|
Article Excerpt
OPERATOR: Welcome to the Amer Sports quarter three 2008 webcast and conference call. My name is Sarah, and I will be your coordinator for today's conference. For the duration of the call you will be on listen-only. However, at the end of the call you'll have the opportunity to ask question. (Operator Instructions) I'm now handing you over to your host, Tommy Ilmoni, to begin today's conference.
TOMMY ILMONI, VP OF IR & CORPORATE COMMUNICATIONS, AMER SPORTS OYJ: Good afternoon ladies and gentlemen, and welcome to Amer Sports third quarter 2008 webcast and conference call. The agenda is the following. President and CEO, Roger Talermo will start by presenting the highlights of the quarter after which CFO, Pekka Paalanne, will discuss in more detail our financials. CEO Talermo will then conclude by presenting Amer Sports' outlook. After this we will be open for the conference call for questions. At this point I would like to hand over to Roger Talermo. Please.
ROGER TALERMO, PRESIDENT & CEO, AMER SPORTS OYJ: Thank you, Tommy. And welcome also on my behalf to this conference call. As you all know we have given out our numbers today, and now as it was mentioned, it's time to conclude a little bit, and maybe go a little bit more in detail on some of the issues. If you look at the general environment it's evident that it continues to be a very challenging environment in its whole . And as we all know, there is a lot of turbulence in the market on a general level as we speak. It wasn't different from the second one. The third quarter continued to be a rough one.
The net sales in local currency terms decreased by 2%, up to EUR433.2 million, and the EBIT in local currency terms decreased 9% to EUR51.5 million. I will come back to the divisions more specifically, but at this point I can say that we clearly see the good success continue in our Apparel and Footwear. Also the Ball Sports division had a very solid quarter, progressing pretty nicely. And the challenge we've had was the same as we had in the previous quarter, which was Precor's consumer business, which didn't reverse from the disappointing trend we saw already earlier this year.
Evidently, going forward, I would say the outlook is more uncertain than we've ever had before, just simply because we don't know how consumers are going to react in the month to come, and therefore of course we are more blind, so to say, than before. We expect our full-year operating result to be somewhat below last year's level, and we've indicated it to be between EUR80 million and EUR90 million without the exceptional item of EUR13 million that we have disclosed earlier that comes from sale of the headquarter earlier this year. So we want to take a cautious look in going forward for the full year.
If we look at the sales side now, we can see that for the quarter, the Winter and Outdoor was in local currencies 2% below last year's level, at the same time -- and I'll come back to this to explain it little bit later -- Ball Sports were up 8%, and Fitness was down 18%, which makes that we were down 2% on the quarter in terms of net sales. If we then take the first nine month, the Winter and Outdoor is still plus 5%, compared to our previous year same time. The Ball Sports is minus 1%, and fitness is minus 12%, which gives us then similar sales in local currency compared to previous years -- previous year, excuse me. So we had -- we were up approximately 1%, 2% in the last quarter, so a small, slight degradation has continued in the third quarter.
If you look at the EBIT, Winter and Outdoor down 3%, Ball Sports down -- excuse me, up 27%, and Fitness down massively 63%, which gives us then total down 9% for the quarter. If we take the first nine month on EBIT, clear improvement in the Winter and Outdoor. We go now from minus EUR14.3 million to EUR4.4 million positive, as it should change here in the third and the fourth quarter for this category very clearly, as big shipments are going out for Winter Sports products. Ball Sports down 8%, and Fitness down from EUR24 million to EUR6 million roughly, for the first nine months. This gives us EUR43.7 million in EBIT compared to EUR38.5 million in the previous year.
Now, if we look little bit more in detail in the different business units, I will not comment any more on the numbers, as we have already tackled the number part just earlier. But I will give more comments on the different disciplines. If we look at Winter Sports Equipment, it's down 13% to EUR134.8 million compared to last year. I wouldn't be too worried about this number at this stage. Yes, it's negative compared to the positive numbers we've had before, but there is a clear timing issue, timing of deliveries. We have a strong order book for the quarter four, which is up 14% at this stage, compared to previous year. And it really comes out from lot of small things. But I think the main and most important reason for this timing is that as -- past year, if you recall, was a tough year in the plains, but a very good season in the mountain areas.
The mountain orders, pre-bookings were up clearly in many places, over 20%. Whereas in the plains it was flat, or ever down some places. This then made that the mix shifted from the plains more to the resort stores. But of course the resort stores are delivered later as many of them won't open before end of November, beginning of December. So that is one of the big reasons why there is this shift. So the order book is not [degredating] momentarily, and we don't momentarily see any issues with this, so we are in fact shipping these products.
If you look at Apparel and Footwear, strong 26% gain, up to EUR87.4 million, very, very strong in Central Europe. But positive thing is also United States, especially with footwear has been solid, and not only solid to dealers, but also good sell-through both in United States and Europe. Good news is also that pre-orders for Spring, Summer, as we have been taking them now, is positive, and continues to grow with double digit numbers. So all in all, Apparel and Footwear very much driven by the footwear. And the Arc'teryx brand looks strong.
Cycling is down 14% to EUR23.5 million. We've had some small supply chain issues in the third quarter, mainly due to the fact that we got quite big orders at the very, very late stage, and we have not been able to deliver everything. As some of these orders that we recorded were OEM orders for bike manufacturers, and the lead time being three months, we haven't been able to ship them as quickly as we planned. We've taken measures, and we tried to do our best to regain as much as possible of this.
Sports Instruments, plus 5% to EUR21.9 million, very good performance driven by, especially outdoor and training products. Those continues to grow with a very, very nice pace. Actually, this number could be much bigger, but the dive business has been struggling because it's mainly very expensive dive computers that usually are purchased when you travel for diving to remote dive locations. And we know that downturn has taken certain toll on dive vacations. And the second part of that comes from the United States market.
We then move over to the Ball Sports division. I'll start with the Racquet Sports. Strong 7% gain, EUR56.7 million. The real good news from our perspective is that the K Factor which is the technology -- the top line of our tennis racquet continued to do well. Some of you might recall that this is the third year when this K Factor is now on the market. Usually, they hold two years. We had with the predecessor, nCode, we had three-year cycle. It looks like we can clearly go with the three-year cycle with this too. And then next year we will come up something new.
We maintain our good number one market share position in all major markets. We are now reorganizing also our local Chinese commercial operations so that that will now be under our own umbrella through Amer Sports China. And why it is under the Racquet Sports is because in China for us, Racquet Sports is clearly the biggest business....
|
