the review
period.
Financial position and liquidity remained strong. Cash flow from operating
activities after interest and taxes was EUR 37.0 million (34.8). Net cash flow
from investing activities was EUR 3.6 million (0.7). Dividends totaling EUR 35.9
million (33.1) were paid.
The Group's net debt at the end of June totaled EUR 132.1 million (December 31,
2004: EUR 133.2 million).
Long-term interest-bearing liabilities amounted to EUR 31.1 million. In addition,
the Group had EUR 62 million in unused committed credit facilities, all of which
will mature after 12 months.
Liquid assets amounted to EUR 24.5 million at the end of the period.
The equity ratio rose to 56.4% (June 30, 2004: 52.8%), and gearing was 28% (June
30, 2004: 29%).
RACQUET SPORTS
The Racquet Sports Division continued to perform well. In local currencies, the
Racquet Sports Division's net sales grew by 8% in the January – June period
compared to the corresponding period of last year. Sales grew by 8% in the
Americas, by 6% in EMEA and by 12% in Asia Pacific. In Japan, sales grew by 7%.
Net sales growth is attributable in large part to the success of the nCode
performance racquet line across all markets. Many players scored victories with
Wilson nCode racquets at major tennis tournaments in 2005: Roger Federer
(Australian Open, Wimbledon), Serena Williams (Australian Open), Justine Henin-
Hardenne (French Open) and Venus Williams (Wimbledon).
Wilson tennis racquet sales
grew by 13% in local currency terms during the January – June period. Sales of
tennis balls increased by 2%. Sales of footwear declined by 5%.
The Racquet Sports Division continued to invest in and focus on increasing the
market share of the global badminton market. Badminton equipment sales grew by 48%
in local currency terms. In the Asia Pacific region, sales grew by 77%.
EBIT grew by 27% and totaled EUR 18.7 million. EBIT was increased by higher sales
and overall gross profit margins.
Wilson is the global leader in tennis racquets.
GOLF
The Golf Division's net sales in local currencies decreased by 4% in January –
June compared with the corresponding period of 2004. Sales declined by 7% in the
Americas and by 5% in EMEA. In Asia Pacific, sales grew by 6% (in Japan by 9%).
During the period under review, global sales of golf clubs declined by 4%. Sales
of Wilson golf balls remained at the previous years level.
EBIT was down 34%. This was a result of lower sales and the lower gross profit
margins necessitated by a highly competitive marketplace.
According to the companys own estimates, the global golf market remained on a par
with the previous year. In the U.S. through May, rounds of play were down 1%
compared to last year.
Decisions to boost the Golf Divisions operational efficiency and reduce costs
will be made during the second half of the year.
TEAM SPORTS
The Team Sports Division continued to grow buoyantly. Stated in local currencies,
the Team Sports Divisions net sales grew by 10%. Sales rose by 8% in the
Americas, 11% in EMEA, and 71% in Asia Pacific. In the United States, sales grew
by 8% and outside the United States by 27%. EBIT grew by 25% in local currency
terms.
The fastest growing product categories in Team Sports were baseball and softball
bats, and baseball training equipment. Sales of basketballs declined by 23%.
Wilson Sporting Goods Company renewed its contract as The Official Football of the
National Football League (NFL). The contract extends until 2011, when Wilsons and
the NFLs relationship will have lasted for 70 years – the longest-running
partnership in professional sports.
Wilson is the number one team sports company in the USA and its position is
especially strong in American football, basketball and baseball.
WINTER SPORTS
The Winter Sports Division focused on producing next season's lines during the
second quarter of the year. Due to this, Winter Sports' operating losses during
the first half of 2005 were EUR 20.5 million. EBIT was also impacted by
investments in the distribution network, especially in Italy and Russia. The
Winter Sports Divisions deliveries are heavily weighted towards the latter part
of the year, the busiest months for deliveries being September and October.
The Winter Sports Division's net sales decreased by 6% in January – June compared
with the corresponding period of 2004. In local currency terms, net sales
decreased by 5%. Sales fell by 2% in EMEA. In the Americas, sales fell by 25%,
which was partly due to poor weather conditions.
Judging from the level of pre-orders, it is expected that there will be an upward
trend in alpine ski boots, cross-country skis and snowboards in 2005. Sales of
alpine skis and bindings are estimated to match last years level.
The Winter Sports Division will continue to develop innovative products. The IZOR
ski line, the first line to utilize nanotechnology, was very well received in all
markets.
FITNESS EQUIPMENT
The Fitness Equipment Division's net sales increased by 16% in local currency
terms. A total of 78% of the net sales came from the Americas, where sales
increased by 15%. In line with its strategy, Amer Sports has begun to harness more
fully its global sales organization, and this is yielding results. During the
period under review, sales outside the Americas grew by 21%: 22% in EMEA and 18%
in Asia Pacific.
Stated in local currencies, the Fitness Equipment Divisions EBIT declined by 11%
because the company has not been able to pass on in full the increased costs of
steel and freight in its selling prices. In addition, the profitability of the
businesses that were integrated last year has not as yet reached a satisfactory
level.
Expansion of Precor's product range into strength training and entertainment
systems and services has bolstered Precor's position as a major international
full-line supplier.
SPORTS INSTRUMENTS
In the Sports Instruments Division, net sales in the January – June period
declined by 2% in local currency terms. Sales rose by 2% in EMEA and by 14% in
Asia Pacific, but were down 10% in the Americas.
Sales of Suuntos diving instruments and wristop computers were at around the same
level as last year. Wristop computers and diving instruments accounted for 62% of
Suunto's net sales in the review period. Diving and watersports suits were at the
last year's level.
Suunto sports instruments help outdoor enthusiasts and athletes to measure their
performance, analyze their development, and share and compare their experiences.
This summer, Suunto is launching many products that will be available worldwide in
fall 2005. One of these launches is Suunto Team POD; its new heart rate technology
enables coaches to monitor dozens of athletes heart rates from a distance of up
to 100 meters/330 feet simultaneously and in real time.
Mr Juha Pinomaa, M.Sc. Eng., MBA, was appointed President of Suunto Oy effective
September 1, 2005. In his most recent position, Pinomaa has acted as Vice
President, Entry Business Line, Nokia Mobile Phones. Pinomaa will also be a member
of the Amer Sports Executive Board.
In May, Amer Sports Corporation made an agreement with adidas-Salomon AG to
acquire Salomon, including the brands Salomon, Mavic, Bonfire, Arc'Teryx, and
Cliché. The combined business will create a leading global sports equipment
company with annual net sales of about EUR 1.7 billion and 6,800 employees. The
acquisition is subject to customary conditions including regulatory approvals.
It is expected that the purchase price will be about EUR 485 million. The final price will be set in accordance with net assets at the time of the consummation of the deal, and includes EUR 144 million in goodwill. Amer Sports is financing the transaction with debt, which is expected to bring its gearing ratio to approximately 110% at the Company's financial year-end, December 31, 2005. It is expected that the transaction will be completed by the end of September 2005. When consummated, the transaction will have a significant impact on Amer Sports net sales in the last quarter of 2005 (Salomon's net sales were EUR 253 million in October-December 2004). The acquisition is estimated to have no significant impact on earnings per share in the current fiscal year.
Amer Sports expects to realize annual cost-savings of EUR 40 million at Salomon by the end of 2008 thanks to synergies and the restructuring measures that have already been initiated. The synergies will mainly be achieved from industrial operations in the winter sports business. In addition, synergies are expected in administration and R&D.
