Precor-parent Amer Group wraps '02 year

Amer Group -- official parent of Precor since Nov. 1 -- has said operating profit continued to grow last year, but that net sales were similar to the previous year, and that market conditions are expected to remain "challenging."
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At its annual meeting, at a financial presentation in Europe and in the company's 2002 financial report just out, Amer Group -- official parent of Precor since Nov. 1 -- has said operating profit continued to grow last year, but that net sales were similar to the previous year.

Market conditions are expected to remain "challenging," CEO and President Roger Talermo told analysts at Capital Market Day in mid-March in Austria, but that Amer Sports is "balanced by its wide portfolio of sports and geographical diversity."

Industry growth has been slow in recent years but Amer Group said it believes that the industry's growth rate will pick up again in the future, Talermo said. He added that Amer Group expects it will be challenging to achieve rapid organic growth against this background, but the group's healthy balance sheet and strong operating cash flow will enable it to continue its development of the business.

In 2002 Amer Group Plc made an operating profit of Euro 103 million (USD $109.5 million) on net sales of Euro 1,101.9 million (USD $1,171.8 million). Earnings per share were Euro 2.95 (USD $ 3.14 - all U.S. Dollars approximate).

Amer Group's net sales and operating profit are expected to grow in 2003, said Talermo, whose Capital Day presentation is available at www.amersports.com, under Investor Relations and under Documents.

According to the company's annual financial report (also available at www.amersports.com, under Investor Relations), the company said it "aims to become the No. 1 sports equipment company in the world."

The following financial targets for operations until 2004 were set and described in the report:

Growth: average growth in net sales -- "Our objective is to increase net sales at an average annual growth rate of at least 10 percent. Although we intend this to be primarily organic growth, acquisitions will also be possible."

Profitability: operating profit of net sales -- "Our annual target or operating profit is 10 percent of net sales. It is also our objective that Amer's profitability should be on a par with the other leading sports equipment companies worldwide."

In 2002, 4 percent of the company's net sales were in fitness equipment

Precor could play a good part in that growth and profitability. The company states that the 2002 year was a successful one for Precor. Net sales were up 14 percent on the previous year at Euro 202.4 million (USD $215.2 million), with operating profit Euro 23.4 million (USD $24.9 million). Amer stated that Precor is the U.S. market leader in elliptical trainers, of which sales rose globally by 16 percent. Amer also stated that Precor held 47 percent of the market share of ellipticals.

Across Amer Group's divisions, sales of fitness equipment grew in January and February in line with expectations, Talermo said in the Austrian presentation. The strong Euro, especially against the U.S. dollar, has had a negative impact on the group's growth rates in the first quarter of 2003, he added. Overall, the group's first quarter net sales and operating profit are estimated to remain similar to 2002's levels.

SNEWS View: Precor will be a dandy feather in Amer Group's hat as it strives to be No. 1 in the world in sporting goods companies and strives to grow. What is interesting to us is that the deadline of being No. 1 by 2003 has suddenly fallen out of the annual report. Hmm, guess that seemed a bit too ambitious. We also hope, and expect, that Amer will find a way to get out of the tobacco business -- which in 2002 contributed 10 percent of the company's net sales, or more than its Suunto division of sports instruments with 9 percent. OK, one can reason that the sales and profits from tobacco allow the company to move forward more quickly into sporting goods. But there is just something deeply disturbing about a sporting goods company selling ski, outdoor and fitness equipment -- and the pursuits and lifestyles they represent -- pushing nicotine and tar out the other door.

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