Acushnet sees 2016 profit more than 10 times higher than in 2015

ACUSHNET HOLDINGS, the parent company of the Titleist and FootJoy golf brands, posted a significant gain in net income in 2016, boosted by strong sales growth outside the United States. / COURTESY ACUSHNET HOLDINGS
ACUSHNET HOLDINGS, the parent company of the Titleist and FootJoy golf brands, posted a significant gain in net income in 2016, boosted by strong sales growth outside the United States. / COURTESY ACUSHNET HOLDINGS

ACUSHNET – Acushnet Holding Corp., the parent company of the Titleist and FootJoy golf equipment and apparel brands, posted net income in 2016 of $49.5 million on revenue of $1.6 billion for the year. The profit represented a nearly 11-fold increase on 2015’s earnings of $4.2 million, even with a more modest 4.6 percent growth in net sales for the year.

Acushnet CEO and President Wally Uihlein noted in a statement released Wednesday along with the earnings report that “2016 was a good year for Acushnet Holdings. … We feel very good about our market position and opportunity for continues success.”

A number of years of dropping participation in the game, as well as the continuing net closures of golf course, has left the industry uneasy about its future. In fact, Nike decided to stop producing and selling golf clubs and balls in 2016, thus clearing the marketplace out and giving greater opportunity for existing competitors. Uihlein acknowledged the dynamics of the industry when he said in the earnings statement that the company was “encouraged by indications that the industry long-term metrics appear to be stabilizing.”

The company, which had been completely privately held by a web of South Korean investors, held an initial public offering in October, which generated $378 million in proceeds for the company. The market capitalization of the company was $1.34 billion at the end of trading Wednesday on the New York Stock Exchange. The company also declared its first dividend on Wednesday of 12 cents per share.

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Acushnet’s market breakdown revealed why many in the American market are uneasy. Net sales in the United States fell 0.1 percent in 2016 compared with 2015 to $804.5 million.

The company showed significant increases in sales on a constant currency basis in three of its global markets. Europe/Middle East/Africa saw a 9.9 percent sale gain to $210.1 million. Japan experienced a 7.6 percent increase to $219 million. And Korea had a 24.4 percent gain to $176 million. The rest of the world experienced a 0.6 percent decline in sales on a constant currency basis to $162.7 million.

In terms of its product lines, golf ball sales fell 3.7 percent on the year to $513.9 million, while golf clubs posted a gain of 9.8 percent to $431 million, Titleist golf gear sales grew 5.5 percent to $136.2 million, and FootJoy golf wear saw a 3.6 percent increase to $433.1 million.

Off the course Acushnet has attracted the attention of retail giant Costco, which filed a federal lawsuit on March 17 defending its right to sell its Kirkland Signature brand of golf balls while asking the court to invalidate a number of Acushnet golf ball patents.

Golf Digest magazine reported that Costco filed the suit as a pre-emptive strike after Acushnet sent the retailer a letter asking it to stop selling the Kirkland ball, which has many of the same chemical qualities of Acushnet’s market-leading Titleist ProV1 and ProV1x balls but retails for significantly less – $15 per dozen compared with the Titleist’s $50 per dozen price tag.

The lawsuit is likely to take a long time to be resolved, given Acushnet’s past defense of its golf ball patent portfolio.

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