Head NV and HTM Sport GmbH said strong snowsports sales drove revenues in 2013 to €358.7 million ($476mm), up 4.5 percent, or 7.4 percent in currency-neutral (c-n) terms compared to the prior year.
The Dutch company reported sales grew in all divisions except Licensing thanks in part to the strong performance of pro athletes Head sponsors in ski racing and tennis.
Sales growth was attributed primarily to a rebound at the Winter Sports division that was amplified by the strong performance of the Head’s ski racing teams. Europe generated 55.9 percent of sales, while North America and Asia accounted for 28 and 10.9 percent respectively. Other markets, which include Latin America, Africa and Australia, accounted for 5.2 percent of sales.
Gross margin increased 80 basis points (bps) to 40.4 percent compared with 2012. Gross profit rose 6.6 percent to €144.9m ($192mm), or 40.4 percent of sales, up 80 basis points from 2012. The €9.0m in additional gross margin offset €6.9m in cost increases and boosted adjusted operating profit to €12.1m, or 3.4 percent of net sales, up 40 bps from a year earlier.
SG&A expenses reached 37.3 percent of revenues, up 60 bps from 2012 due to higher administrative and warehousing expenses as well as increased marketing costs at Racquet Sports. Net profit after interest payments, amortization and taxes was €5.30 million ($7mm), up 111 percent from 2012.
Winter Sports sales reached €160.0 million ($212mm), up 9.1 percent (13.4 percent c-n), driven by higher ski and boots sales in most markets. In Europe, which accounts for 66 percent of global spending on ski and snowboard gear, ski resorts reported record visitation over the Christmas holiday.
The Racquet Sports division reported sales of €144.8 million ($192mm), up 1.8 percent (4.1 percent c-n) thanks to higher sales of tennis balls, particularly in North America where it increased its market share to 60 percent. There was also a more profitable mix of tennis racquets.
At the Diving Division, which owns the Mares, sales inched up 0.9 percent (1.4 percent c-n) to €52.3 million ($60mm) due to higher sales in North America and Asia. Conditions remained tough in the dive destinations of Southern Europe due lingering economic problems and in the Mid East due to the turmoil in Egypt, prompting Mares to shift its focus toward the Asia Pacific.
The Sportswear Division increased sales 12.3 percent to €6.6 million ($9mm) due to improved sales of Winter Sports apparel. Licensing revenues declined by €600,000, or 10.4 percent, to €5.2 million due to the loss of a contract, costs incurred taking sportswear production in-house in the United Kingdom and timing of shipments.
The company ended the year with inventories valued at €82.9 million, or flat with a year earlier.
In 2014, Head foresees continued financial pressure on consumers and negative impact from the warm winter in some parts of Europe offset by the success of the company’s athletes at the Winter Olympics in Sochi and FIS World Cup. Product launches will include a new line of tennis shoes that match Head apparel and bags, a new dive computer and regulators, a new women’s ski line and binding, the Venture ATX all-mountain ski boot, more snowboards using its Head’s framewall concept, and an FIS compliant carbon helmet.
