Adidas Ag · XETR:ADS
Adidas — H1 2008 Earnings Presentation
30 slides from Adidas's earnings presentation, Aug 5, 2008
Slide 1: First Half 2008 Results Analyst Presentation
First Half 2008 Results Analyst Presentation Herzogenaurach, August 5, 2008
Slide 2: Introduction
INTRODUCTION Natalie Knight Vice President Investor Relations 2
Slide 3: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 3
Slide 4: Strong First Half Group Performance
Strong First Half Group Performance • adidas powers ahead • TaylorMade-adidas Golf continues to gain market share • Progress at Reebok continues 4
Slide 5: Second Quarter Results Reflect Broad-Based Strength
Second Quarter Results Reflect Broad-Based Strength Net Sales • Up 14% currency-neutral Gross Margin • Reaches all-time record of 50.1% Operating Margin • Up 0.4pp to 8.2% Net Income attributable to • Increases 12% to € 116 million shareholders 5
Slide 6: adidas Brand Grows Strongly In The Second Quarter
adidas Brand Grows Strongly In The Second Quarter • Q2 currency-neutral sales grow 19% • Broad-based strength across all major categories • Full year sales to grow at low-double-digit rates 6
Slide 7: adidas Takes Home Football Victory
adidas Takes Home Football Victory • 7
Slide 8: adidas Clear Winner of the UEFA EURO 2008
adidas Clear Winner of the UEFA EURO 2008™ 8
Slide 9: Largest adidas Store Opened In Beijing
Largest adidas Store Opened In Beijing 9
Slide 10: adidas Backlogs Increase 8%
adidas Backlogs Increase 8% • Highest footwear North Europe America Asia Total backlogs in North America in eleven quarters FW 5 6 21 9 • European backlogs APP 7 (10) 25 9 reflect post-event period Total 4 0 21 8 • Increased momentum in Asian Currency-neutral development of adidas order backlogs by
Slide 11: Reebok Sales Grow 2% In Second Quarter
Reebok Sales Grow 2% In Second Quarter • Currency-neutral sales increase 2% • First-time consolidation of joint ventures supports sales growth • Double-digit sales increases in many European markets 11
Slide 12: Reebok Partnership With Avon Walks Highlights Importance Of Women's Category
Reebok Partnership With Avon Walks Highlights Importance Of Women’s Category • Held in more than 40 countries worldwide • High media awareness • Strong sell-throughs of pink ribbon line of footwear and apparel 12
Slide 13: Lewis Hamilton Partnership Strengthens Focus On Training
Lewis Hamilton Partnership Strengthens Focus On Training 13
Slide 14: Reebok Launches New Communication and Product Initiatives In North America
Reebok Launches New Communication and Product Initiatives In North America 14
Slide 15: Reebok Backlogs Not Indicative Of Future Sales
Reebok Backlogs Not Indicative Of Future Sales • North American North Europe America Asia Total and Asian backlogs continue at levels FW (9) (29) 8 (13) similar to prior quarter APP (22) (21) 3 (20) • Declines in UK outweigh increases in other European Total (10) (21) 6 (13) markets Currency-neutral
Slide 16: TaylorMade-adidas Golf Grows In All Regions
TaylorMade-adidas Golf Grows In All Regions • Currency-neutral sales grow 6% • Revenues increasing in all regions • New innovative products brought to market • Important market share gains in metalwoods and balls 16
Slide 17: Operating Margin Improves Again In Q2
Operating Margin Improves Again In Q2 Q2 2008 First Half 2008 Gross profit € 1,263m € 2,552m 11% 10% Gross margin 50.1% 49.6% +2.7pp +2.5pp Operating profit € 208m € 490m +10% +17% Operating margin 8.2% 9.5% +0.4pp +1.1p 17
Slide 18: Progress On Share Buyback Program Continues
Progress On Share Buyback Program Continues 180,000 50.00 160,000 45.00 140,000 40.00 35.00 120,000 30.00 100,000 25.00 80,000 20.00 60,000 15.00 40,000 Number of shares repurchased 10.00 20,000 Average purchase price 5.00 0 0.00 30- 7- 15- 25- 11- 27- 7- 15- 23- 2- 29- 6- 16- 24- 2- 10- 18- Jan Feb
Slide 19: Second Quarter EPS Increases 15%
Second Quarter EPS Increases 15% Q2 2008 First Half 2008 Net financial € 39m € 71m expenses +10% (3%) Income before taxes € 169m € 419m +10% +22% Effective tax rate 30.8% 31.5% (0.8pp) (0.5pp) Net income attrib. to € 116m € 286m shareholders +12% +23% Basic EPS € 0.59 € 1.42 +15% +25% 19
Slide 20: Net Debt Reduction Continues Despite Buyback
Net Debt Reduction Continues Despite Buyback • Net borrowings decrease 3.250 3.000 6% to € 2.260 billion 2.750 2.829 2.728 2.519 • Share buyback program 2.500 2.231 2.395 2.201 2.260 remains a priority 2.250 2.073 2.000 1.766 • Financial leverage 1.750 increases slightly to 1.500 82.3% 1.250 1.000 Q
Slide 21: Operating Working Capital Development Supports Further Growth
Operating Working Capital Development Supports Further Growth • 16% currency-neutral inventory growth reflects emerging market expansion • Receivables increase below Q2 sales growth rate • Payables grow 33% on a currency-neutral basis Average operating working capital as a percentage of sales reduce
Slide 22: 2008 Outlook Improves
2008 Outlook Improves adidas Group Targets 2008 Currency-neutral sales growth high-single-digit SED A RE Gross margin IN C to exceed 48.0% SED Operating margin CRE A approaching 10.0% IN Net income growth at least 15% 22
Slide 23: Olympics Set The Pace For Second Half Performance
Olympics Set The Pace For Second Half Performance • Olympics a medium-term growth catalyst for the Group in China • adidas positioned for continued growth • TaylorMade- adidas Golf in strong position • Reebok sales performance to improve during second half of the year 23
Slide 24: Questions & Answers
adidas GROUP QUESTIONS & ANSWERS
Slide 25: Appendix
APPENDIX 25
Slide 26: Upcoming Financial Reporting Dates
Upcoming Financial Reporting Dates Nov 6, 2008 Nine Months 2008 Results Mar 4, 2009 2008 Full Year Results May 5, 2009 First Quarter 2009 Results May 7, 2009 Annual General Meeting Aug 5, 2009 First Half 2009 Results Nov 4, 2009 Nine Months 2009 Results 26
Slide 27: Record Second Quarter Gross Margin
Record Second Quarter Gross Margin Positives: 48.3% • Regional and product mix +2.2pp • Currency benefits 41.2% +2.1pp • Own-retail 46.4% Negatives: +1.7pp • Input costs 50.1%1) +2.7pp Group Full Year Gross Margin Guidance To Exceed 48.0% 1) Includes HQ/Consolidation 27
Slide 28: adidas Group Revenues Increase 14% In Q2 2008
adidas Group Revenues Increase 14% In Q2 2008 19% 11% 2% (9%) 6% (5%) 14% 5% (10%) (5%) 0% 5% 10% 15% 20% In euros Currency-neutral 28
Slide 29: adidas Group Revenues Increase 12% In H1 2008
adidas Group Revenues Increase 12% In H1 2008 16% 10% (2%) (11%) 11% (0%) 12% 4% (15%) (10%) (5%) 0% 5% 10% 15% 20% In euros Currency-neutral 29
Slide 30: Q2 Sales Grow At Double-Digit Rate In All Regions Except North America
Q2 Sales Grow At Double-Digit Rate In All Regions Except North America 20% Europe 14% (9%) North America (20%) Asia 24% 16% Latin America 41% 34% 14% 5% (25%) (15%) (5%) 5% 15% 25% 35% 45% In euros Currency-neutral 30