Amer Sports Accelerates Organic Initiatives

Amer Sports Accelerates Organic Initiatives

Amer Sports is launching a restructuring program to free up €20-25 million in operating expenses needed to accelerate organic growth, which is exceeding expectations.

The Finnish company disclosed the plan in an update ahead of an investor conference in Helsinki Thursday, where it will confirm 2020 financial targets set in August 2015, but raise its goal for organic growth.

“The financial targets and acceleration priorities are unchanged, but now supported by further organic acceleration building blocks,” the company stated.

Amer Sports, which owns a stable of outdoor, athletic and fitness brands including Salomon, Arc’teryx, Wilson and Precor, is now targeting €3.5 billion in organic revenue, instead of through a combination of organic growth and acquisitions, as announced in 2015.

Amer Sports said it will “start a targeted restructuring” to free up operating expenses of approximately €20 million. The cash will be reallocated to fund the company’s apparel and footwear, U.S., China, business-to-consumer and digital fitness initiatives, which were identified as strategic acceleration priorities in 2015.

Restructuring expenses will be €20-25 million (pre-tax, reported under “Items affecting comparability”), recognized in the second half of 2016 and first half of 2017. The cash flow impact will be approximately €20 million. The restructuring will be implemented by the end of 2017.

The minimum €3.5 billion net sales target from 2015 was based on a combination of organic growth and acquisitions. The expectation was that acquisitions would represent approximately €200 million of net sales. In this 2016 update, the company confirms sales from organic growth alone will enable the company to his the €3.5 billion target.

“We have made significant progress especially in the acceleration areas chosen in 2015 and we now have even additional building blocks, sufficient to reach €3.5 billion sales by 2020 organically,” said Heikki Takala, President and CEO of Amer Sports. “This organic acceleration drives significant further value creation for the company. As always, we continue to drive productivity improvement, and we use restructuring as a further measure to shift funds to enable the acceleration. Acquisitions will remain in the toolbox, as our ambition is to grow toward €4 billion in net sales in the next 5+ years”.

The financial targets set in 2015 are:

  • Net sales: At least €3.5 billion with minimum mid-single-digit organic, currency-neutral annual growth
  • Profit: Annual EBIT growth, excluding non-recurring items, ahead of net sales growth
  • Cash flow conversion: Free cash will reach at least 80 percent of net profit.
  • Net debt/EBITDA: A maximum ratio of net debt to earnings before income taxes, depreciation and amortization of three a year’s end.