Sports equipment maker Amer Sports doubles 4th quarter profit but sees no quick recovery

Amer Sports doubles profit in Q4

HELSINKI — Global sports equipment maker Amer Sports Corp., whose brands include Atomic, Salomon and Wilson, on Thursday reported that fourth quarter profit more than doubled to €36.6 million ($51.2 million) on the back of cost cuts, but said it does not expect a quick recovery.

Net profit in the period was up from €18 million in the year-earlier period. Revenue fell 3 percent to €483 million.

After what it called the worst year in more than a decade, the Finnish company said the main priority is to improve profitability and continue “tight cost control.”

“As a whole, last year was a very challenging one due to the recessionary environment,” acting CEO Pekka Paalanne said. “Our key priority in 2009 was to strengthen the balance sheet, and in this task we exceeded our own plans.”

In the full year, Amer’s net profit fell 8 percent to €31.4 million and sales dropped to €1.53 billion from €1.57 billion in 2008.

The company’s stock plunged, closing down more than 5.5 percent to €7.65 ($10.59) in Helsinki.

Amer said it will “continue to focus on strict working capital management, although an improvement similar to the previous year cannot be expected.”

The winter and outdoor sector remained Amer’s biggest earner with net sales of €329 million — up slightly on the same period in 2008. Currency fluctuations accounted for a 3 percent decline in revenue but net sales otherwise remained unchanged, Amer said.

Sales in the Europe and the Middle East — its largest market — grew 7 percent to €266 million in the quarter while revenue plunged 14 percent in the Americas to €155 million.

Salomon, which it acquired in 2005, “strengthened its global position in the outdoor footwear market in 2009,” Amer said.

“The main growth drivers were the trail running footwear and the new progressive hiking-backpacking offer. The unique positioning of Salomon as the mountain apparel brand continued to generate positive results with sales growing faster than the market, especially in Europe,” Amer Sports said. “Ski apparel continued to grow and Salomon strengthened its position on the market.”

In the full-year, its cycling sector — Mavic — took the biggest plunge, with sales falling 13 percent to €100.4 million.

“Both independent bike dealers and bike manufacturers clearly reduced their inventories during the year. This resulted in a major fall in orders (from equipment manufacturers) and weak demand in the U.S. especially,” Amer said.

Amer confirmed it had decided to “further develop” its cycling sector instead of “exploring the possible divestment of Mavic,” as it announced in September.

Formerly Finland’s largest cigarette maker, Amer sold its tobacco operations in 2004 to focus on fitness and sports equipment. It has divested noncore assets and bought several sports equipment makers, including California-based Fitness Products International and Sparks, Nevada-based ATEC, a leading maker of baseball and softball pitching machines.

In December, Amer announced the dismissal of CEO Roger Talermo, who had headed the company since 2006. It gave no details, but chairman Anssi Vanjoki at the time said the board had agreed “to bring in new energy.”

Talermo will be replaced by Heikki Takala, who currently works as commercial director at Procter & Gamble Co., and has served at the Cincinnati-based company in various management positions for 17 years.

“Over the past decade Amer Sports has undergone significant changes and has become a leading global sporting goods company,” Paalanne said. “With the appointment of Heikki Takala as our new CEO and president, from April 1, 2010, the company will enter a new era.”

Based in Helsinki, Amer Sports employs 6,300 people.

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On the Net:

Amer: www.amersports.com