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Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good afternoon and welcome to Amer Sports Second Quarter Presentation and Webcast. The program here in Helsinki is the following President and CEO Roger Talermo who will present the highlights of the quarter. This will be followed by a Q&A session where also CFO Pekka Paalanne will join. We will take questions from our international audience to start with and then that will be followed by a Q&A session from those present here in the room. When asking questions, please us the microphones provided and state your name and organization.
At this point, I hand over to Roger Talermo.
ROGER TALERMO, PRESIDENT AND CEO, AMER SPORTS OYJ: Also on my behalf, welcome to this second quarter review and let's go right into the business and see what has happened here. As we announced some hours ago, our net sales in local currencies were flat to last year and down 8% including the exchange rates. EBIT before non-recurring items was minus EUR7.8 million compared to EUR12.8 million the year before and earnings per share was minus EUR0.16 million compared to minus EUR0.15 million previous year in the second quarter.
So, the first half of the year seems to go in line with last year's numbers, so we're up only 1%, I would say, than flat to last year. And EBIT is improving compared to last year. But now we have to remember there is some specific items that has been recorded here which I come back to a little bit later.
We could see that the challenging environment that we have been talking about continued. Specific softness in the US market continued likewise. And I can't say, really, that we saw it spreading out through the world, but it was spreading out in the US into different fields. Despite that, we can say that our absolutely strong foothold this quarter was the Footwear and the Apparel business. Especially the footwear business showed very good growth.
Evidently, the biggest challenge we've had in the past quarter continued to be the biggest challenge this quarter, which is the Fitness Consumer business in North America. We have also concluded now the pre-bookings for incoming winter season and the -- some of the goods and the bad stuff to say is plus 3%. I'll also explain this a little bit more in detail when I come to the winter and outdoor sector.
And we can also say that the long-lasting dual restructuring of our Winter Sports businesses has now come to a conclusion and the impact should then hopefully start to materialize in 2009. We have, with the environment in sight and the lower-than-expected level of pre-seasons bookings on a full-year level taken down our guidance from previous EUR100 million to EUR130 million EBIT to EUR90 million to EUR105 million EBIT on a full-year level, excluding the capital gain of EUR13 million that we have recorded in the books in this quarter.
As you can see from these tables, the winter and outdoor business still up this quarter 8% and now 12% up on a full-year -- or let's say a full six-month basis that we have recorded. Ball sports down 4% as well as 4% down on the first six months. And fitness down 5% in the quarter and lagging 9% behind the past year. You see the big difference between local currencies and reported currencies and we all know the reasons for that.
On EBIT level, we're slightly better in winter and outdoor compared to previous year in the quarter, but clearly better on the first six months related to the fact that the first quarter was a pretty good quarter, as that was the end of the season quarter of last winter season.
Ball sports, a little weaker quarter than the first quarter, so we're down 16% from EUR15 million to EUR11.3 million. And unfortunately, fitness had its most difficult quarter with a slight loss in the quarter business.
I say already at this point, as you probably have seen in the notes, that we had quite a few one-offs booked in the quarter so that we could then, towards the end of this year, improve the quarterly numbers and then, of course, the full-year numbers from the current status where we are today. Headquarters recorded a positive quarter, but again, due to the fact that there we have booked this EUR13 million gain of the headquarter building. And this all then leads to the numbers I talked to you about just earlier.
If we then jump into the winter and outdoor business, evidently the numbers have already been discussed. You see a slight drop in the personnel at the period. We already have started to see the departures of some of the restructuring measures that we've had. Overall, the winter sports equipment showed 18% growth. Of course, this is absolutely a very, very low period of the business.
We can say that the alpine inventories, generally speaking, are in a pretty good shape in the industry and that's good news because that's the big chunk of the business in the winter and winter sports equipment. Said that the cross-country inventories, both in the plains in middle Europe and especially in Scandinavia Nordic countries are still on a very high level as they didn't see a very good snow year last winter. And this all then ended up when we booked the pre-seasons, as I said, to 3% plus.
Apparel and footwear saw steady good growth of 11% and especially good with the footwear side. And the future orders are indicating a growth. We're also happy to announce that even in North America, where we are a newcomer, the footwear lines, the trail running lines have been very well accepted and awarded by the magazines. So, the sell through, to our understanding in the stores, have been good. So, we'll see that there is a clear momentum in our footwear category from that perspective.
Cycling in the second quarter was up 2%. Sales were a little bit impacted by the fact that, as we are doing the restructuring in France and we have not been maybe fully able to provide all the products to the level where we would -- where we had orders. And nevertheless, it looks like it's a decent year for the cycling business and the order levels remains healthy going in -- when we went into the summer and now going into the autumn. Sports instruments grew 6%. There were several new lines and products launched during the period. And clearly, this is driven by the training lines and the outdoor lines in this category.
Then with ball sports, again, net sales down slightly and EBIT a little bit more. We are about EUR3.7 million behind the past year's numbers. Racket sports down 5%, partly due to the fact that there was a challenging environment in the United States and partly -- and of course that's due to consumer demand -- but partly because we had some capacity constraints, especially with the ball business out from China.
I'm not going to blame the downfall on the Chinese situation, but it's evident that in the areas where we have our ball factories in -- and suppliers in China, there is a quite high rise in wages and raw materials. So, we have had some shortage of people to get into the factories. But that's something that has been worked out pretty well now.
Team sports plus 3% and we took quite a lot of actions before the baseball season now starts to be sure that we are visible and we have products well out there and that we have the right product. And it seemingly has paid off and it looks like the sell-in of the 2009 range has been good and it looks like there is a lot of momentum going on in the baseball category. So, we're quite optimistic with the team sport side to continue to do pretty well despite the fact that the environment is quite challenging.
Golf is down 12%, but here again I remind you about the fact that we are now in a different business mode in Japan and -- but without that we still have a short decline in golf, mainly due to the fact that there is more and more private labels in the commercial, that we'll say the low end, and we have been the leader in the low -- high end of the low category. And that's where we see a lot of new challenges that we are facing.
However, the good news is that our staff line, which is then our high end, has done much better. So, we are clearly changing the mix and then also the fact that now the initiatives we took last year are starting to pay off so that the profitability is also clearly improving. And we're still clearly targeting to be profitable in golf this year and it's not 100% impossible. It's a little challenging, but there's still a lot of good opportunities to make black numbers with the golf.
Fitness, as I said already, has been the -- still the most challenging businesses -- the most challenging business of our -- all different businesses and this is where we can see that the net sales are still down compared to last year. But when I say that, I have to remind you that 74% of our business is in the commercial that will stay in the professional part of the business, selling to the clubs. And that business is okay.
We have no issues with that business. And it remains to see how it will continue, but as we see today, it should be okay through the year. Of course, I keep a small reserve. Nobody knows...
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