“I firmly believe that the Group’s unwavering commitment to long-termism will serve as the foundation for us to implement meaningful strategic changes and enable us to empower everyone who loves sports for centuries to come.”

Dear Shareholders,

On behalf of the Board, I am pleased to present our annual results for the year ended 31 December 2023.

Tiding Over Economic Cycle with Long-termism
Upholding Confidence and Pursuing Growth

As winter yields to spring, the world awakens in a symphony of renewal. Over the past three years, the Group has demonstrated exceptional resilience in the face of external uncertainties and attained resounding success in our must-win battles, thanks to our concrete strategies. In 2023, albeit intensified competition, we capitalized on new opportunities stemming from shifts in the market landscape. Adhering to our strategy of “Single-focus, Multi-brand, Globalization,” we have outpaced the industry with high-quality growth and delivered satisfactory performance across our three core sectors of performance sports, fashion sports, and outdoor sports, while showcasing our long-term strength and teamwork spirit.

In light of a new historic mission, challenges and development responsibilities that come with China’s economy entering a new normal, we recognize the need for a broader vision to allow our brands to explore new horizons, both by deepening our presence in China and expanding internationally. To achieve this, we implemented strategic changes during the financial year. These included enhancing our corporate governance framework in early 2023, establishing the Southeast Asia International Business Unit to further our “Globalization” development strategy, and strengthening the Group’s digital capabilities. Each brand also unveiled a strategic development plan for the next three years (2024 to 2026), providing a solid foundation for our future growth.

Revenue Hit Another Record High and Profit Attributable to Shareholders Exceeded RMB10 Billion

During the financial year, the Group maintained a stable and healthy development trend, achieving commendable performance. The Group’s revenue hit another record high, having increased by 16.2% to RMB62.36 billion (2022: RMB53.65 billion), cementing our leading position among Chinese sportswear brands. The overall gross profit margin and operating profit margin both expanded prominently compared with 2022. Our overall gross profit margin increased by 2.4% point to 62.6% (2022: 60.2%). Operational efficiency further improved, with overall operating profit margin increasing 3.7% point to 24.6% (2022: 20.9%). On a consolidated basis, without the effect of the share of profit or loss of a joint venture, the profit attributable to equity shareholders surged by 44.9% to RMB10.95 billion (2022: RMB7.56 billion). On a consolidated basis, with the effect of share of profit or loss of a joint venture, profit attributable to equity shareholders exceeded RMB10 billion for the first time, leaping 34.9% to RMB10.24 billion (2022: RMB7.59 billion).

During the financial year, the Group’s financial position stayed robust with strong cash-generating capability and solid net cash position. Operating cash inflow of RMB19.63 billion (2022: RMB12.15 billion) and free cash inflow of RMB17.82 billion (2022: RMB10.42 billion) were recorded. As at 31 December 2023, the Group had an aggregate amount of cash and cash equivalents, fixed deposits held at banks with maturity over three months and pledged deposits of RMB48.52 billion. Furthermore, the Group is committed to creating value for its shareholders and delivering sustainable and steady growth in returns. Ordinary dividend payout for the financial year was 50.7% (2022: 44.3%) of the profit attributable to equity shareholders.

Strengthening Three Core Competitiveness to Enhance Brand Awareness

As a global sportswear company with distinctive strengths, we continued to leverage the advantage of our “Multi-brand” strategy and achieve fruitful results. We consistently strengthened the competitiveness of each brand in various market segments, enhanced retail operational efficiency, and further differentiated ourselves to keep each brand at the forefront of operational capabilities for end customers in the market.

ANTA adhered to the core strategy of “Mass Market Positioning, Breakthroughs in Performance Sports, Brand Transformation and Upgrade” and focused on transformation. Various initiatives were implemented to optimize both the products and channel mix, with the goal of strengthening its mass market positioning through professionalism. During the financial year, ANTA segment revenue grew by 9.3% to RMB30.31 billion (2022: RMB27.72 billion). Gross profit margin and operating profit margin expanded to 54.9% (2022: 53.6%) and 22.2% (2022: 21.4%) respectively.

Guided by its principle of “High-quality, High Efficiency and Healthy Growth”, FILA initiated the “Beacon Project” to drive brand enhancement. Multiple operational indicators surpassed business targets, with particularly strong e-commerce accomplishments. Historical breakthroughs were achieved in live-streaming and social platforms, while sales of performance sports and footwear categories attained remarkable growth. During the financial year, FILA segment revenue increased by 16.6% to RMB25.10 billion (2022: RMB21.52 billion), with a substantial enhancement in gross profit margin and operating profit margin, reaching 69.0% (2022: 66.4%) and 27.6% (2022: 20.0%) respectively.

As a result of the increasing popularity of outdoor sports as a new lifestyle among customers, other brands sustained robust growth momentum. DESCENTE positioned itself as a high-end, high-quality professional sports brand, while KOLON SPORT portrayed a premium quality outdoor lifestyle as its brand image. Both exuded product excellence that unlocked latent potential within this trend. During the financial year, total revenue of all other brands surged by 57.7% to RMB6.95 billion (2022: RMB 4.41 billion). Gross profit margin recorded 72.9% (2022: 71.8%), and operating profit margin soared to 27.1% (2022: 20.6%), underscoring splendid results.

Amer Sports’ business showed impressive advancements as well. During the financial year, revenue of the joint venture AS Holding grew by 30.1% to RMB31.25 billion (2022: RMB24.03 billion), and EBITDA increased by 45.4% to RMB3.75 billion (2022: RMB2.58 billion), reflecting the healthy development and the enhancement in profitability at operation level of the joint venture.

Amer Sports, Inc.’s successful listing on the New York Stock Exchange on 1 February 2024 marked an important milestone in its development journey. The listing will catalyze Amer Sports, Inc. to expedite its growth strategies. As Amer Sports, Inc.’s largest shareholder, the Group believes that Amer Sports, Inc. will make important and positive contributions to our Group and empower our global expansion in future endeavors drawing on our mutual strengths and strategic synergies.

From Excellence to Greatness: A Journey of Mutualism and Shared Prosperity

The Group embraces a clear mission – To integrate the sports spirit of “Going Beyond Oneself” into everyone’s daily life. Our ambition extends beyond establishing brand leadership in China, we aspire to become a leading multi-brand sportswear group in the world, transcending from “excellence” to “greatness”. To realize our vision and mission, we have consistently fortified the Group’s three core capabilities – “Multi-brand Synergistic Management Capabilities”, “Multi-brand Retail Operations Capability” and “Global Operations and Resource Deployment Capability”. These three capabilities serve as the cornerstone and strength that propel our Group to the forefront.

As we continue our journey towards becoming an exceptional enterprise, the Group remains committed to creating three major values: delivering “consumer value” by offering attractive products that cater to the diverse needs of various consumer segments; building “corporate value” by implementing systematic management practices, benchmarking against high standards, and striving for best-in-class operational efficiency; and establishing “social value” by actively contributing to the community and fostering “Mutualism with society”. I firmly believe that the Group’s unwavering commitment to long-termism will serve as the foundation for us to implement meaningful strategic changes and enable us to empower everyone who loves sports for centuries to come.

While 2024 may present numerous challenges, we steadfastly uphold our commitment to long-termism regardless of the external environment. This dedication enables us to generate sustainable returns for our shareholders. On behalf of the Board, I would like to extend my heartfelt gratitude to our shareholders for their continuous support as we navigate the path to success. Additionally, I wish to express my appreciation to our stakeholders and our talented team for their unwavering determination as we forge ahead together.

Ding Shizhong Chairman Hong Kong SAR, 26 March 2024