Adidas Ag · XETR:ADS
Adidas — Q1 2011 Earnings Presentation
31 slides from Adidas's earnings presentation, May 5, 2011
Slide 1: First Quarter 2011 Results Analyst Presentation
First Quarter 2011 Results Analyst Presentation Herzogenaurach May 5, 2011
Slide 2: Introduction
INTRODUCTION John-Paul O’Meara Vice President Investor Relations 2
Slide 3: Operational Highlights
OPERATIONAL HIGHLIGHTS Herbert Hainer adidas Group CEO 3
Slide 4: adidas Group Has Fastest Q1 In History
adidas Group Has Fastest Q1 In History • Record sales of € 3.3 billion • Gross margin virtually unchanged • Net income and EPS increase 25% 4
Slide 5: Growth Accelerates In All Regions
Growth Accelerates In All Regions +14% Western European Markets1) +26% European Emerging Markets1) +26% North America1) +36% Greater China1) +7% Other Asian Markets1) +15% Latin America1) 1) Sales development on a currency-neutral basis 5
Slide 6: adidas Sales Increase 18% Currency-Neutral
adidas Sales Increase 18% Currency-Neutral adidas Sport Performance adidas Sport Style Up 15% Up 27% 6
Slide 7: Innovation Drives Growth In Running
Innovation Drives Growth In Running • adiZero F50 Runner and ClimaCool Ride drive category sales up over 30% 7
Slide 8: Basketball Momentum Set To Continue
Basketball Momentum Set To Continue • Q1 sales increase 14% c.n. • adiZero Crazylight, the lightest ever basketball shoe, to hit retail in June 2011 8
Slide 9: adidas Outdoor Sales Advance 25%
adidas Outdoor Sales Advance 25% 9
Slide 10: adidas To Introduce Interactive Football Boot
adidas To Introduce Interactive Football Boot 10
Slide 11: adidas Launches “all adidas” Campaign
adidas Launches “all adidas” Campaign • Largest ever global brand campaign • “all adidas” launched in March 2011 • Fusion of sport, music and fashion • Celebration of every aspect of the adidas brand • Commercial success story already 11
Slide 12: Reebok Delivers Strong Sales And Margin Improvements
Reebok Delivers Strong Sales And Margin Improvements • Sales increase of 24% currency-neutral • Reebok gross margin up 0.9pp to 37.2% • More than 20% growth in most regions 12
Slide 13: ZigTech Continues To Go From Strength To Strength
ZigTech Continues To Go From Strength To Strength 13
Slide 14: Reebok Third Product Pillar RealFlex Starts Strongly
Reebok Third Product Pillar RealFlex Starts Strongly • 76 independent “sensors” help promote natural movement • Support of natural movement and flexibility • Very encouraging initial sell-through from retail 14
Slide 15: TMaG Grows 20% Currency-Neutral In Q1
TMaG Grows 20% Currency-Neutral In Q1 • White R11 driver well received by tour players and consumers • Martin Kaymer crowned world no. 1 golfer for first time 15
Slide 16: Impact Of Japan On Group Performance
Impact Of Japan On Group Performance • adidas Group market leader in Japan • Japan represents a high-single-digit percentage of Group sales and is highly profitable • Scenarios imply sales decline of 15% to 25% in Japan from April to December • Strength in other markets to compensate for shortfalls
Slide 17: 2011 Revenue Guidance Increased
2011 Revenue Guidance Increased Group sales (currency-neutral) high-single-digit increase Wholesale sales (currency-neutral) mid- to high-single-digit increase Retail sales (currency-neutral) low-double-digit increase Other Businesses sales (currency-neutral) mid-single-digit increase Gross margin 4
Slide 18: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 18
Slide 19: Currency-Neutral Group Sales Up 18%
Currency-Neutral Group Sales Up 18% Western Europe 14% 16% Europ. Emerging 26% Markets 28% 26% North America 28% 36% Greater China 43% Other Asian 7% Markets 16% 15% Latin America 21% 18% 22% 0% 10% 20% 30% 40% Currency-neutral In euros 19
Slide 20: Wholesale Revenues Driven By Improvements In All Regions
Wholesale Revenues Driven By Improvements In All Regions Wholesale Q1 2011 Change Net sales (€ in millions) 2,320 18%1) Gross margin 43.1% 0.0pp Segmental operating margin 34.6% +1.5pp 1) Currency-neutral 20
Slide 21: Retail Comparable Store Sales Increase 17%
Retail Comparable Store Sales Increase 17% Retail Q1 2011 Change Net sales (€ in millions) 577 22%1) adidas comp store sales 17%1) Reebok comp store sales 15%1) Total comp store sales 17%1) Gross margin 61.2% +3.0pp Segmental operating margin 15.4% 4.2pp 1) Currency-neutral 21
Slide 22: Other Businesses Grow 14%
Other Businesses Grow 14% Other Businesses Q1 2011 Change Net sales (€ in millions) 376 14%1) Gross margin 45.6% +0.6pp Segmental operating margin 28.1% (0.9pp) 1) Currency-neutral 22
Slide 23: Group Gross Margin Virtually Unchanged
Group Gross Margin Virtually Unchanged Wholesale 43.1% • Higher input costs 0.0pp • Currency/Hedging Retail 61.2% 3.0pp • Higher Retail sales at higher margins Other 45.6% Businesses 0.6pp • Less clearance sales • Overproportionate growth in emerging 48.5%1) markets (0.1pp) Q1 Group gross profit up
Slide 24: Group Operating Margin Increases On A Comparable Basis
Group Operating Margin Increases On A Comparable Basis Q1 2011 Royalty and commission income € 18 million (16%) Other operating income € 17 million (63%) Other operating expenses € 1.309 billion 18% Other operating expenses 40.0% as a percentage of sales (1.5pp) Operating profit € 313 million 21% Op
Slide 25: Diluted EPS Increase 25%
Diluted EPS Increase 25% Q1 2011 Financial income € 5 million (61%) Financial expenses € 33 million 14% Income tax rate (4.0pp) 26.5% Net income attributable to shareholders € 209 million 25% Diluted earnings per share € 1.00 25% 25
Slide 26: Operating Working Capital As A Percentage Of Sales
Operating Working Capital As A Percentage Of Sales Continues to Improve • Inventories increase 23% on a 27 26.2 currency-neutral basis 26 25.6 25.6 • Mirrors growth expectations 25 24.3 for next quarters 24 22.9 • Receivables up 10% on a 23 currency-neutral basis 22 21.7 20.9 20.8 • Increase below G
Slide 27: Net Debt Declines Considerably
Net Debt Declines Considerably • Net borrowings decrease 33% versus 3,000 2,883 2,732 prior year to 2,500 2,294 € 914 million 2,000 • Ratio of net borrowings/EBITDA 1,500 1,359 1,090 decreases to 0.8 from 1,000 917 903 914 1.4 in 2010 500 • Equity ratio increases 221 0 0.6 percentage points to Q1/09
Slide 28: Strong Start To Route 2015
Strong Start To Route 2015 • Group sales to increase at a high-single-digit rate • Position in key growth markets continues to improve • Despite negative headwinds profitability targets all confirmed • 2011 a fitting start to our Route 2015 journey 28
Slide 29: Questions & Answers
QUESTIONS & ANSWERS 29
Slide 30: Upcoming Financial Reporting Dates
Upcoming Financial Reporting Dates May 12, 2011 Annual General Meeting May 13, 2011 Dividend paid1) Aug 4, 2011 First Half 2011 Results Nov 3, 2011 Nine Months 2011 Results 1) Subject to Annual General Meeting approval 30
Slide 31: Strong adidas And Reebok Brand Momentum
Strong adidas And Reebok Brand Momentum Q1 2011 Change Net sales (€ in millions) 2,439 18%1) Gross margin 47.8% 0.1pp Net sales (€ in millions) 477 24%1) Gross margin 37.2% 0.9pp 1) Currency-neutral 31