Amer Sports on the glidepath to EUR 3.5 billion and beyondAmer Sports CMD 2016
Heikki Takala, President & CEO, and Jussi Siitonen, CFO
Topics today
• Our strategy has continued to deliver
• We confirm our glidepath to EUR 3.5 billion – now organically
• We enable the acceleration through continuous productivity
improvement and targeted restructuring
• Our glidepath creates significant value
• We have even higher ambitions: toward EUR 4 billion in the
next 5+ years
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Our Sustainable Growth Model and Portfolio Logic
Our Sustainable Growth Model
1. Annual topline growth
– Both organic and via strategic acquisitions. We prefer organic.
2. Annual profit and cash flow improvement
– Profit can come from growth or through cost cutting. We prefer growth with cost discipline.
3. Investing for the future
– To sustain future growth, we invest every year back into the business
4. Continuous renewal and productivity improvement
– Toward faster growth, higher profitability, better asset efficiency
Amer Sports Roadshow April 20164 1 September 2016
We have 3 distinctive sources of profitable growth
• Organic:
– We grow the core to reinforce relevancy and authenticity.
– We add more to reinforce long term leadership.
– We fix underperformers, and if needed, eliminate bleeders.
• Game-changing learning: We develop new-to-the-world business
models
• M&A: we actively scan targets for which we can be a “better owner”
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Grow the core Add more M&AGame-changing
learning
Sources of profitable growth
Our long-term portfolio aspiration and logic
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Global leader in
Grand Outdoor
Sports
Priority: Growth
Podium position
in global fitness
Priority: Growth
Global
leader and
game changer in
selected ball
sports
Priority: Cash &
profit
Our strategy has continued to deliver
We moved from turnaround to sustainable growth…
*Vara consensus
• Balance sheet step-
changed (Net Debt /
EBITDA 2x)
Amer Sports CMD 2016
0,0 %
2,0 %
4,0 %
6,0 %
8,0 %
10,0 %
1 200m
1 400m
1 600m
1 800m
2 000m
2 200m
2 400m
2 600m
2 800m
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Net Sales EBIT Margin
Net Sales (EUR) EBIT Margin
...driven by strategic building blocks…
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Achievement 2009 2016
Apparel & Footwear growth 300m x3.3
Arc'teryx growth x5
Salomon 50% softgoods 75% softgoods / Sales x2
Suunto EBIT negative Sales x >2 / EBIT ~10%
Cycling x1.6
Precor EBIT negative Sales x2 / EBIT ~10%
Wilson Team Low EBIT Sales x2 / EBIT 10+%
Winter Sports Equipment GM 40% 46%
China 10m >100m
B2C 20m 8% of the Group
Connected devices 0m 10% of the Group
…whilst continuing to tackle challenges
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Challenge Our solution
Weather conditions • Become a 4 season company
• Winter Sports Equipment business model change
Pressure in several sports categories • Opex and working capital discipline
• Exit action sports
• New business model (example: baseball)
• Industry consolidation
Retailer landscape disruption • Amer Sports Go to Market re-invention
• Omni-channel acceleration
Country risks, currencies, financial
markets..
• Mitigate disruption in Russia and Latin America
• Contingency planning (example: hedging)
• Long-term funding secured
Amer Sports is well positionedto deliver the 2020 targets
Long-term trends offer us significant growth opportunities
• Fitness, health and wellness
• Outdoor & sports: activity and lifestyle
• Digitalization
• Consumer habits and practices: multi-activity sports,
omni-channel shopping, personalized experiences and services
• Urbanization / megacities / emerging markets
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Our 2015 acceleration priorities capitalize on the trends and market potential
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Topic Glidepath to 2015/16 Acceleration to 20202009
Apparel & Footwear1.
€ 300 m € ~1000 m € ~1500 m
USA2. $ 700 m $ ~1000 m $ ~1500 m
China3.
€ 13 m € ~100 m € ~200 m
B2C4.
€ 20 m € ~200 m € ~400+ m
Connected Devices & Services5. € 0 m € ~300 m € ~600+ m
Net impact: € ~900-1000 m
(net of duplication)
2016 confirms: Acceleration execution underway
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Net impact: € ~900-1000 m
(net of duplication)
Topic Glidepath to 2015/16 Acceleration to 20202009 Progress in 2016
€ 300 mApparel & Footwear1.
€ ~1000 m € ~1500 m 8-10% growth
USA2.
$ 700 m $ ~1000 m $ ~1500 m 8-10% growth
China3.
€ 13 m € ~100 m € ~200 m ~20% growth
B2C4.
€ 20 m € ~200 m € ~400+ m ~25% growth
Connected Devices & Services5.
€ 0 m € ~300 m € ~600+ m 20+% growth
Reaching EUR 3.5 billion sales − organically
Accelerating organically
• Last year we introduced new financial targets, and our building
blocks were sufficient to take us to EUR ~3.3 billion
• A gap of EUR 200 million was to be closed primarily through M&A
• Based on 2016 progress and additional acceleration building blocks,
we now target EUR 3.5 billion organically
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Apparel and Footwear: Accelerating beyond EUR 1.5 billion
New building blocks:
• Arc’teryx
– Range expansion: seasonal balance, new segments, female offering
– Faster own store opening, focus North America and China
• Salomon
– New brand positioning
– Faster expansion of running
• Significant capability improvement in Apparel and Footwear
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Examples of Apparel and Footwear acceleration
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USA and China, further acceleration
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New building blocks:
• Distribution expansion: megacities and epicenters
• Faster own store opening
• New proven baseball Go to Market model
• Precor: new fitness segments and channels
Examples of USA and China acceleration
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Examples of USA and China acceleration
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B2C beyond EUR 400 million
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New building blocks:
• Retail: Sustained same-store growth and accelerated store opening,
annual net opening of 25+ own stores
• Ecommerce: New brand / country expansions (Canada, Japan, Sports
Tracker multi-brand store..)
• Customization expansion
• Consumer database ramp-up
• Integrated omni-channel Go to Market
Examples of B2C acceleration
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Connected Devices & Services beyond EUR 600 million
New building blocks:
• Suunto and Precor: Significantly strengthened initiative pipeline
• Outdoor, running and fitness service content
• Digital pilots across the portfolio: Wilson X
• Consumer database, marketing automation and analytics for cross-selling
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Examples of accelerating Connected Devices & Services
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We are well positioned to deliver the 2020 targets, now organically
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Net salesAt least EUR 3.5 billion with minimum mid-single digit organic,
FX-neutral annual growth
Profit Annual EBIT growth (excl. NRI) ahead of net sales growth
Cash flow
conversionFree cash flow / Net profit at least 80%
Net debt /
EBITDAYear-end net debt / EBITDA ratio max 3.0x
Enabling the organic acceleration: financials
We have funded our growth sustainably
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Cash flow
from
operations
Net Debt
Source
of funds
1,028
851
177
356
122
Dividends/
Share buybacks
M&A
336 CAPEX
214
Use
of funds
1,028
Working
Capital
Sources and uses of funds
2010-H1/2016, EUR million
Since 2010
Source of funds:
• Operations EUR 851 million
• Net Debt increase EUR 177 million
Use of funds:
• Organic growth (working capital and
CAPEX) EUR 550 million
• Returned to the shareholders EUR 356
million
• M&A EUR 122 million
Whilst investing steadily into profitable growth
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30%
35%
40%
45%
50%
2009 2010 2011 2012 2013 2014 2015 H116(LTM)
Gross Margin
Total OPEX
Cash OPEX
Gross Margin and OPEX development
2010-H1/2016, % of Net Sales
20092009
Since 2010
• Gross Margin improvement over
500bps
• OPEX efficiency gains invested
back into growth and gross
margin drivers, therefore OPEX
as % of Net Sales relatively flat
Accelerating organic growth…
• Net sales target of minimum EUR 3.5 billion by 2020 unchanged
– Equal to approx. 6.5% CAGR of which minimum mid-single-digit organically
– Gap of approximately EUR 200 million still in 2015, planned to be closed by M&A
– Now the gap will be closed by organic acceleration
• Why organic acceleration
– Proven building blocks
– Supports continuous profitability improvement and 80% cash conversion
– Improves asset efficiency vs. acquisitions, therefore driving higher ROCE
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…through productivity improvement…
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No/low
Overhead
Growth
Full
Overhead
Growth
WSEBall
Sports
Cycling
Arc’teryx
Salomon
A&G
Footwear
Fitness
Suunto
Business specific investment logic
Full acceleration:
invest upfront
Acceleration: Invest
for growth
Stabilization: Utilize
growth opportunities
while completing
integration
Slow growth: plan
spending for slow-
growth market
• We improve productivity and free up legacy
spending to re-allocate resources into the
prioritized areas
• Productivity improvement:
• Each Business Area has specific investment
logic
• Further on-going productivity improvement
through scale and synergy
…and through restructuring
• Main restructuring needs:
– Break-even point to be lowered and asset-efficiency to be improved further
when topline uncertain
– Factory utilization rates improvement by right-sizing capacity
– Operations: structure and distribution footprint
– Go to Market renewal into integrated omni-channel model
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Restructuring financials
• Targeting EUR 20 million annual cost reduction, to be reallocated
to fund the acceleration
• Payback of the restructuring approximately 1.2 years
• Plans will be executed by the end of 2017
• One-time expenses of EUR 20-25 million (pre-tax, reported as
IAC) will be incurred in H2/2016 and H1/2017. Cash cost EUR 20
million.
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Organic acceleration drives value
Organic growth – even including restructuring cost –is financially attractive
• Higher asset efficiency for EUR 200 million additional growth:
– Organic: capital employed required EUR 80-100 million
– M&A: Valuation multiples typically 1.1-1.3X net sales: EUR 220-260 million
• Shorter payback
– Organic (including restructuring cost): Total internal investment 5-6X EBITDA
– M&A: Valuation multiples typically 10+X EBITDA
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Organic acceleration drives value – sustainably
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2.5
5.0
7.5
10.0
12.5
1.2X 1.6X 2.0X 2.4X
2020 (20+%)
2015 (15%)
2014 (14%)
2013 (13%)2012 (12%)
2011 (12%)
2010 (10%)
2009 (5%)
2016E
Capital Turnover
EBIT%
Amer Sports ROCE and its drivers
We have even higher ambition
2009 2015 2020
Sales
4B€
Ambition: EUR 4 billion in the next 5+ years
39
Sales
>3.5B€
Sales
~2.5B€
Sales
~1.5B€
• Organic building
blocks largely in
place
• Further organic
building blocks
• M&A
Acquisitions remain in the toolbox – logic unchanged
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• Logic: consolidation, and/or acceleration, and/or capabilities, and/or gaining
scale
• Acquisition criteria in line with our SGM:
– Faster growth
– Higher profitability
– Better asset efficiency
• Multiple arbitrage target: no dilution to the Company’s own valuation multiples
– Exceptions: Significant synergy benefits or critical capability gaps
Long-term funding in place to support the acceleration
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1,0
2,0
3,0
0
50
100
150
200
250
300
350
2016 2017 2018 2019 2020 2021=>
EURm %Long-term debt repayment schedule
Coupon Interest (right axis)L-T debt repayment (left axis)
• Average debt maturity of new
issuances extended to 5+ years,
synchronized with the glidepath
• Significant savings in financing
expenses: Average coupon down
by approx. 150-200bps
• Cash and unused funding reserves
of approx. EUR 380 million
Our funding capacity continues to grow
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0
250
500
750
1,000
1,250
201920172016 2018
Organic
Glidepath
Net Debt
2015
Net Debt
capacity
(to 3X
EBITDA)
2020
47%
45%
61%
55%
48%
39%
42%
58%
56%53%
52% 44%
• Organic acceleration provides
increasing leverage potential
– Enables us to maintain a
sustainable, steadily
increasing dividend
– Ensures we have sufficient
firepower for potential
acquisitions
Summary
Summary
• Our strategy has continued to deliver
• We confirm our glidepath to EUR 3.5 billion – now organically
• We enable the acceleration through continuous productivity
improvement and targeted restructuring
• Our glidepath creates significant value
• We have even higher ambitions: toward EUR 4 billion in the
next 5+ years
Amer Sports CMD 201644
DisclaimerStatements in this presentation, which are not historical facts, such as expectations, anticipations, beliefs and estimates,are forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995.Such statements involve risks and uncertainties which may cause actual results to materially differ from those expressedin such forward-looking statements.Amer Sports assumes no responsibility to update any of the forward-looking statements contained herein.No representation or warranty, express or implied, is made or given by or on behalf of Amer Sports or its employees orany other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation.
www.amersports.com
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