Adidas Ag · XETR:ADS
Adidas — adidas-Salomon — FY2001 Earnings Presentation
52 slides from Adidas's earnings presentation, Mar 7, 2002
Slide 1: 2001 Full Year Results Presentation
adidas-Salomon 2001 Full Year Results Presentation March 7, 2002 1 2001 Full Year Results Presentation
Slide 2: Operational Highlights
Operational Highlights Herbert Hainer, CEO 2 2001 Full Year Results Presentation
Slide 3: 2001: Turnaround Year for adidas-Salomon
2001: Turnaround Year for adidas-Salomon • Focus on core competencies • Revitalized adidas brand • TMaG in industry-leading position • Strong positioning in fast-growing segments • "Cool" products • Financial and brand discipline 3 2001 Full Year Results Presentation
Slide 4: 3-Divisional Strategy for adidas
3-Divisional Strategy for adidas Price EQUIPMENT Division ORIGINAL Division FOREVER SPORT Division Sport Lifestyle 4 2001 Full Year Results Presentation
Slide 5: US Turnaround
US Turnaround • New management • Key-account teams • Top products • Positive backlogs 5 2001 Full Year Results Presentation
Slide 6: Investing in Success at Salomon and TMaG
Investing in Success at Salomon and TMaG 6 2001 Full Year Results Presentation
Slide 7: Basketball on the Fast Track
Basketball on the Fast Track • Sales increase 37% • Great 2002 product line-up • T-MAC • KOBETHREE • ClimaCool™ • a³ • Continued strong growth in 2002 7 2001 Full Year Results Presentation
Slide 8: adidas Brand Positioning Improves Dramatically
adidas Brand Positioning Improves Dramatically • Strong double-digit growth in Originals sales • Excellent product placement • Exclusive agreements with designers 8 2001 Full Year Results Presentation
Slide 9: 2001 Social and Environmental Highlights
2001 Social and Environmental Highlights • Top in sector - Dow Jones Sustainability Index • Listed in new FTSE4Good Europe Index • AAA environmental rating by Innovest • Social and Environmental Report issued today 9 2001 Full Year Results Presentation
Slide 10: New Additions to the adidas-Salomon Family
New Additions to the adidas-Salomon Family 10 2001 Full Year Results Presentation
Slide 11: Financial Highlights and Outlook
Financial Highlights and Outlook Robin Stalker, CFO 11 2001 Full Year Results Presentation
Slide 12: Key Financial Targets for 2001
Key Financial Targets for 2001 • Increase sales 3-5% • Maintain gross margin strength • Drive operating expense decline • Reduce inventories • Lower debt • Deliver 15% earnings growth 12 2001 Full Year Results Presentation
Slide 13: 2001 Sales Increase to € 6.1 Billion
2001 Sales Increase to € 6.1 Billion +7% (+ 8%) 1,800 * +3% (+ 2%) 1,600 +10% (+ 9%) +/- 0% (+5%) 2000 1,400 2001 1,200 * Euros in millions 1,000 (Currency-neutral Q1 Q2 Q3 Q4 figures) 13 2001 Full Year Results Presentation
Slide 14: 2001 Sales in Europe Beat Targets
2001 Sales in Europe Beat Targets % of Group 7% 85 4% 12 26% 3 7% Total: € 3.1b Group 100 0% 5% 10% 15% 20% 25% 30% 14 2001 Full Year Results Presentation
Slide 15: 2001 Asia Sales Top € 1 Billion
2001 Asia Sales Top € 1 Billion % of Group 12% 72 -23% 11 102% 17 15% Total: € 1b 100 Group -25% 0% 25% 50% 75% 100% 15 2001 Full Year Results Presentation
Slide 16: 2001 North America Sales Reflect Tough Market Conditions
2001 North America Sales Reflect Tough Market Conditions % of Group -8% 73 12% 11 0% 0% 16 -5% Total: € 1.8b Group -5% 100 -10% -5% 0% 5% 10% 15% 16 2001 Full Year Results Presentation
Slide 17: 2001 Latin America Sales Grow Despite Tough Market Conditions
2001 Latin America Sales Grow Despite Tough Market Conditions • Total sales € 178m • Improvement + 4% 17 2001 Full Year Results Presentation
Slide 18: 2001 Gross Margin Strength Continues
2001 Gross Margin Strength Continues 38.2% down 2.6 pp 43.8% up 1.7 pp 51.5% up 2.0 pp Group* 42.6% down 0.8 pp *Includes HQ/consolidation 18 2001 Full Year Results Presentation
Slide 19: Operating Expense Ratio Improves
Operating Expense Ratio Improves • Operating expenses as a percent of net sales improves 1.0pp to 34.8% • Focus on cost control continues • Significant marketing working budget savings 19 2001 Full Year Results Presentation
Slide 20: Strong 2001 Earnings
Strong 2001 Earnings • Operating profit and margin improve (+9%) • Financial expenses at € 102m • IBT at € 376m • Tax rate down 1.2pp to 39.0% • Minority interests down 17% to € 21m • Earnings per share increase 15% to € 4.60 20 2001 Full Year Results Presentation
Slide 21: Working Capital Improvements Continue
Working Capital Improvements Continue • Inventories down 2% year-over-year • Aging improvement continues • Receivables increase 11% • Driven by TaylorMade and Salomon Borrowings decline € 112m, exceeding Management target 21 2001 Full Year Results Presentation
Slide 22: 2001 Financial Targets Achieved
2001 Financial Targets Achieved • Group sales up 5% • Industry-leading gross margin at 42.6% • Operating expenses as a percent of sales down 105 basis points • Inventories reduced € 21m • Debt reduced € 112m • Earnings growth = 15% 22 2001 Full Year Results Presentation
Slide 23: adidas Order Backlog (in % yoy)
adidas Order Backlog (in % yoy) •Underlying backlog euros currency development neutral improves Footwear + 8% + 6% •Footwear growth supported by Apparel - 3% - 4% resurgence in USA & Asia Total + 4% + 2% •Q2 portion of backlogs strengthens 23 2001 Full Year Results Presentation
Slide 24: Positive Overall Backlogs in North America for the First Time in 3 years
Positive Overall Backlogs in North America for the First Time in 3 years (in % yoy) •Currency-neutral footwear backlogs euros currency improve 7pp neutral versus Q3 Footwear +13% + 7% •Double-digit footwear backlog Apparel +/-0% - 5% gains at athletic Total + 8% + 3% specialty and premium sporting g
Slide 25: Timing Issues Affect European Backlogs
Timing Issues Affect European Backlogs (in % yoy) euros •Conservative retail ordering enviroment led to backlog reductions Footwear + 1% •Apparel basics under Apparel - 6% pressure across Europe •Underlying business Total - 2% trends positive 25 2001 Full Year Results Presentation
Slide 26: Major Growth in Asian Backlogs
Major Growth in Asian Backlogs (in % yoy) euros currency • Major gains in neutral both footwear Footwear +24% +30% and apparel • Strongest growth Apparel +13% +19% in Japan Total +18% +24% 26 2001 Full Year Results Presentation
Slide 27: 2002 Financial Priorities
2002 Financial Priorities • Maintain gross margin strength • Focused spending • Continued working capital improvements • Cash flow emphasis • Debt reduction 27 2001 Full Year Results Presentation
Slide 28: Strategic Outlook
Strategic Outlook Herbert Hainer, CEO 28 2001 Full Year Results Presentation
Slide 29: adidas 3-Divisional Strategy Advances to Next Level
adidas 3-Divisional Strategy Advances to Next Level • First full collections from new team available at retail • Equipment pre-launch set for Fall/Winter 2002 • Strong top-line growth projected for 2002 • 3-divisional structure adopted by Global Operations 29 2001 Full Year Results Presentation
Slide 30: T-MAC
T-MAC • #1 selling shoe in the US • $90 retail price • Marks commitment to outstanding basketball product • Target consumer: urban youth • Distribution channel: athletic specialty 30 2001 Full Year Results Presentation
Slide 31: ClimaCool
ClimaCool 31 2001 Full Year Results Presentation
Slide 32: a³
a³ 32 2001 Full Year Results Presentation
Slide 33: ADAN II
ADAN II 33 2001 Full Year Results Presentation
Slide 34: SL III
SL III 34 2001 Full Year Results Presentation
Slide 35: KOBETHREE
KOBETHREE 35 2001 Full Year Results Presentation
Slide 36: Steel 200
200 Steel 36 2001 Full Year Results Presentation
Slide 37: XAPro
XAPro 37 2001 Full Year Results Presentation
Slide 38: Winter Olympics: Janica Kostelic
Winter Olympics: Janica Kostelic • Over 50% of athletes sponsored by adidas or Salomon • Nearly 200 cumulative medal winners • Janica Kostelic wins three gold and a bronze, first medals ever for Croatia 38 2001 Full Year Results Presentation
Slide 39: Jill Bakken and Vonetta Flowers
Jill Bakken and Vonetta Flowers • Gold medalists in the first ever women's bobsled event 39 2001 Full Year Results Presentation
Slide 40: Georg Hackl
Georg Hackl • First athlete ever to win at least one medal at five consecutive Winter Games 40 2001 Full Year Results Presentation
Slide 41: World Cup Football
World Cup Football • 41 billion viewers • 10 teams • 25,000 officials & volunteers wearing adidas • Top products 41 2001 Full Year Results Presentation
Slide 42: Bayern Munich Football
Bayern Munich Football • Europe’s most important football club • 10% stake to be purchased mid-year • Cash deal, to be financed from Group’s free cash flow 42 2001 Full Year Results Presentation
Slide 43: Growth Potential in Italy
Growth Potential in Italy • Biggest growth opportunity for adidas in Europe • Buy-out of remaining 50% of joint venture 43 2001 Full Year Results Presentation
Slide 44: Turnaround in America
Turnaround in America • Positive backlogs • First market share gains • Double-digit sales growth in 2002 • New headquarters 44 2001 Full Year Results Presentation
Slide 45: TMaG: The Industry Leader Again in 2002
TMaG: The Industry Leader Again in 2002 • Double-digit sales growth • #1 driver • #1 metalwood • Profitable growth in golf ball segment • Leading irons on tour • Continued operating profit improvements 45 2001 Full Year Results Presentation
Slide 46: Salomon: Growth in New Categories
Salomon: Growth in New Categories • Multi-brand apparel strategy • Growth in new playgrounds • Focus on organizational excellence 46 2001 Full Year Results Presentation
Slide 47: Further Strengthening Group Financial Health
Further Strengthening Group Financial Health • Continued working capital improvements • Focus on cash-flow generation • Investing to support the core business 47 2001 Full Year Results Presentation
Slide 48: 2002 adidas-Salomon Outlook
2002 adidas-Salomon Outlook • Turnaround in North America brings tangible results • New footwear technologies generate brand excitement • World Cup 2002 mania • Double-digit growth in Italy • Growing the high-margin adidas own-retail business • Salomon and TaylorMade success continues 48 2001 Full Y
Slide 49: Aggressive Targets Again in 2002
Aggressive Targets Again in 2002 • Group sales to increase at least 5% • Double-digit sales growth in North America, Asia and TMaG • Gross margin 41 - 43% • Spending € 100m on key initatives • DSO and stock turn improvement • EPS growth: 5 - 10% 49 2001 Full Year Results Presentation
Slide 50: End of Presentation
End of Presentation Question and Answer Session to Follow 50 2001 Full Year Results Presentation
Slide 51: Question and Answer Session
Question and Answer Session 51 2001 Full Year Results Presentation
Slide 52: Next Reporting Dates
Next Reporting Dates Q1 2002 Results May 2, 2002 • Press Release 7:30 CET 1:30 EST • Q1 Presentation available 12:00 CET 6:00 EST online • Conference Call 15:30 CET 9:30 EST 52 2001 Full Year Results Presentation