Amer Sports, the parent of Arc’teryx, Salomon and Wilson brands, last week received an upgrade on its credit rating to B+ from B and a stable outlook from S&P Global. The credit rating agency, which is projecting revenue growth of 17 to 18 percent for Amer this year and 8 to 9 percent in 2024, cited the Finnish company’s strong performance in China, acceleration in the Arc’teryx business, and continued momentum in footwear for its improved outlook.
The subsidiary of AS Holding, a joint venture that is 52.7 percent controlled by China’s Anta Sports Products Ltd., generated 8.8 percent growth in annual Ebitda to 2,575 million yuan renminbi (€363.8m) in 2022 from nearly 22 percent revenue growth to RMB 24,026 million (€3.4b). With the results that included a FY net profit of RMB 50 million (€70.7m), the JV delivered its first share of profit, equal to RMB 28 million to Anta.
In its detailed review and projections for Amer’s financial business, S&P Global forecast an adjusted Ebitda margin of 12.8 percent this year and 13.0 percent in 2024 as the company’s adjusted debt to Ebitda “remains comfortably below 7.0x over the next two years.”
Amer’s 2023 business, including revenue growth, is focusing on the continued expansion of its retail (15 percent of FY22 sales) and e-commerce (14 percent of FY22 sales) segments and further investments in its key brands. FY profitability should get a boost from supply chain stabilization, lower container and air freight costs, and strategies focused on bolstering the d-t-c segment and the higher-margin Arc’teryx business. But the company is likely to face flat free operating cash flow this year, S&P said, due to project investments and higher inventory levels that should subside in 2024. Amer’s annual capital expenditure budget is pegged at €180 to €200 million through 2024, largely due to information technology investments and the opening of new stores in China and the U.S.
China, which reportedly accounted for almost 20 percent of Amer’s Q1 sales, is forecast to grow at an 8 to 9 percent annual rate through 2026 and helped by support from Anta Sports.
