Amer Sports 2018 Q2 Financials
Amer CEO, Heikki Takala summarised the position to date:
"We titled the presentation Normal Q2, our strategic priorities are delivering and we have a solid view on the H2. And in a nutshell, the year 2018 for us is very much the pattern of 2017, the way that we delivered last year. So H1, actually – so indeed a normal Q2. We grew sales by 2% in local currencies. And as a reminder, the Q2 is always in-season orders. We don’t deliver any pickups or actually any pre-orders. EBIT was down a few million versus a year ago. More importantly, it always reflects our spending in H2 and beyond. So when we have visibility of the pre-orders and the order books for the second half of the year and into 2019, then we spend accordingly. Working capital, very much the same. We – typically in Q2, we prepare for those pre-orders and we built inventory to deliver in Q3 and Q4.
"Going into the kind of second topic, the strategic priorities, they are delivering well. Our direct consumer was up 15% for the quarter. And within that, own retail up 11% and e-commerce up 22%, so a solid transformation going on there. Modern sales channels are 30% of the sales given for this quarter. And just to remind, the modern sales channels consists of own retail, e- commerce, e-tail and click-and-mortar. And, again, as a reminder, just six, seven years ago, we did not have modern sales channels at all, so this number was basically close to zero.
"Importantly, our trades delivered a very strong quarter, up strong double-digits, and the order book for the second half is strong and the indications going into 2019 continue to be strong. China, solid 21% growth, very much in line with our collide target. And, very encouragingly, the USA is starting to rebound and we’re looking at a return to up to mid single-digits growth after a couple
of flat years following the wholesale disruption which took place in this US market.
"Just a final point, we are always in a long-term sustainable growth mode. And currently, we are still consolidating the footwear distribution. We’re cleaning up some of this lower-quality distributions, and that’s taking its toll in the current year top line. Importantly, in the United States, where the footprint is healthy, we continue to grow at double-digit rate in footwear, so the reduction is mainly impacting EMEA. Going into 2019, we actually see things improving quite well, so we are encouraged by the actions we are taking.
"Then moving onto the full year, so looking at H2, we are actually having a solid view. We’re expecting double-digit growth in many of the areas of the company, and that’s backed up by the pre-orders and the order books we have in place. Winter sport equipment is looking at approximately 10% pre-order growth. Arc’teryx is up strong double-digit growth in the pre-orders and order book, and Suunto sports instrument continues to grow well as the building blocks are well laid out for the second half of the year.
"Importantly, Precor, whilst having delivered a relatively flattish H1, we now start to get benefits from the expansion into the budget segment, and we’ve just won the largest ever two-year customer contract in Precor’s history. It’s a customer called Planet Fitness, which is the largest low-cost operator in the United States and in the world, and we expect that the contract could be worth at least $30 million over the two-year duration cycle.
"Finally, we added Peak Performance to the company’s portfolio as of Q3, so we closed the deal. And now, it will be accretive to our growth and to our profits as of Q3. The building blocks are quite well in place, including, of course, all of the transformation areas which continue to drive the business forward.
"And then just one point on Peak Performance. This indeed accelerates our strategic transformation, and especially so in the areas of self-goods and direct-to-consumer, and, of course, we need to mention the female consumer, where it’s heavily weighted. And, of course, the Peak Performance takes the company towards areas of faster growth and profitability as well as better asset efficiency. We can take a deeper look into Peak Performance in this September capital markets day, so not more about it here today."
