Amer Sports reported that fourth quarter net sales increased 114% to €558.5 million ($664 mm) from €261.0 million ($339 mm) in the year-ago quarter. The Salomon acquisition contributed €255.2 million ($304 mm) to the quarter’s top-line, a 0.8% increase over last year’s net sales of €253 million ($305 mm) when the brand was under adidas. Excluding the acquired business, Amer’s sales increased 16.2% during the quarter to €303.3 million ($361 mm). On a pro forma basis, adding Salomon’s results into this year and last, Amer’s sales increased 10% to €558.5 million ($664 mm) compared to €505.8 million ($656 mm). Excluding the effect of foreign currency exchange rates, Amer sales, excluding the Salomon business, would have increased 16.2% for the three-month period ended December 30.

Sales for Wilson Racquet, Golf, and Team Sports products rose 16.9% to €119.7 million in Q4, when measured in Euros, from €102.4 million in Q4 last year. Measured in home country U.S. dollars, Wilson sales rose 7.2% to $142 million from $133 million in the year-ago period. EBIT for the Wilson divisions dropped 60.3% in Euros to €2.9 million ($3.5 mm) versus €7.3 million ($9.5 mm) in the year-ago quarter. This drop was caused by a considerable increase in the loss in the Golf division and a slight decline in the EBIT of Team Sports, which was partially offset by a 49% EBIT increase in Racquet Sports. Wilson Q4 EBIT decreased 63.6% in U.S. dollars.

Wilson is undergoing realignment in order to bring the golf business back into line with the other product categories. Amer will be making personnel changes and cuts, increasing Far Eastern sourcing, and bringing greater cohesion to the distribution strategy.

The Racquet Sports division saw revenues grow 16.5% to €45.8 million when measured in Euros. In U.S. dollars, the Racquet Sports business rose 6.9% to $54.5 million from $51.0 million in Q4 last year. Divisional EBIT increased 48.9% to €6.7 million ($8.0 mm) from €4.5 million ($5.8 mm) in Q4 last year, and increased 36.6% when measured in U.S. currency.

For the full-year, the product categories leading the sales increases in the division were tennis rackets with a 9% increase; badminton equipment with a 40% jump; and accessories with a 12% gain. Sales rose by 6% in the Americas, by 6% in EMEA, and by 9% in Asia Pacific.

Golf division revenues for the third quarter declined 7.6% in Euros to €22.7 million. Sales declined 1.3% to $27.0 million when measured in U.S. dollars. The Golf division more than tripled its EBIT loss to €8.9 million ($10.6 mm) in the Q4 period from a loss of €2.9 million ($3.8 mm) in the same quarter last year, or roughly a 181% increase in the loss when measured in U.S. dollars.

In Asia Pacific, sales rose by 8%, but decreased by 7% in the Americas and by 6% in EMEA. At the end of December, the Golf Division kicked off the realignment of its global organization to increase operational efficiency and lower costs. According to Amer management, tough competition on the global golf market forced equipment prices down as new products were brought to market at an ever-faster rate. After achieving a swing to profitability in the Golf division last year, the company saw a 47% decline in profits this year. EBIT declined and was in the red, partially due to a €4.7 million provision for costs associated with a reorganization program.

The Team Sports division reported a 21.9% increase in Q4 sales to €51.2 million measured in Euros, or a 11.8% increase to $60.9 million when measured in U.S. dollars.

Team Sports EBIT fell 10.5% to €5.1 million ($6.1 mm) from €5.7 million ($7.4 mm) in Q4 last year or a 17.9% decline in EBIT in U.S. currency. The market for American football equipment grew slightly in the United States in 2005. The basketball and baseball equipment markets remained at 2004’s levels.

The products leading sales performance were baseball and softball bats with sales increasing by 33%. Sales of American footballs rose by 8% and game apparel by 17%. Sales of basketballs fell by 7%. 87% of the division’s sales were generated in the US market. Sales outside the United States grew by 15%.

The Winter Sports business, which is currently anchored by Atomic, increased 6.7% to €85.9 million in the quarter when measured in Euros. In this historically important period for the Winter Sports business, EBIT slipped 7.3% to €19.0 million from €20.5 million in the prior year period.

Suunto instruments revenues decreased 12.8% to €17.0 million for the fourth quarter, while EBIT for the period fell 128% to a loss of €700,000.

The Fitness Equipment business, which is built on the Precor platform, was again the darling for the quarter, posting a 37.7% increase in sales to €80.7 million when measured in Euros, or 26.3% measured in U.S. dollars. Fourth quarter EBIT for the division jumped 78.9% to €13.6 million ($16.2 mm) from €7.6 million ($9.9 mm) in the same period last year.

Net sales growth was fuelled primarily by direct sales to major commercial customers. Amer management believes this is due to the company’s increased ability to deliver a “Total Product” that addresses commercial facilities’ business needs. 79% of net sales were generated in the Americas, where sales increased by 18%. Sales in Asia Pacific grew by 25% on the previous year. Sales rose by 64% in Japan.

Salomon sales increased 0.9% to €255.2 million ($303.6 mm) compared to €253.0 million ($328.2 mm) last year. Salomon reported a negative EBIT of €16.7 million ($19.9 mm) due to a €52.8 million ($62.8 mm) restructuring charge relating to the acquisition. Pro forma full year sales for Salomon were down 1% to €623.5 million ($776.5 mm). EBIT was down 19% for the full 2005 year to €18.1 million ($22.5 mm) with a 2.9% operating margin, compared to a 3.5% operating margin in 2004.

Sales of Salomon winter sports equipment declined 6% in 2005 due to the weak market in the United States, which affected sales of both alpine skis and bindings. Retailers’ large inventories in the United States burdened the whole snowboarding equipment category, in which sales contracted by 10%. Sales of cross-country skiing equipment rose by 8%. Net sales of apparel and footwear, including Arc’Teryx, grew by 12%. Mavic’s sales increased 10% in 2005.

In 2006, Amer Sports’ net sales are expected to be €1.8 billion, with Salomon being included in the figures during the entire year. For comparison purposes, pro forma 2005 if Salomon results were included for the full year, sales would have been €1.73 billion. Earnings per share in 2006 are expected to come in at €0.90–1.05.

Amer management emphasized that 2006 is a transitional year for Salomon. Substantial earnings improvements are expected in 2007 and 2008.

Amer Group 
Full Year Results
in $ millionsa 2004a 2003a  Changeb
Group Sales $1,381 $1,289 +7.0%
Americas $846.7 $742.7 +13.9%
EMEA $648.8 $407.0 +59.2%
Asia Pacific $202.7 $138.8 +45.9%
Racquet Spts $280.7 $261.6 +7.2%
Golf  $175.8 $183.7 -4.4%
Team Spts $253.8 $230.1 +10.2%
Wilson $710.4 $675.4 +5.2%
Winter Spts $266.5 $255.7 +4.1%
Fitness Equip $314.0 $261.3 +20.0%
Suunto  $89.7 $96.0 -6.7%
Salomon $776.5 $785.6 -1.2%
Net Income  $93.7 $85.3 +9.6%
Diluted EPS   $1.30 $1.19 +8.3%

About The Author

Teresa Hartford

Teresa Hartford Editorial & Creative Director | SGB Media | 704.651.5741



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