Delivering mid-term targets and accelerating beyond
At the Capital Markets Day end August, Amer Sports
reconfirmed its mid-term financial targets. For the EBIT margin the
target is 10% level. Roughly half of the Group portfolio is already at
this target profitability or above it. Growth and benefits of scale will
be the main assets for raising the EBIT level of the rest of the
portfolio in the coming two years, Apparel and Footwear being the
biggest growth drivers. Other significant contributor is gross margin
improvement, driven especially by Ball Sports.
– Our mid-term target of 10% EBIT is a threshold for each part of our portfolio, stressed CFO Jussi Siitonen at the 2014 Capital Markets Day.
Approximately 50% of Amer Sports portfolio is already performing at this level or better.
– In these businesses the focus is on accelerating the growth, Siitonen said.
Business areas performing below the 10% threshold are Ball Sports, Apparel and Winter Sports Equipment.
– In Ball Sports we have already started the restructuring. First, we need to fix gross margins, then re-ignite profitable growth.
– In Apparel the benefits from scale have started to work. We have already seen very good gross margin improvement. We expect that this positive development will continue. The majority of Amer Sports’ profitability improvement towards 2016 will come from growth.
– In Winter Sports Equipment we have lowered break-even points and improved our productivity so that gross margins are above the Group average. Now we continue driving appropriate OPEX scale.
The growth expectations in Winter Sports Equipment are lower than the Group average. This does not mean that Amer Sports will stop developing this business area full of heritage and knowledge.
– We continue making targeted investments into chosen growth areas, such as backcountry skiing, helmets, goggles, customization and digitalization, Siitonen said.
Restructuring for future growth
Amer Sports has started the execution of a new restructuring program.
– This is not a cost cutting exercise, reminded Siitonen at the Capital Markets Day.
– The goal is to secure our mid-term targets, but more importantly, enable the acceleration beyond 2016.
The new restructuring consists of three different tasks:
– In Ball Sports, we have had slow growth, a negative trend in gross margins, and too many underperforming product lines and distribution points. We will first fix structural profitability, then re-ignite profitable growth.
The second point of focus will be functions and underperforming assets.
– We will continue working on the shared service center concept. On Finance shared services, 80% of EMEA is completed, now we have to run the same exercise for Americas. And we still have old structures to be removed: too many sites, and too many overlapping functions at those sites.
The third task is the acceleration in Go to Market operations.
– We have already integrated a lot. We have taken distribution in-house where it makes sense, but we still see further potential taking more in-house. And we need to complete system and warehouse integration to support the acceleration in go-to-market operations.
According to Siitonen, the total restructuring expenses are 60 million euros.
– These expenses will be recognized mostly in the second half of 2014.
With the restructuring, Amer Sports aims to secure its mid-term targets and accelerate profitable growth after the 2016 milestone.
- Resource fluidity is a key. We want to accelerate our core business, i.e. softgoods, new pockets of growth in equipment, core markets and own retail. At the same time, we want to free up resources for acceleration in new areas where we are underfunded compared to the opportunity, like in digital development, says Siitonen.
Source Amer Sports
– Our mid-term target of 10% EBIT is a threshold for each part of our portfolio, stressed CFO Jussi Siitonen at the 2014 Capital Markets Day.
Approximately 50% of Amer Sports portfolio is already performing at this level or better.
– In these businesses the focus is on accelerating the growth, Siitonen said.
Business areas performing below the 10% threshold are Ball Sports, Apparel and Winter Sports Equipment.
– In Ball Sports we have already started the restructuring. First, we need to fix gross margins, then re-ignite profitable growth.
– In Apparel the benefits from scale have started to work. We have already seen very good gross margin improvement. We expect that this positive development will continue. The majority of Amer Sports’ profitability improvement towards 2016 will come from growth.
– In Winter Sports Equipment we have lowered break-even points and improved our productivity so that gross margins are above the Group average. Now we continue driving appropriate OPEX scale.
The growth expectations in Winter Sports Equipment are lower than the Group average. This does not mean that Amer Sports will stop developing this business area full of heritage and knowledge.
– We continue making targeted investments into chosen growth areas, such as backcountry skiing, helmets, goggles, customization and digitalization, Siitonen said.
Restructuring for future growth
Amer Sports has started the execution of a new restructuring program.
– This is not a cost cutting exercise, reminded Siitonen at the Capital Markets Day.
– The goal is to secure our mid-term targets, but more importantly, enable the acceleration beyond 2016.
The new restructuring consists of three different tasks:
– In Ball Sports, we have had slow growth, a negative trend in gross margins, and too many underperforming product lines and distribution points. We will first fix structural profitability, then re-ignite profitable growth.
The second point of focus will be functions and underperforming assets.
– We will continue working on the shared service center concept. On Finance shared services, 80% of EMEA is completed, now we have to run the same exercise for Americas. And we still have old structures to be removed: too many sites, and too many overlapping functions at those sites.
The third task is the acceleration in Go to Market operations.
– We have already integrated a lot. We have taken distribution in-house where it makes sense, but we still see further potential taking more in-house. And we need to complete system and warehouse integration to support the acceleration in go-to-market operations.
According to Siitonen, the total restructuring expenses are 60 million euros.
– These expenses will be recognized mostly in the second half of 2014.
With the restructuring, Amer Sports aims to secure its mid-term targets and accelerate profitable growth after the 2016 milestone.
- Resource fluidity is a key. We want to accelerate our core business, i.e. softgoods, new pockets of growth in equipment, core markets and own retail. At the same time, we want to free up resources for acceleration in new areas where we are underfunded compared to the opportunity, like in digital development, says Siitonen.
Source Amer Sports
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