Amer Sports reported operating earnings in the fourth quarter before special items rose 13.9 percent as revenues on a currency-neutral basis grew 9.0 percent.
Net revenues rose 4.0 percent to €803.1 million from €772.4 million.
By region, EMEA revenues rose seven percent to €368.3 million from €345.3 million and also gained seven percent on a currency-neutral basis. Sales in the Americas region inched up one percent to €317.6 million from €314.5 million and added nine percent on a currency-neutral basis. In the Asia Pacific region, sales grew four percent to €117.2 million from €112.6 million and jumped 13 percent on a currency-neutral basis.
Earnings before interest and taxes (EBIT) before non-recurring items reached €92.6 million, up from €81.3 million in the same period ago. Gross margin excluding non-recurring items was 44.4 percent against 44.7 percent.
Items affecting comparability were €6.7 million in the latest period and mainly related to restructuring expansion announced in February 2017. Increased sales in local currencies had a positive impact of approximately €29 million on EBIT while eroding gross margin had a negative impact of approximately €3 million. Operating expenses increased by approximately €15 million.
Including the non-recurring items, EBIT was €85.9 million against €73.1 million. Net earnings were slightly lower at €47.2 million against €47.9 million.
By segment, the Outdoor segment grew seven percent in the quarter to €527.3 million from €490.7 million and gained 11 percent on a currency-neutral basis. Apparel grew by 13 percent driven by Arc’teryx. Footwear grew by seven percent. Sales of Winter Sports Equipment increased by 12 percent. Cycling sales declined by 10 percent. Sports Instruments sales grew by 28 percent as its product pipeline is now in place.
By region for the Outdoor segment in the quarter, EMEA grew eight percent to €315.9 from €292.9 million and added nine percent on a currency-neutral basis. Americas added seven percent to €131.8 million from 123.3 and advanced 14 on a currency-neutral basis. Asia Pacific’s revenues jumped seven percent to €79.6 million from €74.5 million and added 15 percent on a currency-neutral basis.
EBIT before non-recurring items for the Outdoor segment grew nine percent to €76.2 million from €69.7 million. Increased sales in local currencies had a positive impact of approximately €25 million on EBIT while declining gross margin had a negative impact of approximately €7 million. Operating expenses increased by approximately €13 million. Other income and expenses and currencies had a positive impact of approximately €2 million on EBIT.
The Ball Sports segment was down six percent in the quarter to €161.2 million from €171.9 million but gained one percent on a currency-neutral basis. Individual Ball Sports dropped 10 percent to €61.2 million from €67.9 million and were down five percent on a currency-neutral basis. Team Sports sales reached €100.0 million against €104.0 million, down four percent on a reported basis but up five percent on a currency-neutral basis.
By region for the Ball Sports segment, EMEA’s sales were down seven percent on both a reported and currency-neutral basis to €23.0 million from €24.8 million. Americas was down six percent to €117.3 million from €125.3 million but up two percent on a currency-neutral basis. Asia Pacific’s sales were €20.9 million against €21.8 million, down four percent on a reported basis but up four percent on a currency-neutral basis.
EBIT before non-recurring items for Ball Sports segment still rose five percent to €13.5 million from €12.8 million. Increased sales in local currencies contributed to EBIT by approximately €1 million and higher gross margin had a positive impact of approximately €2 million. Other income and expenses and currencies had a negative impact of approximately €2 million on EBIT.
The Fitness segment advanced 12 percent to €114.6 million from €109.8 million and gained 14 percent on a currency-neutral basis. By region, EMEA’s sales rose seven percent to €29.4 million from €27.6 million and added eight percent on a currency-neutral basis. In the Americas, sales were up four percent to €68.5 million from €65.9 million. Asia Pacific sales reached €16.7 million against €16.3 million, up two percent on a reported basis and 11 currency-neutral.
EBIT before non-recurring items for the Fitness segment vaulted 82 percent to €12.4 million from €6.8 million. Increased sales in local currencies had a positive impact of approximately €4 million on EBIT while operating expenses decreased by approximately €1 million. Other income and expenses and currencies had a positive impact of approximately €1 million on EBIT.
For the full year, Outdoor net sales were €1,670.9 million, an increase of five percent in local currencies. Own retail and e-commerce “continued to perform well.”
Apparel’s 12 percent growth was driven by Arc’teryx. In Footwear, sales grew by three percent. Footwear sales were adversely impacted by Amer Sports’ global distribution consolidation and the prudent wholesale market. Winter Sports Equipment sales grew by nine percent. Cycling was adversely impacted by declined OEM orders and high industry and retail inventories, and sales declined by 10 percent. In Sports Instruments, sales increased by one percent, accelerating to high-double-digit growth toward the year end as the demand for the new Spartan product family was strong and sales grew especially in e-commerce and Asia Pacific.
In March, Amer Sports acquired Armada, the US ski brand. Armada was integrated into Amer Sports Winter Sports Equipment business unit.
Outdoor EBIT excluding non-recurring items was €179.3 million, down from €196.9 million in the year-ago period. Increased sales in local currencies had a positive impact of approximately €42 million on EBIT while declined gross margin had a negative impact of approximately €22 million. Operating expenses increased by approximately €37 million. Other income and expenses and currencies had a negative impact of approximately €1 million on EBIT.
For the full year, Ball Sports’ net sales were €653.2 million, down from €671.1 million. In local currencies, net sales decreased one percent. Ball Sports sales were adversely impacted by the challenging U.S. wholesale market.
Ball Sports’ earnings before non-recurring items was €44.9 million, about flat with €44.8 million a year ago. Decreased sales in local currencies had a negative impact of approximately €3 million on EBIT while declined gross margin had a negative impact of approximately €3 million. Operating expenses decreased by approximately €7 million. Other income and expenses and currencies had a negative impact of approximately €1 million on EBIT.
For the full year, Fitness segment sales were €361.1 million, up from €349.2 million. In local currencies, net sales increased by six percent driven by product launches and networked fitness.
In 2017, Fitness’ operating earnings before non-recurring items was €20.1 million against €17.0 million. Increased sales in local currencies had a positive impact of approximately €8 million on EBIT while declined gross margin had a negative impact of approximately €9 million. Operating expenses decreased by approximately €4 million.
Companywide for the full year, net sales reached €2.69 billion against €2.62 billion. In local currencies, net sales grew four percent. Operating earnings before non-recurring items was down slightly to €215.0 million from €221.7 million.
Reported EBIT was €168.3 million, down from €204.8 million. Net earnings in the year was €93.3 million versus €126.9 million.
For 2018, Amer Sports said its net sales in local currencies as well as earnings before non-recurring items EBIT excl. IAC are expected to increase from 2017. Due to ongoing wholesale market uncertainties, the quarterly growth and improvement are expected to be uneven. The company will prioritize sustainable, profitable growth, focusing on its five strategic priorities (Apparel and Footwear, Direct to Consumer, China, U.S. and Connected Devices and Services) while continuing its consumer-led transformation.
Heikki Takala, president and CEO, said, “We finished 2017 with a strong fourth quarter, driven again by our strategic acceleration priorities Softgoods, Direct to Consumer and China. We continued to accelerate growth in Fitness and Sports Equipment. We also continued to make Winter Sports Equipment stronger, with solid growth and improving profitability. At the same time, in a turbulent market, we did have challenges to drive target growth, especially in Ball Sports and Cycling, and work remains to re-ignite them.
“2017 was the eighth consecutive year of growth and broad-based improvement for Amer Sports. The consumer shopping behavior is changing rapidly, calling for a commercial business model transformation. We have pursued this transformation proactively, as we have invested significantly into our commercial omni-channel transformation and direct consumer engagement, with focus on long-term health and value creation. However, in 2017, we also continued to create short-term value as we reached record results in three of our four strategic financial targets: record sales, record cash flow and strongest ever balance sheet.”
Photo courtesy Arc’teryx
