Amer Sports Drives Further Growth And Value With An Updated Strategy

Amer sports, currently a potential takeover target continues its transformation toward faster growth, higher profitability and better asset efficiency. As the company seeks accelerated improvement, the toolbox is now broadened with portfolio choices aiming to a more focused profile.

“Amer Sports is a company of great brands. But we are also a house of great people who like to compete and transform to improve ourselves,” said Heikki Takala, CEO of Amer Sports, when introducing the company’s updated strategy at the Amer Sports Capital Markets Day in Helsinki.

Takala confirmed the company’s strong commitment to continue a sustainable profitable growth, and acceleration especially in the prioritized business areas.

“Our strategy is working and organic growth drivers remain largely unchanged”, Takala said.

However, whilst the company’s long-term performance has been solid during this decade, he noted that the improvement slowed down in 2016–2017 in some areas.

“Sharper choices and expanded toolbox is now needed to get us back to the target glidepath.”

The updated strategy is a combination of relying on the well performing, fundamental building blocks of growth and the introduction of a new, broader toolbox. The mid-term financial targets of the company remain unchanged, as the CFO Jussi Siitonen explained.

He highlighted how the acceleration in Softgoods, Direct to Consumer, China and USA has delivered the majority of the compound annual growth during the past five years.

“We continue our transformation towards areas of faster growth, higher profitability, and better asset efficiency, with increasing weight on Softgoods, D2C, and China.”

As part of the new toolbox to enhance the continuous profitable growth of the company, Mavic cycling business has now been placed under strategic review. Mavic has not reached its financial targets over the past cycle, and the Group scale & synergy benefit has not been sufficient.

“Hence, we now check if we are the “best owner”.”

Great performance in the Softgoods business continues to drive the company forward. Takala reminded that the Amer Sports growth target for Softgoods has been 9–10 per cent. “We can tick the box”, as Takala expressed it.

Amer Sports Softgoods will this year reach 40% of the company sales, and continues to progress towards 50% and beyond. This is strategically important as Softgoods brings faster growth, higher profitability, and better asset efficiency, and hence makes the company profile increasingly attractive.

Heikki Takala is pleased with the current Direct to Consumer strategy of the company. Back in 2010, D2c sales were below two percent of the business, but will bypass 10 percent this year. Increase has been remarkable and the compound annual growth rate target of over 20 percent has been reached. In Softgoods the share of D2C can be up to 25–30 per cent as Amer Sports will continue pushing it.

“D2C is where the consumer is, so we will be very active there”, Takala summarised.

Takala described China as an important growth area. As Amer Sports entered the market only eight years ago, its share of the company’s business portfolio is still relatively small – but it is growing impressively. Back in 2010, China sales formed one per cent of the group sales but today it is six percent of the sales and the share is growing all the time.

“China has showed very strong compound annual growth of 29 percent during the past five years and its contribution to group sales is already significant”, Siitonen stated. “At the same time, it is good to remember that USA is still a one-billion-dollar business for us with over six per cent growth for the past five years.”

Amer Sports is also driving the digitalization of the company. This change is proceeding as planned.

“We are now more digital than ever. Today we have digital manufacturing, our warehouses start to be relatively digitally operating, we have databases and digital systems in the company. This is no longer a choice, it is a must. If you want to be a tomorrows’ company, you need to be sufficiently digitalized.”

CEO Heikki Takala noted that under the current management and strategy Amer Sports has delivered an uninterrupted set of growth years since 2010. Improvement has been seen across the portfolio and Takala feels confident the new focus in the company strategy will lead the way to continuous sustainable growth and profitability.