Once "secret" Precor financials now public -- net sales up

Precor parent Amer Group of Finland, which breaks out the financial results of each of its segments, reported that Precor's net sales in the first quarter of 2003 were up 5 percent in U.S. dollars, while operating profits jumped 31 percent.
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Precor parent Amer Group of Finland, which breaks out the financial results of each of its segments, reported that Precor's net sales in the first quarter of 2003 were up 5 percent in U.S. dollars, while operating profits jumped 31 percent, both mostly due to the fastest-growing categories of treadmills and ellipticals.

In Euros, however, net sales dropped 6 percent based on the European Union currency's change in value and strength over the dollar in the last year -- Euro 51.4 million compared to Euro 54.9 million. Operating profit, based on Euros is up 16 percent -- Euro 8.9 million compared to Euro 7.7 million.

"North American commercial and consumer markets appear to be cooling," Amer Group said in its quarterly release. "Major club organizations are holding off on purchases, and the government market has postponed investments in fitness equipment. Consumers are similarly cautious.

"In February, a new line of C846 and C842 upright and recumbent cycles for club and commercial markets were brought to the market," the statement continued. "Despite general uncertainty, the fitness sector as a whole is expected to continue growing. Further growth is also anticipated in the popularity of elliptical fitness equipment. The fitness equipment division has good growth opportunities especially outside North America."

Amer Group has set itself the goal of becoming “the world's No. 1 sports equipment company,” and the company stated that it has "a firm foundation to advance the strategic development of its businesses." In the statement, the company (www.amersports.com) said it expects total company net sales to grow, while operating profit will decline modestly. Amer Group also owns wrist-top computer company Suunto, winter sports specialist Atomic, and Wilson Sporting Goods, which the company on April 29 announced it is reorganizing into two business segments with separate managers. Jim Baugh, who has been president of Wilson, will leave his position, the company announced, and administration will be decentralized. New heads of golf and racquet sports (Steve Millea), and team sports (Chris Considine) will report directly to Amer Group CEO Roger Talermo.

Companywide, Amer Group reported net sales in in the quarter ended March 31 of Euro 283.9 million (USD $317.25 million), compared to Euro 289.4 million (USD $323.4 million) a year ago, while operating profit remained the same at Euro 15.3 million (USD $17.1 million). Geographically, net sales in Europe were similar to 2002, but declined by 2 percent overall in North America, by 6 percent in Japan, and by 7 percent in Asia Pacific.

Across the company's segments in the first quarter, fitness equipment sales were in line with expectations, as were sales in the team sports division, while golf sales were down. Amer Tobacco's sales declined as the Finnish cigarette market shrunk.

Overall, the company said that the demand for sports equipment did not recover during the first quarter of 2003. "In Amer Group's key markets, the United States and Germany, both the trade and consumers remain cautious," the company wrote. "The growth in demand for sports instruments and fitness equipment continues, even though the growth in fitness equipment seems to be slowing down a little."

SNEWS View: Former Precor parent ITW, although public, didn't break out figures for various segments it owned in quarterly and annual financial reports. New parent Amer Group breaks out each division, laying it open for all to see, which indeed is revealing. And that's not negative since Precor showed astounding increases in operating profits -- even when considered in Euros. That was obviously a great feat considering the weaker economy where many consumers are postponing purchases.

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