HELSINKI (BRAIN) — Amer Sports CEO Heikki Takala made clear Thursday that the company is considering selling off both its cycling brands, Mavic and Enve. In the most gentle but firm way, Takala said there might be a better owner out there, somewhere, for the brands, both of which he called "iconic."
"We are not able to give them enough scale and synergy potential," he told invited guests at a Capital Markets Day presentation Thursday morning. "Rather than going and keeping going and keeping going and trying — we've been trying for quite some time and we've done good things but it's clearly taking a lot of time and effort and it's not responding in line with expectations.
"Hence we say we are going to put it under strategic review to make sure we understand: are we really the best owner of this business."
On Wednesday, Amer announced that it was putting Mavic under review, but didn't say whether Enve, which Amer bought in 2016, was included. In his presentation Thursday, Takala made clear he was referring to both brands and that the review would examine whether they should be sold off.
He said Amer was re-examining its large portfolio of brands with an eye toward becoming a more focused company. Amer's brands include Salomon, Arc'teryx, Peak Performance, Atomic, Mavic, Enve, Suunto, Louisville Slugger, Wilson and Precor. He said Amer has been seeing the best performance in recent years in softgoods, direct-to-consumer sales, and sales in China. Ball sports (Louisville and Wilson) also are strong, but not growing fast, and Suunto sales have been growing, but at the cost of significant new investment in product development in recent years.
The cycling division, Mavic and Enve, has been underperforming, however. In the first half of 2018, the two brands' sales were about 60 million euros ($70 million) down 13 percent from the same period in 2017. The brands' full year 2017 sales were down 10 percent from 2016.
When he announced the first half figures in July, Takala indicated his patience might be wearing thin. He said Mavic's "legacy aluminum wheel business" was weighing down results and that Mavic had more aluminum wheel manufacturing capacity than it could use while OEM orders were lagging.
On Thursday, Takala reiterated the concern about excess manufacturing capacity.
He said that while the cycling market has been "quite dynamic in certain segments, our capabilities and capacities may not have been exactly in the right place. We have a bit too much factory footprint and things like that, which are fixed assets while the market continues to move somewhere else."
In a later presentation at the event Thursday, CFO Jussi Siitonen said that Amer had hired an investment bank to assist it in the review process.
