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Article Excerpt
OPERATOR: Good afternoon, ladies and gentlemen, and welcome to Amer Sports financial statement 2008 hosted by Tommy Ilmoni. My name is Ina, and I'll be your coordinator for today's conference. For the duration of the call you'll be on listen-only. However, at the end of the call you'll have the opportunity to ask questions. (Operator Instructions) I'm now handing over to Mr. Ilmoni to begin today's conference.
TOMMY ILMONI, VP - IR & CORPORATE COMMUNICATIONS, AMER SPORTS OYJ: Good afternoon, ladies and gentlemen, and welcome to Amer Sports Q4 and 2008 webcast and conference call. We published our Q4 and 2008 numbers two hours ago. And with me here I have CEO and President, Roger Talermo, who will go through the business highlights, and the CFO, Pekka Paalanne, who will discuss the financials in more detail.
CEO Roger Talermo will start by giving his presentation followed by Pekka Paalanne, and then after that we'll close it up with a Q-and-A session. Now, I'd like to hand over to CEO, Talermo, please.
ROGER TALERMO, PRESIDENT & CEO, AMER SPORTS OYJ: Good afternoon, ladies and gentlemen, and also on my behalf welcome to this web information on our fullyear and Q4 numbers and results.
The net sales of EUR1.576 billion compared to last year of EUR1.652 billion were equal in local currencies, but of course decreased in reported currencies. EBIT, EUR78.9 million compared to EUR49.5 million last year. It's in progress. But this includes the capital gain of EUR13 million from selling our corporate headquarters in last April.
And as you have seen reported, earnings per share EUR0.47 compared to EUR0.25 the year before. Evidently, in these numbers, as you know, we had last year quite a few restructuring charges, and this year we also have some charges or incomes of, let's say, one-off nature.
The Board had today decided to propose to the AGM a dividend of EUR0.16 compared to EUR0.50 last year. We are aware of our financial situation from a balance sheet standpoint, and of course this will -- as you will hear a little bit later -- be certainly one of our priorities to go forward.
There is probably three important things to mention, to really highlight, from our past year. First of all, on the positive note, our Apparel and Footwear sales moved very well forward, gained shares, and the business grew with 19%. So we are quite pleased with the continuation of growth in this market. Our restructuring of our Winter Sports equipment business, that was a -- the three-year plan that we decided upon in 19 -- 2005 -- end of 2005 when we bought Salomon is now completed. So we worked through the three years as we decided in the beginning.
However, I have to say and admit that there were much, much more work done than we originally planned. It's almost up to 1,000 people less in this business in the Winter Sports business than we had when we started. The -- and that's positive news that we are now up and running on this side. And we should be able from the current setup to be competitive in terms of producing good products, and also being cost-efficient in the manufacturing.
On the negative note, it's evident that our great disappointment was the sales and the profitability of our business in Fitness. One could even call it the collapse, as the result really went down, especially due to the environment in United States, driven by the home fitness equipment, which we have actually reported earlier.
If we only look at the Q4 we have to say that of course it's evident that our sporting goods business is not in any way different from any other businesses. And we are affected by the financial crisis like anybody else.
On the Q4, our net sales decreased with 3%, and was EUR495 million, so we have -- so a little weaker Q4 than the other quarters. Our EBIT was EUR35.2 million, but that number includes a voluntary recall which of course generated costs around about EUR6 million from our Mavic component business, and I'll come back to this little later. And just to remind you that the last year number was including the EUR42.7 million restructuring cost for our Winter Sports business.
We have already in the Q4 started to actively work on our working capital, and to adjust our organization to current market conditions. We have done a lot of work there. It's a very strong programs that's going forward that hopefully will then reduce strongly our working capital for this current year.
If we look at the Q4 highlights compared to our earlier thoughts going into fourth quarter I think that a little bit -- maybe a little surprising for us was that reorders of the Winter Sports equipment business were lower than we anticipated. You probably all know that there is excellent snow conditions everywhere in the Alps, and my read on this is that the dealers were cautious. They wanted to show as strong balance sheets as possible going in, in the year 2009. And I have to say that coming back -- a little bit jumping ahead here, but coming back from the big trade shows that took place this week and last week, the mood is quite positive in all the main markets in the Winter Sports business.
But though there are still seasons to go. This winter, however, it's on the 2009 year side. But it gave us a slower end of 2008 than we anticipated.
Also we saw some slowness in the commercial fitness equipment market towards the end of 2008, which clearly was reasoned by the fact that the planned openings and new openings of fitness clubs did not materialize the sales volume as planned, because of the financial situation. And as I already mentioned, the good progress in Apparel and Footwear continued in a very positive way.
And very briefly going through some of the numbers -- as Mr. Paalanne is coming back to these numbers a little later, and I don't want to take the story off from him. But if we look at the Q4 in the different segments compared to the full year like for like '07 to '08, we can see that the Winter and Outdoor business took up a little speed, which is certainly related to the good snow conditions.
So we grew in local currencies -- just to leave it somewhere -- 6% in the Q4. So we got a good 5% growth on the annualized numbers for our Winter and Outdoor.
Ball Sports went down 2%, compared to 1% of the full year. So there was a little more downward trend in the fourth quarter. And also the Fitness business deteriorated more in the fourth quarter than the full year. Mainly both Ball Sports and Fitness degradation comes from the US market.
If you look at the EBIT level, it follows very well the -- more or less the same pattern. In the Winter and Outdoor we were up 5% year-on-year -- on quarter. And a very strong improvement overall on the full year from EUR20.9 million to EUR41.1 million, very much driven by the first results of the 2006, 2007, 2008 restructuring of Winter equipment, and then the good float of the Apparel and Footwear, that also improved of course its profitability.
Ball Sports profitability went down quite a lot in the fourth quarter, very much driven by the Team Sports closing out end-of-year inventories, which is the main driver of this.
Likewise, Fitness had a very bad, very tough fourth quarter. And actually the numbers were negative on the quarter. But it's evident that here also as we close the books we take all the necessary measures to have a clean year going forward.
And unfortunately, the real loss, the real disappointment for us was that Precor EBIT profitability went from 36 -- EUR37.2 million to EUR3.8 million. Headquarter on the paper improved a lot. But don't forget, here it's the gain that we booked in these numbers for the sale of the headquarters building.
And if you look at the business area information from a sales perspective you can clearly see that the real issue lies in the Fitness equipment, which then went down 20% year-on-year, and likewise Apparel and Footwear that went up 19%. Golf...
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