Adidas Ag · XETR:ADS
Adidas — Q1 2013 Earnings Presentation
56 slides from Adidas's earnings presentation, Jun 24, 2013
Slide 1: First Quarter 2013 Results Roadshow Presentation
First Quarter 2013 Results Roadshow Presentation San Francisco, June 24, 2013
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS 2
Slide 3: adidas Group Delivers Solid Financial Performance
adidas Group Delivers Solid Financial Performance • Sales flat on a currency-neutral basis • Growth across all key attack markets • Record gross margin of 50.1% • Operating margin improves 1.1pp to 11.8% • Net income and EPS increase 6% • Net borrowings decline 72% to € 180 million 3
Slide 4: Strong Growth Continues In Emerging Markets
Strong Growth Continues In Emerging Markets (6%) Western Europe +3% European Emerging Markets +3% North America +6% Greater China +12% (4%) Latin America Other Asian Markets Sales development on a currency-neutral basis. 4
Slide 5: Latin America Fastest-Growing Market In Q1
Latin America Fastest-Growing Market In Q1 • Revenues up 12% currency-neutral in Q1 • Double-digit sales growth in most markets • Sales at adidas up 19% currency-neutral 5
Slide 6: adidas Continues To Dominate Lifestyle Market In China
adidas Continues To Dominate Lifestyle Market In China • Sales increase 6% currency-neutral • Comp store sales up 8% • adidas Originals and adidas NEO label post double-digit sales increases 6
Slide 7: Reebok Continues To Shine In Russia/CIS
Reebok Continues To Shine In Russia/CIS ЖИЗНЬ – ЭТО ГОНКА,ВЫИГРАЙ ЕЁ • European Emerging Markets up 3% currency-neutral • Both adidas and Reebok grow at a single-digit rate • Retail trends improving after slow start to the year 7
Slide 8: North America Returns To Growth In Q1
North America Returns To Growth In Q1 • Sales up 3% currency-neutral • TMaG sales increase 19% • adidas Basketball enjoys strong momentum with 27% growth in Q1 8
Slide 9: Mixed Performance In Western Europe
Mixed Performance In Western Europe • Sales decline 6% currency-neutral • Growth in France and Poland offset by declines in Southern Europe and the UK • Own Retail and Other Businesses up single digits 9
Slide 10: adidas And Reebok Gross Margins Up In Q1
adidas And Reebok Gross Margins Up In Q1 Q1 2013 Change Net sales (€ in millions) 2,858 1%1) Gross margin 48.1% 1.8pp Net sales (€ in millions) 378 (14%)1) Gross margin 39.1% 1.5pp 1) Currency-neutral 10
Slide 11: Energy Boost Overwhelming Success For adidas Running
Energy Boost Overwhelming Success For adidas Running • Sales up 12% currency- neutral in Q1 • Strong growth in Climacool and Boost franchises • Award-winning and market-leading innovation driving success 11
Slide 12: Strong Momentum At adidas Basketball Continues
Strong Momentum At adidas Basketball Continues • Sales grow 18% currency-neutral • Footwear and apparel up double digits • Footwear momentum driven by D Rose 3.5 and Crazy Light 2 • Strong social media buzz from NBA All-Star Weekend and March Madness 12
Slide 13: adidas Outdoor Sales Accelerate To 21% In Q1
adidas Outdoor Sales Accelerate To 21% In Q1 • Sales up 21% currency-neutral on top of 45% in the prior year • New introductions drive footwear growth of over 30% 13
Slide 14: adidas Originals Sees Strong Trajectory In Emerging Markets
adidas Originals Sees Strong Trajectory In Emerging Markets • Revenues up 3% currency-neutral in Q1 • Strong reception to marketing campaign ‘Unite All Originals’ with over 20 million fans on facebook 14
Slide 15: adidas NEO Label Continues To Win The Young Consumer
adidas NEO Label Continues To Win The Young Consumer • adidas NEO sales increase 9% currency-neutral • NEO footwear sales up double digits in Q1 • Increasing brand visibility with Justin Bieber, Selena Gomez, Angelababy and Eddie Peng 15
Slide 16: Reebok Maintains Momentum In Apparel And Classics
Reebok Maintains Momentum In Apparel And Classics • Sales down 14% currency-neutral with half of the decline related to NFL • Fitness Training up 13% driven by strong growth in Delta apparel and CrossFit • Reebok Classics grows 33% supported by Retro basketball 16
Slide 17: Reebok Launches ReebokONE Instructor Platform
Reebok Launches ReebokONE Instructor Platform 17
Slide 18: Reebok Introduces New Fitness App
Reebok Introduces New Fitness App 18
Slide 19: TMaG Continues To Dominate Golf Market
TMaG Continues To Dominate Golf Market • Sales grow 13% currency-neutral • Dominant market leader in metalwoods and irons with R1, RocketBladez and RBZ Stage 2 • Launch of adizero tour catapults sales in footwear to a new record market share of 20% 19
Slide 20: Gross Margin Improves 2.4 Percentage Points
Gross Margin Improves 2.4 Percentage Points Q1 2013 • Pricing and favourable Wholesale 44.3% product mix +2.6pp • Overproportionate growth in Retail 60.7% emerging markets (0.8pp) • Larger share of higher-margin Other Businesses 44.6% Retail sales +0.9pp 50.1%1) +2.4pp • Negative FX impact 1) Total
Slide 21: Q1 Group Operating Profit At Record Level
Q1 Group Operating Profit At Record Level Q1 2013 Royalty and commission income € 25 million +1% Other operating income € 18 million (28%) Other operating expenses € 1,482 million +1% Other operating expenses 39.5% as a percentage of sales +1.2pp Operating profit € 442 million +8% Operating margin 1
Slide 22: Net Income And Diluted EPS Grow 6%
Net Income And Diluted EPS Grow 6% Q1 2013 Financial income € 4 million (47%) Financial expenses € 19 million (30%) Income before taxes € 427 million +10% Income tax rate 27.5% +2.0pp Net income attributable to shareholders € 308 million +6% Diluted earnings per share € 1.47 +6% 22
Slide 23: Wholesale Segmental Operating Margin Up 3.4pp
Wholesale Segmental Operating Margin Up 3.4pp Wholesale Q1 2013 Change Net sales (€ in millions) 2,481 (3%)1) Gross margin 44.3% +2.6pp Segmental operating margin 36.0% +3.4pp 1) currency-neutral 23
Slide 24: Retail Sales Increase 6% Currency-Neutral
Retail Sales Increase 6% Currency-Neutral Retail Q1 2013 Change Net sales (€ in millions) 722 +6%1) adidas comp store sales (1%)1) Reebok comp store sales +0%1) Total comp store sales (1%)1) Gross margin 60.7% (0.8pp) Segmental operating margin 14.0% (2.6pp) 1) currency-neutral 24
Slide 25: Retail Store Development
Retail Store Development • 2,458 stores operated at quarter-end • Net openings of 12 stores in Q1 • 92 new stores opened, 80 stores closed, 37 stores remodelled • 1,372 adidas and 349 Reebok branded; 737 factory outlets 25
Slide 26: Other Businesses Grow 9% Currency-Neutral
Other Businesses Grow 9% Currency-Neutral Other Businesses Q1 2013 Change Net sales (€ in millions) 548 +9%1) Gross margin 44.6% +0.9pp Segmental operating 31.3% +2.6pp margin 1) currency-neutral 26
Slide 27: Operating Working Capital As A Percentage Of Sales Remains At Low Levels
Operating Working Capital As A Percentage Of Sales Remains At Low Levels 22 • Inventories decrease 2% on a currency-neutral basis 21 • Receivables up 3% on a 20.3 20.2 currency-neutral basis 20.0 19.9 20.0 20 • Payables decrease 7% on a currency-neutral basis 19 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Average
Slide 28: Net Borrowings Decline 72%
Net Borrowings Decline 72% Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 500 448 • Net borrowings reduced by 100 90 € 460 million to € 180 million • Ratio of net borrowings/EBITDA decreases to 0.1 (Q1 2012: 0.5) -300 -180 -318 -337 • Equity ratio increases significantly to 49.7% (Q1 2012: 47
Slide 29: Strategic Initiatives and Outlook 2013
STRATEGIC INITIATIVES AND OUTLOOK 2013 29
Slide 30: Continue Creating The Most Desirable Brands
Continue Creating The Most Desirable Brands 30
Slide 31: 2013 Will See Significant Innovation Pipeline
2013 Will See Significant Innovation Pipeline 31
Slide 32: The Year Of adidas Running Starts With Boost
The Year Of adidas Running Starts With Boost 32
Slide 33: New Crazyquick Platform Introduced At Retail
New Crazyquick Platform Introduced At Retail 33
Slide 34: adidas To Unveil New Football Silo
adidas To Unveil New Football Silo ? 34
Slide 35: Build-Up Begins In Latin America For 2014 FIFA World Cup
Build-Up Begins In Latin America For 2014 FIFA World Cup 35
Slide 36: Reebok Running – Footwear Technology Offensive
Reebok Running – Footwear Technology Offensive 36
Slide 37: Reebok ZigCarbon
Reebok ZigCarbon 37
Slide 38: Reebok Launches New Yoga Range
Reebok Launches New Yoga Range 38
Slide 39: TMaG Continues Driving Innovation
TMaG Continues Driving Innovation 39
Slide 40: adidas Group Well On Track For Successful 2013
adidas Group Well On Track For Successful 2013 • Deliver a step change in margin progression • Seed game-changing product innovations in key categories • Maintain a steady course for the Group against a mixed economic backdrop 40
Slide 41: adidas Group Confirms 2013 Full Year Outlook
adidas Group Confirms 2013 Full Year Outlook Group sales (currency-neutral) mid-single-digit increase Wholesale sales (currency-neutral) low-single-digit increase Retail sales (currency-neutral) high-single- to low-double-digit increase Other Businesses sales (currency-neutral) mid- to high-single-d
Slide 42: adidas Group
adidas GROUP 42
Slide 43: Route 2015 Financial Milestones
Route 2015 Financial Milestones
Slide 44: Revised Sales Targets For Global Brands
Revised Sales Targets For Global Brands 2010 OLD NEW 44
Slide 45: Brand Architecture – Portfolio Strategy
Brand Architecture – Portfolio Strategy 8% 14% 22% 14% 26% 10% 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 45
Slide 46: Brand Architecture – Business Reality
Brand Architecture – Business Reality 8% 14% 22% 14% 26% 10% 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 46
Slide 47: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better 47
Slide 48: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 48
Slide 49: Slide 49
Slide 50: From An Activity To A Lifestyle…
From An Activity To A Lifestyle… 50
Slide 51: Reebok To Focus On Building Sustainable Fitness Categories
Reebok To Focus On Building Sustainable Fitness Categories 51
Slide 52: Meet Consumers Where They Live Within Their Fitness Life
Meet Consumers Where They Live Within Their Fitness Life 52
Slide 53: Well On Track To Deliver 11% Operating Margin By 2015
Well On Track To Deliver 11% Operating Margin By 2015 Quality of distribution Emerging Market Manufacturing Growth excellence Retail Performance proficiency driven Trade Terms Organisational Infrastructure set-up modernisation Range reduction 53
Slide 54: IR And Media App – Available For iPhone And iPad
IR And Media App – Available For iPhone And iPad Investor Relations and Media App 54
Slide 55: Questions & Answers
QUESTIONS & ANSWERS 55
Slide 56: Upcoming Event Dates
Upcoming Event Dates Aug 8, 2013 First Half 2013 Results Nov 7, 2013 Nine Months 2013 Results 1) Subject to Annual General Meeting Approval. 56