Adidas Ag · XETR:ADS
Adidas — FY2015 Earnings Presentation
49 slides from Adidas's earnings presentation, Mar 29, 2016
Slide 1: Full Year 2015 Roadshow Presentation
HOW FULL YEAR 2015 WE ROADSHOW PRESENTATION CREATE THE NEW
Slide 2: Operational Highlights
OPERATIONAL HIGHLIGHTS
Slide 3: Major Developments in Q4
MAJOR DEVELOPMENTS IN Q4 STRONG TOP-LINE MOMENTUM CONTINUES GROUP REVENUES INCREASE 12% CURRENCY-NEUTRAL OR 15% IN EURO TERMS TO € 4.2 BILLION ADIDAS BRAND UP 16% CURRENCY-NEUTRAL ON TOP OF AN 11% INCREASE IN THE PRIOR YEAR PERIOD REEBOK REVENUES UP 5% CURRENCY-NEUTRAL 11TH CONSECUTIVE QUARTER OF GR
Slide 4: Major Developments in FY 2015
MAJOR DEVELOPMENTS IN FY 2015 ADIDAS GROUP EXCEEDS FULL YEAR GUIDANCE GROUP REVENUES INCREASE 10% CURRENCY-NEUTRAL OR 16% IN EURO TERMS TO € 16.9 BILLION STRONG GROWTH AT ADIDAS (+12%) AND REEBOK (+6%) DRIVEN BY NEW PRODUCT INTRODUCTIONS DOUBLE-DIGIT GROWTH IN MOST MARKETS WESTERN EUROPE, GREATER CH
Slide 5: adidas and Reebok Enjoy Stellar Momentum
ADIDAS AND REEBOK ENJOY STELLAR MOMENTUM Q4 2015 CHANGE FY 2015 CHANGE NET SALES (€ IN MILLIONS) 3,399 +16%1) 13,939 +12%1) GROSS MARGIN 47.8% +2.0pp 47.9% +1.2pp NET SALES (€ IN MILLIONS) 456 +5%1) 1,751 +6%1) GROSS MARGIN 38.7% +5.4pp 39.2% +2.1pp 1) CURRENCY-NEUTRAL. 5
Slide 6: Football
STRONG MOMENTUM IN FOOTWEAR AND APPAREL FOOTBALL CURRENCY-NEUTRAL SALES GROW 26% IN Q4, WITH DOUBLE-DIGIT SALES INCREASES IN MOST MARKETS REVENUES IN FOOTWEAR GROW AT A DOUBLE-DIGIT RATE IN FY 2015, REFLECTING THE STRONG SUCCESS AROUND ‘ACE’ & ‘X’ ROBUST BUILD-UP TO THE UEFA EURO 2016 WITH APPAREL S
Slide 7: Running
FOCUS ON KEY FRANCHISES ULTRABOOST AND PUREBOOST RUNNING CURRENCY-NEUTRAL REVENUES IN RUNNING GROW 6% IN FY 2015 OVER 10 MILLION PAIRS OF BOOST RUNNING SHOES SOLD IN FY 2015 70 MAJOR MARATHON WINS WITH BOOST AND COUNTING INTRODUCTION OF HIGHLY ATTRACTIVE TECHNOLOGY FOR THE FEMALE ATHLETE: PUREBOOST
Slide 8: Originals
ONGOING BRAND HEAT SUPPORTED BY KEY FRANCHISES AND PARTNERSHIPS ORIGINALS SALES GROW 45% CURRENCY-NEUTRAL IN Q4, WITH DOUBLE-DIGIT INCREASES IN ALL MARKETS EXCEPT RUSSIA/CIS STRONG DOUBLE-DIGIT SALES GROWTH IN BOTH FOOTWEAR AND APPAREL 2015: ‘YEAR OF THE SUPERSTAR’ WITH MORE THAN 15 MILLION PAIRS SO
Slide 9: NEO
STRONG CONSUMER ENGAGEMENT PROPELS GROWTH MOMENTUM NEO CURRENCY-NEUTRAL NEO SALES UP 27% IN FY 2015, DRIVEN BY DOUBLE-DIGIT INCREASES IN FOOTWEAR AND APPAREL DOUBLE-DIGIT INCREASES IN MOST MARKETS NEO EXCEEDS € 1 BILLION IN REVENUES BACKLOGS UP AT A DOUBLE-DIGIT RATE DRIVEN BY KEY MARKETS SUCH AS GR
Slide 10: Women
WOMEN RUNNING ON CLOUDS WITH PUREBOOST X 10
Slide 11: Reebok: 11th Consecutive Quarter of Growth
11TH CONSECUTIVE QUARTER OF GROWTH REEBOK CURRENCY-NEUTRAL REEBOK REVENUES UP 5% IN Q4, WITH DOUBLE-DIGIT GROWTH IN THE RUNNING AND STUDIO CATEGORIES DOUBLE-DIGIT INCREASES IN KEY MARKETS SUCH AS WESTERN EUROPE, LATIN AMERICA AND MEAA CURRENCY-NEUTRAL REVENUES IN GREATER CHINA MORE THAN DOUBLE BUILD
Slide 12: TMAG
RESTRUCTURING PROGRAMME INITIATED TO IMPROVE PROFITABILITY TMAG REVENUES DOWN 13% CURRENCY-NEUTRAL IN FY 2015, DUE TO SALES DECLINES IN METALWOODS AND IRONS STRUCTURAL MARKET WEAKNESS PERSISTING DESPITE CLEANER TRADING ENVIRONMENT AT RETAIL FAR-REACHING RESTRUCTURING PROGRAMME AT TMAG IN FULL SWING
Slide 13: Financial Highlights
FINANCIAL HIGHLIGHTS 13
Slide 14: Broad-Based Top-Line Momentum in 2015
BROAD-BASED TOP-LINE MOMENTUM IN 2015 STRONG SALES INCREASE IN MOST REGIONS NORTH AMERICA +5% RUSSIA/CIS (11%) JAPAN (0%) WESTERN EUROPE +17% MEAA +14% GREATER CHINA +18% LATIN AMERICA +12% CURRENCY-NEUTRAL. FIGURES REFLECT COMBINED REVENUES OF THE ADIDAS AND REEBOK BUSINESSES. 14
Slide 15: Top-Line Momentum Accelerates in Most Regions in Q4 2015
TOP-LINE MOMENTUM ACCELERATES IN MOST REGIONS IN Q4 2015 STRONG DOUBLE-DIGIT INCREASE IN WESTERN EUROPE NORTH AMERICA +8% RUSSIA/CIS (16%) JAPAN (4%) WESTERN EUROPE +30% MEAA +17% GREATER CHINA +16% LATIN AMERICA +12% CURRENCY-NEUTRAL. FIGURES REFLECT COMBINED REVENUES OF THE ADIDAS AND REEBOK BUSIN
Slide 16: Western Europe
STRONG BRAND MOMENTUM CONTINUES IN Q4 WESTERN STRONG YEAR-END FINISH WITH CURRENCY-NEUTRAL SALES UP 30% IN Q4, WITH DOUBLE-DIGIT SALES GROWTH IN THE REGION‘S MAJOR MARKETS EUROPE ROBUST SALES MOMENTUM AT ADIDAS (+31%) FUELLED BY DOUBLE-DIGIT SALES INCREASES IN FOOTBALL AND AT ADIDAS ORIGINALS EXCITE
Slide 17: North America
ADIDAS MOMENTUM ACCELERATES IN Q4 NORTH CURRENCY-NEUTRAL SALES INCREASE 8% IN Q4 REVENUES AT ADIDAS UP 12%, DRIVEN BY DOUBLE-DIGIT AMERICA GROWTH AT ADIDAS ORIGINALS AND ADIDAS NEO RETAIL SALES GROW 15% CURRENCY-NEUTRAL WITH COMP STORE SALES UP 7% GROSS MARGIN IMPROVEMENTS (+2.6PP) REFLECTING IMPROV
Slide 18: Greater China
GROWTH AND EXPANSION OF SPORTING GOODS INDUSTRY CONTINUES IN Q4 GREATER CURRENCY-NEUTRAL SALES GROW 16% IN Q4 – 7TH CONSECUTIVE QUARTER OF DOUBLE-DIGIT GROWTH CHINA ADIDAS SALES UP 14%, SUPPORTED BY DOUBLE-DIGIT INCREASES IN KEY PERFORMANCE CATEGORIES AS WELL AS AT ADIDAS ORIGINALS AND ADIDAS NEO SA
Slide 19: Latin America
ROBUST GROWTH IN Q4 DESPITE MACROECONOMIC UNCERTAINTIES LATIN CURRENCY-NEUTRAL SALES UP 12% IN Q4 AS A RESULT OF DOUBLE-DIGIT SALES GROWTH AT BOTH ADIDAS (+12%) AND REEBOK (+12%) AMERICA TOP-LINE DEVELOPMENT DRIVEN BY DOUBLE-DIGIT SALES GROWTH IN COLOMBIA, ARGENTINA, PERU AND MEXICO REVENUES IN RETA
Slide 20: Russia/CIS
MACROECONOMIC CHALLENGES WEIGH ON CONSUMER SENTIMENT AND SPENDING IN 2015 RUSSIA/ SALES DOWN 11% CURRENCY-NEUTRAL IN 2015 NEGATIVE CURRENCY EFFECTS AS WELL AS HIGHER INPUT CIS COSTS WEIGH ON GROSS MARGIN DEVELOPMENT RATIONALISATION OF OWN-RETAIL STORE NETWORK WITH A TOTAL OF 167 NET STORE CLOSURES I
Slide 21: Japan
BRAND STRENGTH REFLECTED IN DTC GROWTH JAPAN TOP-LINE DEVELOPMENT NEGATIVELY IMPACTED BY DIFFICULT WORLD-CUP COMPARISON AND SHIFT IN ORDER PATTERN CURRENCY-NEUTRAL SALES AT ADIDAS REMAIN STABLE; SALES AT REEBOK DECLINE 1% IN FY 2015 RETAIL REVENUES INCREASE 26% CURRENCY-NEUTRAL, WITH COMP STORE SALE
Slide 22: MEAA
STRONG MOMENTUM ACROSS THE REGION’S MAJOR MARKETS CONTINUES IN Q4 MEAA REVENUES IN Q4 UP 17% CURRENCY-NEUTRAL DOUBLE-DIGIT GROWTH IN SOUTH KOREA, THE UNITED ARAB EMIRATES, INDIA, TURKEY AND SOUTH AFRICA ADIDAS UP 16%, FUELLED BY DOUBLE-DIGIT SALES INCREASES IN KEY PERFORMANCE CATEGORIES AS WELL AS A
Slide 23: Other Businesses
STRUCTURAL CHALLENGES WEIGH ON THE GOLF MARKET IN 2015 OTHER CURRENCY-NEUTRAL SALES OF OTHER BUSINESSES DOWN 3% IN 2015 BUSINESSES SALES AT TMAG DECLINE 13%, REFLECTING ONGOING EFFORTS AIMED AT RESIZING THE GOLF BUSINESS MAJOR RESTRUCTURING PROGRAMME INITIATED IN 2015, WITH THE MAIN OBJECTIVE TO SIG
Slide 24: Group Gross Margin Up 2.3pp in Q4
GROUP GROSS MARGIN UP 2.3PP IN Q4 Q4 2015 FY 2015 GROSS MARGIN +2.3pp 47.2% +0.6pp 48.3% OTHER OPERATING EXPENSES +23% € 2,024 MILLION +18% € 7,289 MILLION OTHER OPERATING EXPENSES AS A PERCENTAGE OF SALES +3.1pp 48.6% +0.4pp 43.1% OPERATING PROFIT N/A (€ 7 MILLION ) +14% € 1,094 MILLION OPERATING M
Slide 25: Underlying Net Income Grows 12% to €720 Million
UNDERLYING NET INCOME GROWS 12% TO € 720 MILLION Q4 2015 FY 2015 FINANCIAL INCOME +180% € 14 MILLION +140% € 46 MILLION FINANCIAL (1%) EXPENSES (11%) € 16 MILLION € 67 MILLION INCOME BEFORE N/A TAXES (€ 9 MILLION) +18% € 1,073 MILLION NET INCOME FROM N/A CONTINUING OPERATIONS (€ 17 MILLION) +12% € 7
Slide 26: Retail Profitability Improves Strongly
RETAIL PROFITABILITY IMPROVES STRONGLY COMP STORE SALES EXCL. RUSSIA/CIS UP 10% IN Q4 Q4 2015 CHANGE FY 2015 CHANGE NET SALES 1,165 +13%1) 4,221 +11%1) (€ IN MILLIONS) ADIDAS COMP STORE SALES +5%1) +4%1) REEBOK COMP STORE SALES +3%1) (3%)1) TOTAL COMP STORE SALES +5%1) +3%1) GROSS 61.6% +2.5pp 61.8%
Slide 27: Store Development
STORE DEVELOPMENT 2,722 STORES OPERATED AT YEAR-END 2015 37 NET STORE CLOSURES COMPARED TO YEAR-END 2014 284 NEW STORES OPENED, 321 STORES CLOSED, 113 STORES REMODELLED 154 CONCESSION CORNERS RECLASSIFIED INTO THE WHOLESALE CHANNEL 1,484 ADIDAS AND 366 REEBOK BRANDED; 872 FACTORY OUTLETS 27
Slide 28: Average OWC in % of Sales Decreases 1.9pp to 20.5%
AVERAGE OWC IN % OF SALES DECREASES 1.9PP TO 20.5% 22.4% INVENTORIES GROW 25% (CN) 21.3% TO SUPPORT GROWTH EXPECTATIONS RECEIVABLES UP 3% (CN) 20.4% 20.5% PAYABLES GROW 22% (CN), 20.0% REFLECTING THE GROWTH IN INVENTORIES 2011** 2012 2013* 2014* 2015* Average operating working capital in % of sales
Slide 29: Net Debt Position of €460 Million
448 NET DEBT POSITION OF € 460 MILLION 295 INCREASE IN NET DEBT DUE TO 90 UTILISATION OF CASH FOR THE SHARE BUYBACK PROGRAMME RATIO OF NET DEBT/EBITDA AMOUNTS TO 0.3 (2014: 0.1) EQUITY RATIO REMAINS AT (185) STRONG LEVEL OF 42.5% (2014: 45.3%) (460) 2011 2012 2013 2014 2015 Net cash/(net borrowings)
Slide 30: Dividend Proposal of €1.60 per Share
DIVIDEND PROPOSAL 1.60 OF € 1.60 PER SHARE 1.50 1.50 PROPOSED DIVIDEND OF € 1.60 PER SHARE, UP 7% VERSUS THE 1.35 PRIOR YEAR PAYOUT RATIO OF 47.9% (2014: 53.9%) PAYOUT RATIO AT THE UPPER END OF TARGET RANGE OF BETWEEN 30% AND 50% 1.00 2011 2012 2013 2014 2015 Dividend per share (in €), 30 2015 subje
Slide 31: Outlook
OUTLOOK
Slide 32: Futurecraft
FUTURECRAFT ADIDAS BREAKS THE MOULD WITH 3D-PRINTED PERFORMANCE FOOTWEAR 32 32
Slide 33: Running
RUNNING FURTHER EXPANDING BOOST FRANCHISE 33
Slide 34: Women
WOMEN DELIVERING FASHION AND FUNCTION WITH AVENUE A 34 34
Slide 35: Wanderlust
WANDERLUST ANNOUNCEMENT OF INTEGRATED PARTNERSHIP 35
Slide 36: Football
FOOTBALL LEVERAGING PRODUCTS AND PARTNERSHIPS 36
Slide 37: Football
FOOTBALL CAPITALISING ON MAJOR EVENTS 37
Slide 38: Rio 2016
RIO 2016 PROVIDES UNIQUE PLATFORM TO SHOWCASE THE BRAND 38
Slide 39: adidas Originals
ADIDAS ORIGINALS MANAGING SUCCESS – BEYOND CLASSICS 39
Slide 40: adidas Originals
ADIDAS ORIGINALS ONGOING BRAND HEAT FROM PARTNERSHIPS AND ENDORSEMENTS 40
Slide 41: US Sports
US SPORTS BEING DISRUPTIVE TO WIN THE CONSUMER 41
Slide 42: NFL Combine
NFL COMBINE $1 MILLION TO THE PRO PROSPECT WHO BREAKS THE 40-YARD DASH RECORD 42 42
Slide 43: Basketball
BASKETBALL CELEBRATING JESSE OWENS WITH BLACK HISTORY MONTH COLLECTION 43
Slide 44: NBA All-Star
NBA ALL-STAR CREATING FOR THE 6IX 44
Slide 45: Reebok
REEBOK ESTABLISHING ITSELF AS ‘THE’ FITNESS BRAND 45
Slide 46: Reebok Classics
REEBOK CLASSICS INTRODUCING FURYLITE COLLECTION 46
Slide 47: TMAG
TMAG INTRODUCING M2 – MASSIVE SWEET SPOT 47
Slide 48: Outlook 2016
GROUP SALES TO INCREASE AT A RATE BETWEEN 10% AND 12% OUTLOOK GROSS MARGIN DECLINE TO BE LIMITED TO BETWEEN 50 AND 100 BASIS POINTS 2016 SIGNIFICANT REDUCTION OF OPERATING EXPENSES AS A PERCENTAGE OF SALES OPERATING MARGIN TO REMAIN AT LEAST STABLE VERSUS 2015 LEVEL OF 6.5% NET INCOME TO INCREASE AT
Slide 49: Upcoming Events
UPCOMING EVENTS DATE EVENT MAY 4, 2016 FIRST QUARTER 2016 RESULTS MAY 12, 2016 ANNUAL GENERAL MEETING AUGUST 4, 2016 FIRST HALF 2016 RESULTS NOVEMBER 3, 2016 FIRST NINE MONTHS 2016 RESULTS 49