Amer Sports Q4 Sales Down 3% as Ball Sports Segment Weakens - The China Outdoor sports industry web portal

Amer Sports Corporation said net sales for the fourth quarter fell 3% to
€482.8 million ($713.1mm) , due largely to a 14% decline in sales of ball sports. Winter and outdoor sales rose 1% to €392.2 million ($579.3mm), while fitness sales were flat at €58.9 million ($87mm), including the effect of currency translation.

Amer Sports said its declining sales trend turned slightly positive towards the end of the fourth quarter, although this reflected more the timing of winter sports deliveries and weak comparables in the Fitness segment than a recovery in the market, the Finnish company said.

"Our profitability also started to improve thanks to programs initiated during 2009, and we expect the favorable development to continue during 2010," said Pekka Paaalanne, aciting president and CEO.

Amer Sports brand portfolio includes Salomon, Wilson, Preco, Atomic, Suunto, Mavic and Artc"Teryx.

Paaalane said the results were the weakest reported by the company during the past decade, but that it exceeded its goals in strengthening its balance sheet.

Net sales by business segment

EUR million	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	% of sales 10-12/09	% of sales 10-12/08
Winter and Outdoor	329.2	326.6	1	3	68	66
Ball Sports	94.7	110.0	-14	-8	20	22
Fitness	58.9	58.7	0	10	12	12
Total	482.8	495.3	-3	1	100	100

*) In local currency terms

EBIT by business segment

EUR million	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	% of sales 10-12/09	% of sales 10-12/08
Winter and Outdoor	42.5	36.7	16	20	12.9	11.2
Ball Sports	2.2	3.4	-35	-28	2.3	3.1
Fitness	-0.5	-2.3
Headquarters	-4.8	-2.6
Total	39.4	35.2	12	16	8.2	7.1

*) In local currency terms

WINTER AND OUTDOOR

EUR million	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Net sales
Winter Sports Equipment	203.7	196.7	4	6	371.7	378.9	-2	-1
Apparel and Footwear	73.8	73.9	0	2	304.7	277.9	10	11
Cycling	27.1	31.3	-13	-12	100.4	114.2	-12	-13
Sports Instruments	24.6	24.7	0	4	85.8	89.8	-4	-5
Net sales, total	329.2	326.6	1	3	862.6	860.8	0	0
EBIT	42.5	36.7	16	20	46.5	41.1	13	17
Personnel, Dec 31					3,940	3,777	4

*) In local currency terms.

	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Americas	50.8	60.8	-16	-12	181.1	202.3	-10	-12
EMEA	236.1	219.2	8	9	585.4	558.8	5	6
Asia Pacific	42.3	46.6	-9	-6	96.1	99.7	-4	-6
Total net sales	329.2	326.6	1	3	862.6	860.8	0	0

*) In local currency terms

The EBIT of â‚¬46.5 million (41.1) increased by 17% in local currency terms. The improvement reflects clearly better profitability in Winter Sports Equipment and the continued good level of profitability in Apparel and Footwear. The profitability of both Cycling and Sports Instruments weakened mainly due to lower sales. In October-December EBIT grew to â‚¬42.5 million (36.6). Winter Sports Equipment's profitability improved significantly.

Winter Sports Equipment

In 2009, Winter Sports Equipment's net sales of â‚¬371.7 million (378.9) were at last year's level in local currencies. The biggest product categories were alpine ski equipment, representing 78% of net sales, cross country 12%, and snowboards 10%. Net sales of alpine ski equipment fell in local currency terms by 3%, snowboards fell by 10% and cross country increased by 22%.

The development of sales showed very different patterns in the key markets during 2009. The alpine and Nordic countries started to show signs of recovery with favorable weather conditions. The North American market continued to weaken whereas the Asian market was flat. Industry sales were relatively stable as a whole, at approximately â‚¬1.4 billion: alpine ski equipment â‚¬1.0 billion, snowboards â‚¬0.3 billion, and cross-country ski equipment â‚¬0.1 billion. The EMEA continued to be the largest winter sports region representing 71% of global sales, followed by the Americas with 17%, and Asia Pacific with 12%.

After significant restructuring in 2008, 2009 was the first year for the Winter Sports Equipment business operating under its new structure. Winter Sports Equipment successfully completed its consolidation of the manufacturing sites from ten to six at the beginning of the year. In addition, the integration of the Bulgarian ski factory, which was acquired in 2008, proceeded according to plan. The Winter Sports Equipment business area produced a positive result after a very challenging period.

Apparel and Footwear

Net sales in Apparel and Footwear increased by 11% in local currency terms to â‚¬304.7 million (277.9). Net sales by product categories were as follows: footwear 55% and apparel and gear 45%. Net sales of footwear increased in local currency terms by 15%, and apparel and gear by 6%. The EMEA continued to be the largest business region representing 69% of global sales, followed by the Americas with 26%, and Asia Pacific with 5%.

Salomon strengthened its global position in the outdoor footwear market in 2009. 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. Ski apparel continued to grow and Salomon strengthened its position on the market. The Apparel and Footwear business is weighted towards the winter season. However, the outdoor and trail-running spring/summer collections have continued to be the fastest growing categories.

Despite a tough US environment and high exposure in the US market, Arc'teryx managed to increase its sales. This was mainly driven by a successful spring/summer collection.

Even though the US was the toughest market in 2009, Amer Sports estimates that its Apparel and Footwear business area's market share increased in the US. The outdoor trend remained strong and trail running as a category continued to gain popularity. The business area's good profitability was maintained in 2009.

Cycling

Due to the challenging business climate in 2009, both independent bike dealers and bike manufacturers clearly reduced their inventories during the year. This resulted in a major fall in OEM orders and weak demand in the US especially.

Mavic saw net sales fall in local currencies by 13% to â‚¬100.4 million (114.2). The biggest product categories were rims and wheels, representing 83% of net sales, and apparel and footwear 14%. Net sales of rims and wheels fell in local currency terms by 16%, and apparel and footwear by 3%. The distribution of Cycling's net sales by geographical region was as follows: EMEA 65%, Asia Pacific 21%, and the Americas 14%.

At the beginning of 2009, Mavic decided to recall its R-Sys front wheels and replace the original carbon spokes with a new and stronger construction. Customers appreciated the way this recall was managed, which showed Mavic's continuous commitment to maintaining its strong brand image. Improving the supply chain and maintain tight control of expenses were key focus areas in 2009. Mavic's profitability weakened in 2009 due to lower sales volumes and the disruption caused by the recall of R-Sys wheels.

On September 1, 2009, Amer Sports announced that it was exploring strategic alternatives in respect of its cycling business and that the review could result in the divestment of Mavic. Amer Sports evaluated several different options, and reached the conclusion that the divestment of Mavic would not be in the best interest of shareholders. Instead Amer Sports will concentrate its efforts on further developing its cycling business.

Sports Instruments

Net sales of Sports Instruments' net sales fell by 5% in local currency terms to â‚¬85.8 million (89.8). Over the years, wristop computers and diving instruments have consistently increased their share of Suunto's total net sales: reaching 80% of total business in 2009. Net sales of wristop computers increased in local currency terms by 3% and diving instruments fell by 13%. The distribution of net sales by geographical region was as follows: EMEA 56%, the Americas 29%, and Asia Pacific 15%. Suunto's profitability weakened in 2009.

In 2009, Suunto entered the premium sports watch market with the Suunto Elementum collection.

Winter and Outdoor outlook 2010

The Winter and Outdoor segment is well positioned to continue to improve its profitability. The Apparel and Footwear business area continues to extend its direct-to-consumer program and its profitability is expected to remain at a good level. Within Winter Sports Equipment, Cycling and Sports Instruments the focus is on improving gross margins while maintaining tight cost control.

BALL SPORTS

EUR million	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Net sales
Racquet Sports	40.9	45.1	-9	-5	222.7	227.0	-2	-5
Team Sports	43.6	52.8	-17	-8	187.3	189.9	-1	-6
Golf	10.2	12.1	-16	-13	66.7	78.6	-15	-16
Net sales, total	94.7	110.0	-14	-8	476.7	495.5	-4	-7
EBIT	2.2	3.4	-35	-28	23.5	37.0	-36	-40
Personnel, Dec 31					1,586	1,731	-8

*) In local currency terms

In 2009, Ball Sports net sales of â‚¬476.7 million (495.5) fell by 7% in local currencies. The breakdown of net sales by business area was as follows: Racquet Sports 47%, Team Sports 39%, and Golf 14%. The Americas generated 63% of net sales, EMEA 23%, and Asia Pacific 14%.

10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Americas	61.7	74.9	-18	-9	298.7	316.9	-6	-10
EMEA	18.0	19.2	-6	-4	111.5	119.1	-6	-4
Asia Pacific	15.0	15.9	-6	-6	66.5	59.5	12	4
Total	94.7	110.0	-14	-8	476.7	495.5	-4	-7

*) In local currency terms

Racquet Sports

In local currencies, Racquet Sports' net sales fell in local currency terms by 5% to â‚¬222.7 million (227.0). The breakdown of Racquet Sports sales by region was as follows: the Americas 42%, EMEA 36% and Asia Pacific 22%. In local currencies, the Americas saw a fall of 12%, EMEA fell by 2% whereas Asia Pacific grew by 6%. The decline in the Americas was driven by the poor economic environment. The growth in Asia Pacific reflects a positive development in both Australia and Korea combined with the expanded distribution in China. Racquet Sports' profitability remained at a good level.

For 2009, market trends remained stable for Racquet Sports. Wilson's position as the leading tennis racket brand strengthened further. Its strong racket brand position was leveraged to drive growth in tennis strings and accessories. The biggest product categories were tennis rackets, representing 40% of net sales, and tennis balls 22%. Net sales of tennis rackets fell in local currency terms by 9%, and tennis balls were at least year's level.

Shipments of the new BLX racket line started in January 2010. Roger Federer, Juan Martin Del Potro, and Justine Henin debuted successfully the new technology at the 2010 Australian Open.

Team Sports

In local currencies, Team Sports' net sales fell in local currency terms by 6% to â‚¬187.3 million (189.9). The breakdown of Team Sports sales by region is as follows: the Americas 94%, EMEA 2% and Asia Pacific 4%. In local currencies, the Americas fell by 6%, the EMEA fell by 19% and Asia grew by 25%. Team Sports' profitability weakened due to revenue declines and lower margins driven by the recessionary environment.

The business environment in the Americas remained challenging due to the economic environment and the inventory destocking trend by the trade. The growth in Asia Pacific was driven by Korea, where the baseball strategies have been successful. The biggest product categories were American footballs, representing 21% of net sales, baseballs and gloves with 20%, baseball and softball bats with 17%, and basketballs with 15%. Net sales of American footballs fell in local currency terms by 10%, baseballs and gloves increased by 2%, baseball/softball bats were at last year's level, and basketballs fell by 4%.

Golf

In local currencies, Golf's net sales fell in local currency terms by 16% to â‚¬66.7 million (78.6). The breakdown of sales by market was: the Americas 44%, EMEA 44% and Asia Pacific 12%. In local currencies, the Americas fell by 25%, the EMEA fell by 4%, and Asia Pacific fell by 19%. The biggest product categories were clubs, representing 59% of net sales, and balls 26%. Net sales of clubs fell in local currencies by 15%, and balls by 21%.

The golf equipment market remained very competitive. The overall market decline created a challenge for brands and retailers alike. Wilson Golf's profitability was affected by the challenging market environment.

Wilson Golf's strategy is to focus on the iron category and the brand is committed to making the best irons in the industry. Several new award-winning products have been launched in 2010.

Racquet Sports

Shipments of the new BLX racket line started in January 2010. Roger Federer, Juan Martin Del Potro, and Justine Henin debuted successfully the new technology at the 2010 Australian Open.

Golf

Wilson Golf's strategy is to focus on the iron category and the brand is committed to making the best irons in the industry. Several new award-winning products have been launched in 2010.

Ball Sports outlook 2010

A slight recovery is expected in the Ball Sports segment, driven by retail distribution gains and assumed restocking due to low trade inventory levels. Ball Sports' profitability is expected to improve mainly due to gross margin improvements and tight cost control.

FITNESS

EUR million	10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Net sales	58.9	58.7	0	10	194.1	220.3	-12	-15
EBIT	-0.5	-2.3			-7.5	3.8
Personnel, Dec 31					737	765	-4

*) In local currency terms.

In 2009, Fitness' net sales fell by 15% in local currencies to EUR 194.1 million (220.3). The Americas accounted for 72% of net sales, EMEA for 20%, and Asia Pacific for 8%.

10-12/ 2009	10-12/ 2008	Change %	Change *%)**	2009	2008	Change %	Change *%)**
Americas	42.3	43.6	-3	8	140.7	158.8	-11	-15
EMEA	11.9	11.2	6	11	38.1	45.4	-16	-11
Asia Pacific	4.7	3.9	21	30	15.3	16.1	-5	-19
Total	58.9	58.7	0	10	194.1	220.3	-12	-15

*) In local currency terms

EBIT fell to â‚¬-7.5 million (3.8) due to the sharp fall in sales, which could not be fully offset by the cost reduction programs. In October-December, EBIT was â‚¬-0.5 million (-2.3), including bad debt provisions of EUR 5 million.

Fitness equipment manufacturers worldwide experienced significant reductions in sales in both the commercial and consumer markets during 2009. Of Precor's net sales, clubs and institutions represented 87% and home use was 13%.

The commercial business (clubs and institutions) fell by 14% in local currencies. A dependable driver of commercial equipment sales growth had been the opening of new facilities. With tightened credit markets and uncertain consumer spending, most fitness customers held off on expansion plans in 2009. Within existing facilities, a reduction in customer spending on extras such as personal training and pro-shop gear led to lower revenues, which in turn drove owners to cut expenses. Many chose to address expense cuts by deferring plans for new fitness equipment, preferring to stretch the service life of their existing equipment. In the fourth quarter of 2009, commercial business saw a slight improvement as club operators increased their investments in new and replacement equipment.

The consumer (home use) business fell by 19% in local currencies. The market for consumer equipment experienced a second year of decline with the premium segment, where Precor competes particularly, exposed to the broader trend of reduced discretionary spending. Financial weakness among specialty fitness dealers, the primary distribution channel for premium home equipment, magnified market challenges.

Related to the construction of the new strength equipment production facility in North Carolina, Precor has had significant capital expenditures in 2009. The total amount is approximately EUR 4.5 million. The facility is now in use and will provide the required capacity for the recently launched selectorized strength lines and reduce manufacturing costs.

Fitness outlook 2010

In the near-term the outlook for the industry is uncertain. However, as 2009 progressed sales became more predictable and, in the fourth quarter, Precor returned to growth. Precor has strengthened its position during the downturn by continuing market penetration of the AMTï¿½, successfully launching two new lines of strength equipment, and winning key international hospitality accounts. Precor is well positioned when demand returns in the fitness industry.