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Mavic's legacy aluminum wheel business weighing down Amer's cycling results, CEO says

Published July 26, 2018

HELSINKI (BRAIN) — Amer Sports, owner of Enve and Mavic, reported Thursday that sales in its cycling division were down 13 percent in the first half of 2018, to 60 million euros ($70 million). In the second quarter, sales in the division were down 11 percent. 

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"Cycling continued to be adversely impacted by lower OEM orders and low demand in wholesale channel," the company said.

Across all its divisions, Amer's first half sales were up 2 percent, to 1.1 billion euros. Second quarter sales also were up 2 percent.

Asked about the decline in cycling revenue in an investor's conference call Thursday, Amer's president and CEO, Heikki Takala, said, "On cycling it's an interesting situation: all the transformational elements which we've been driving, they work really well. So we're growing in apparel, we're growing in helmets, we're growing in carbon wheels, we're growing in the United States, we're growing in business-to-consumer. So all of these things are contributing, but then the kind of old heart of our Mavic business has been in aluminum wheels and that's where the OEM business is impacting us significantly.

"We know how to make, in masses, very good aluminum wheels. We have the capacity, we have the factories and as the demand continues to decline, of course, we are managing down that capacity and we continue to do so because the demand is clearly shifting to carbon. We were right getting into carbon, we are heavily there, but of course that legacy side is still weighing on our result.

"We do the right thing, we'll always do the right thing, and we reset the capacity as we transform ourselves and we'll get the business right, but it takes a bit of time. Once the market rebounds, as it always does at some stage as inventories are kind of melted at the retail level, that will help. But we aren't seeing that yet unfortuately."

The company's brands include Salomon, Arc'teryx, Peak Performance, Atomic, Mavic, Suunto, Wilson and Precor. Amer Sports shares are listed on the Nasdaq Helsinki stock exchange (AMEAS).

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Topics associated with this article: Earnings/Financial Reports

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