Adidas Ag · XETR:ADS
Adidas — Q1 2016 Earnings Presentation
38 slides from Adidas's earnings presentation, 2016
Slide 1: Q1 2016 Roadshow Presentation
HOW Q1 2016 WE ROADSHOW PRESENTATION CREATE THE NEW
Slide 2: Operational Highlights
OPERATIONAL HIGHLIGHTS 2
Slide 3: Major Developments in Q1
MAJOR DEVELOPMENTS IN Q1 ADIDAS GROUP WITH STRONG TOP- AND BOTTOM-LINE IMPROVEMENT GROUP REVENUES GROW 22% CURRENCY-NEUTRAL OR 17% IN EURO TERMS TO € 4.8 BILLION ACCELERATING MOMENTUM AT ADIDAS (+26%) AND REEBOK (+6%) SUPPORTED BY BROAD TOP-LINE GROWTH GROSS MARGIN RISES 30 BASIS POINTS TO 49.4% WIT
Slide 4: Brand Leadership Paying Off
BRAND LEADERSHIP PAYING OFF WINNING THE CONSUMER THROUGH HOLISTIC APPROACH 4
Slide 5: Double-Digit Growth in Key Markets and Key Categories
DOUBLE-DIGIT GROWTH IN KEY MARKETS AND KEY CATEGORIES UNDERLINES BROAD-BASED TOP-LINE MOMENTUM WESTERN EUROPE (+25%) GREATER CHINA (+30%) KEY MARKETS NORTH AMERICA (+22%) LATIN AMERICA (+19%) FOOTBALL (+25%) ORIGINALS (+45%) KEY CATEGORIES RUNNING (+19%) NEO (+60%) TRAINING (+15%) 5
Slide 6: Accelerating Momentum of Sport Performance
ACCELERATING MOMENTUM OF SPORT PERFORMANCE DRIVEN BY DOUBLE-DIGIT INCREASES IN KEY CATEGORIES +22% 6
Slide 7: Football
ACCELERATING MOMENTUM FUELLED BY BOTH FOOTWEAR AND APPAREL FOOTBALL CURRENCY-NEUTRAL REVENUES CLIMB 25% IN Q1 WITH DOUBLE-DIGIT SALES INCREASES IN MOST MARKETS REVENUES IN FOOTWEAR GROW AT A DOUBLE-DIGIT RATE, REFLECTING SUCCESSFUL PRODUCT INTRODUCTIONS APPAREL SALES INCREASE AT A STRONG DOUBLE- DIG
Slide 8: Running
KEY FRANCHISES DRIVE ROBUST TOP-LINE GROWTH RUNNING CURRENCY-NEUTRAL REVENUES UP 19% FOOTWEAR SALES INCREASE AT A DOUBLE- DIGIT RATE, REFLECTING THE STRONG SUCCESS AROUND BOOST REVENUES IN APPAREL GROW AT A DOUBLE- DIGIT RATE, DRIVEN BY NEW PRODUCT INTRODUCTIONS BOOST FRANCHISES NOW REPRESENT ONE- T
Slide 9: Training
STRONG GROWTH IN Q1 WITH FOCUS ON WOMEN TRAINING CURRENCY-NEUTRAL REVENUES GROW 15% IN Q1 DOUBLE-DIGIT SALES GROWTH IN MOST MAJOR MARKETS FOOTWEAR SALES INCREASE AT A DOUBLE-DIGIT RATE ‘I AM HERE TO CREATE’ CAMPAIGN RESONATING EXTREMELY WELL WITH THE FEMALE CONSUMER STRONG MOMENTUM IN THE MEN’S BUSI
Slide 10: Originals
OUTSTANDING BRAND HEAT DRIVES ANOTHER STAGGERING PERFORMANCE ORIGINALS CURRENCY-NEUTRAL SALES UP 45% DOUBLE-DIGIT INCREASES IN ALL MARKETS EXCEPT RUSSIA/CIS STRONG DOUBLE-DIGIT SALES GROWTH IN BOTH FOOTWEAR AND APPAREL ALL ESTABLISHED KEY FRANCHISES WITH STRONG DOUBLE-DIGIT SALES INCREASES UNRIVALLE
Slide 11: NEO
STRONG CONSUMER ENGAGEMENT PROPELS GROWTH MOMENTUM NEO CURRENCY-NEUTRAL SALES UP 60% WITH STRONG DOUBLE-DIGIT GROWTH IN ALL MARKETS EXCEPT RUSSIA/CIS DOUBLE-DIGIT INCREASES IN BOTH FOOTWEAR AND APPAREL EXCLUSIVE OFFERING OF NEO PRODUCTS AT KEY WHOLESALE PARTNERS IN WESTERN EUROPE GOING FORWARD OWN-R
Slide 12: Reebok
12TH CONSECUTIVE QUARTER OF GROWTH REEBOK CURRENCY-NEUTRAL SALES GROW 6% IN Q1 REVENUES IN WESTERN EUROPE, GREATER CHINA, JAPAN AND MEAA INCREASE AT A DOUBLE-DIGIT RATE EACH ONGOING MOMENTUM IN CLASSICS WITH STRONG DOUBLE-DIGIT INCREASES IN Q1 GROSS MARGIN UP 40 BASIS POINTS, REFLECTING IMPROVEMENTS
Slide 13: TMAG Strategic Review of Golf Business Completed
STRATEGIC REVIEW OF GOLF BUSINESS COMPLETED TMAG ADIDAS GROUP TO FOCUS EFFORTS IN GOLF ON ADIDAS GOLF ONLY GOING FORWARD DIVESTITURE PROCESS AROUND THE TAYLORMADE, ADAMS AND ASHWORTH BRANDS ANNOUNCED AND ONGOING RESTRUCTURING PLAN EXECUTED ON, RESULTING IN A MORE NIMBLE AND PROFITABLE ORGANISATION G
Slide 14: Financial Highlights
FINANCIAL HIGHLIGHTS 14
Slide 15: adidas and Reebok
ADIDAS AND REEBOK WITH ACCELERATING TOP-LINE MOMENTUM Q1 2016 CHANGE NET SALES (€ IN MILLIONS) 4,036 +26%1) GROSS MARGIN 47.4% (0.2pp) NET SALES (€ IN MILLIONS) 416 +6%1) GROSS MARGIN 38.0% +0.4pp 1) CURRENCY-NEUTRAL. 15
Slide 16: Broad-Based Top-Line Momentum
BROAD-BASED TOP-LINE MOMENTUM WITH STRONG DOUBLE-DIGIT SALES INCREASES ACROSS ALL REGIONS EXCEPT RUSSIA/CIS NORTH AMERICA +22% RUSSIA/CIS +2% JAPAN +44% WESTERN EUROPE +25% MEAA +17% GREATER CHINA +30% LATIN AMERICA +19% CURRENCY-NEUTRAL. FIGURES REFLECT COMBINED REVENUES OF THE ADIDAS AND REEBOK BU
Slide 17: Western Europe
ONGOING BRAND HEAT REFLECTED IN STRONG DEMAND FOR BOTH ADIDAS AND REEBOK WESTERN CURRENCY-NEUTRAL SALES CLIMB 25%, DRIVEN BY STRONG DOUBLE-DIGIT SALES GROWTH AT BOTH ADIDAS (+26%) AND REEBOK (+15%) EUROPE STRONG DOUBLE-DIGIT SALES GROWTH IN NEARLY ALL OF THE REGION’S MAJOR MARKETS GROSS MARGIN DECLI
Slide 18: North America
ACCELERATING MOMENTUM FOR ADIDAS IN Q1 NORTH CURRENCY-NEUTRAL SALES GROW 22% REVENUES AT ADIDAS UP 31%, FUELLED BY DOUBLE-DIGIT AMERICA GROWTH IN KEY PERFORMANCE AND LIFESTYLE CATEGORIES REEBOK SALES DECLINE 13%, DUE TO ONGOING EFFORTS TO STREAMLINE US DISTRIBUTION GROSS MARGIN IMPROVEMENT (+1.2PP)
Slide 19: Greater China
ROBUST BRAND POSITIONING EXPANDS FURTHER GREATER CURRENCY-NEUTRAL SALES GROW 30% 8TH CONSECUTIVE QUARTER OF DOUBLE-DIGIT GROWTH CHINA SALES AT ADIDAS SOAR 30%, FUELLED BY STRONG DOUBLE- DIGIT GROWTH IN KEY PERFORMANCE CATEGORIES AS WELL AS AT ADIDAS ORIGINALS AND ADIDAS NEO REEBOK REVENUES UP 22%, D
Slide 20: Latin America
STRONG GROWTH IN LIGHT OF THE RIO 2016 OLYMPIC GAMES LATIN SALES UP 19% IN Q1, WITH DOUBLE-DIGIT GROWTH IN ALL THE REGION’S MAJOR MARKETS AMERICA REVENUES AT ADIDAS RISE 23%, DRIVEN BY DOUBLE- DIGIT SALES GROWTH IN KEY PERFORMANCE CATEGORIES AND AT ADIDAS ORIGINALS REVENUES IN RETAIL GROW 30% CURREN
Slide 21: Other Businesses
SALES GROWTH IN Q1 DESPITE STRUCTURAL CHALLENGES OTHER CURRENCY-NEUTRAL SALES UP 6% SALES AT TMAG DECLINE 1%, AS GROWTH AT BUSINESSES TAYLORMADE AND ADIDAS GOLF WAS MORE THAN OFFSET BY DECLINES AT ADAMS AND ASHWORTH REEBOK-CCM HOCKEY SALES DOWN 2%, AS GROWTH IN STICKS AND PROTECTIVE EQUIPMENT WAS MO
Slide 22: Group Gross Margin Up 0.3pp in Q1
GROUP GROSS MARGIN UP 0.3PP IN Q1 DESPITE SEVERE CURRENCY HEADWINDS Q1 2016 GROSS MARGIN +0.3pp 49.4% OTHER OPERATING EXPENSES +13% € 1,924 MILLION OTHER OPERATING EXPENSES (1.3pp) AS A PERCENTAGE OF SALES 40.3% OPERATING PROFIT +35% € 490 MILLION OPERATING MARGIN +1.4pp 10.3% Excluding goodwill imp
Slide 23: Underlying Net Income Grows 38% to € 350 Million
UNDERLYING NET INCOME GROWS 38% TO € 350 MILLION Q1 2016 FINANCIAL INCOME +25% € 19 MILLION FINANCIAL (15%) EXPENSES € 13 MILLION INCOME BEFORE TAXES +37% € 497 MILLION NET INCOME FROM CONTINUING OPERATIONS +38% € 350 MILLION DILUTED EARNINGS PER SHARE FROM CONTINUING +38% € 1.71 OPERATIONS Excludin
Slide 24: Retail Profitability Improves Strongly
RETAIL PROFITABILITY IMPROVES STRONGLY COMP STORE SALES EXCL. RUSSIA/CIS UP 16% IN Q1 Q1 2016 CHANGE NET SALES 1,034 +22%1) (€ IN MILLIONS) ADIDAS COMP STORE SALES +15%1) REEBOK COMP STORE SALES +3%1) TOTAL COMP STORE SALES +13%1) GROSS 61.2% +3.3pp MARGIN OPERATING 19.6% +5.5pp MARGIN 1) CURRENCY-N
Slide 25: Average OWC in % of Sales Improves 1.7pp to 20.2%
AVERAGE OWC IN % OF SALES IMPROVES 1.7PP TO 20.2% 21.9% 21.6% INVENTORIES GROW 25% (CN) TO SUPPORT TOP-LINE MOMENTUM 20.7% RECEIVABLES UP 11% (CN) 20.5% PAYABLES GROW 11% (CN), 20.2% REFLECTING THE INCREASE IN INVENTORIES Q1/15* Q2/15* Q3/15* Q4/15* Q1/16* Average operating working capital in % of s
Slide 26: Net Debt Position of € 809 Million
NET DEBT POSITION OF € 809 MILLION INCREASE IN NET DEBT DUE TO UTILISATION OF CASH FOR THE PURCHASE OF FIXED ASSETS, THE (460) ACQUISITION OF RUNTASTIC AND (542) THE SHARE BUYBACK PROGRAMME RATIO OF NET DEBT/EBITDA AMOUNTS TO 0.5 (2015: 0.4) (809) EQUITY RATIO REMAINS AT STRONG LEVEL OF 42.3% (903)
Slide 27: Outlook
OUTLOOK 27
Slide 28: Copa America
COPA AMERICA STRONG PORTFOLIO OF LEADING FEDERATIONS 28
Slide 29: UEFA EURO 2016
UEFA EURO 2016 ADIDAS OFFICIAL SPONSOR, OUTFITTER AND LICENSEE OF THE UEFA EURO 29
Slide 30: Running: Key Footwear Franchises
RUNNING KEY FOOTWEAR FRANCHISES TO PROPEL MOMENTUM 30
Slide 31: Running: Bounce
RUNNING BOUNCE TO SUPPORT MOMENTUM IN NORTH AMERICA 31
Slide 32: Originals: Focus on Key Franchises
ORIGINALS FOCUS ON KEY FRANCHISES 32 32
Slide 33: Originals: Your Future Is Not Mine
ORIGINALS YOUR FUTURE IS NOT MINE 33
Slide 34: NEO: Introducing Cloudfoam
NEO INTRODUCING CLOUDFOAM 34
Slide 35: Reebok: 25,915 Days Campaign
REEBOK 25,915 DAYS CAMPAIGN 35 35
Slide 36: Reebok: 20th Anniversary of Question Mid
REEBOK 20TH ANNIVERSARY OF REEBOK QUESTION MID IN HONOUR OF ALLEN IVERSON 36 36
Slide 37: Improved Outlook
IMPROVED OUTLOOK ADIDAS GROUP INCREASES FY 2016 GUIDANCE GROUP SALES TO INCREASE AT A RATE OF AROUND 15% GROSS MARGIN DECLINE TO BE LIMITED TO A MAXIMUM OF 50 BASIS POINTS OPERATING MARGIN TO INCREASE TO A LEVEL OF AROUND 7.0% NET INCOME TO INCREASE AT A RATE OF AROUND 25% TO AROUND EUR 900M 37
Slide 38: Upcoming Events
UPCOMING EVENTS DATE EVENT JULY 18, 2016 3RD IR TUTORIAL WORKSHOP AUGUST 4, 2016 FIRST HALF 2016 RESULTS NOVEMBER 3, 2016 FIRST NINE MONTHS 2016 RESULTS 38