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Business risks and uncertainty factors

For example, the following risks can potentially have an impact on the company’s development:

• The United States represents 50% of the world-wide sporting goods market and some 40% of Amer Sports’ sales. There is a correlation between the demand for sporting goods and the development of U.S. retail sales. Therefore, a change in overall U.S. retail sales can have an impact on Amer Sports’ business.

• Winter sports equipment represents 25% of Amer Sports’ sales. Weather conditions can have an impact on the company’s results. Historically, however, poor snow conditions in one region are compensated for by good snow conditions in another region.

• Integration of the winter sports equipment business will allow major improvement in earnings in the next few years. Failure to implement the plans as expected would undermine Amer Sports’ outlook for the next few years.

• A change in the euro’s value vis-à-vis other currencies has an impact on Amer Sports’ results. The impact, however, is limited due to the fact that the company’s euro-U.S. dollar position is balanced.

• Despite extensive testing of its products before market launch, the company cannot completely rule out the risk that the company can face legal action related to product liability. Amer Sports has standard insurance cover against financial consequences of product liability cases. Product liability cases could harm Amer Sports’ reputation and, as a result, could have an adverse effect on its sales.

• Losing a significant client would affect Amer Sports’ sales. However, this risk is limited because Amer Sports’ client base is diversified, with the five largest clients accounting for less than 10% of the company’s annual sales.

• Amer Sports uses steel, rubber and oil-based raw materials and components in its products. Price increases affecting these materials can have a negative impact on product costs. Amer Sports typically introduces new products every year, which can, depending on the market situation, offset the impact of material cost increases.

• A large part of Amer Sports’ production is outsourced. The aim is to minimize the supply, quality and price risks associated with purchasing. Although the business areas audit their subcontractors regularly, possible delivery problems or breaches of contract by subcontractors may have an impact on Amer Sports’ operations.

• Amer Sports’ most important production facilities are the Atomic factory in Austria, Precor’s factory in the United States, and the Suunto factory in Finland. In addition, Amer Sports has major factories in Eastern Europe and Romania, which are owned by subcontractors. Amer Sports’ most important distribution centers are located in Germany, Austria, the United States and France. Any unexpected production or delivery breaks in these units would have a negative impact on the company’s development.

• A characteristic feature of the sporting goods industry is the need to protect intellectual property rights and disputes connected with them. The material impacts on Amer Sports’ financial position and operational result arising from pending litigation affecting the business areas and decisions of the authorities are assessed regularly, and current estimates are presented publicly when necessary.