New Precor owner Amer Group may want to kick the habit

Amer Group, new owner of U.S.-based fitness equipment manufacturer Precor as well as Wilson Sporting Goods and alpine goods, may want to get out of the other side of its business — tobacco — because it doesn’t fit with the sporting goods business.

According to a story in London’s Financial Times, Amer CEO Roger Talermo said: “Tobacco has been an important part of our business. It has been the foundation of our business and as we have made the transition (to sporting goods), it has helped us with the cashflow. Now its importance has diminished dramatically as it is less than 10 percent of sales.”

The paper said in its story last week that Talermo called the exit “urgent, specifically as we go into the fitness business.”

However, Amer Group told SNEWS a slightly different story, and the exit that sounds so definitive in the paper’s story may not be so — yet.

“It is true that the tobacco business doesn’t fit with the sporting goods business,” spokeswoman Paivi Antola told SNEWS. “However, no decisions to get out of the tobacco business have been made.”

The Finish company, which makes the Wilson brand of tennis racquets and golf clubs as well as the Atomic ski line, also produces and sells cigarettes in Finland where it had a 75-percent market share last year. However, the company has turned to focusing on sporting goods and has declared it wants to be No. 1 in the world by the end of 2004. It was said to be the acquisition of Precor that forced Amer Group to re-think the apparent conflict between fitness and nicotine.

Talermo said to the paper: “To get rid of it, you can’t sell it as we are a licensed producer for Philip Morris, so we have to at some point negotiate with Philip Morris, if we so decide to step out of (the nicotine).” Talermo would not comment on whether there had been any discussions with Philip Morris. In 2001, Amer had net sales after excise duties of Euro 104 million (USD $105.19 million) from its tobacco division, the London paper cited, which generated an operating profit of Euro 9.6 million (USD $9.7 million).

SNEWS View: This would be a huge step toward increased viability on Amer Group’s part in the fitness and sporting goods business in many parts of the world, but certainly particularly in North America. When SNEWS wrote in its stories this fall about the Finish company’s investment in tobacco, more than a few readers were not only shocked, but also a bit surprised that no other stories or press releases hinted at that involvement. Certainly mixing tobacco and fitness in one business feels a bit like talking out of both sides of your mouth so SNEWS is glad to hear that the company believes it needs to structure an exit.