Adidas Ag · XETR:ADS
Adidas — adidas-Salomon — 9M 2002 Earnings Presentation
41 slides from Adidas's earnings presentation, Nov 7, 2002
Slide 1: Nine Months 2002 Financial Results Presentation
adidas-Salomon AG Nine Months 2002 Financial Results Presentation November 7, 2002 1 Nine Months 2002 Financial Results Presentation
Slide 2: Operational Highlights
Operational Highlights Herbert Hainer, CEO 2 Nine Months 2002 Financial Results Presentation
Slide 3: Q3 2002: Excellent Performance Despite Tough Markets
Q3 2002: Excellent Performance Despite Tough Markets • Underlying Group sales grow 10% • North America turnaround continues • Currency-neutral backlogs up 16% • 2002 sales and earnings targets confirmed 3 Nine Months 2002 Financial Results Presentation
Slide 4: North America Turnaround on Track
North America Turnaround on Track • Underlying sales increase at all brands • TMaG sales increase 51% in local currency in Q3 • Market share improvements in the US 4 Nine Months 2002 Financial Results Presentation
Slide 5: Europe Momentum Continues
Europe Momentum Continues • YTD sales increase 4%, +6% in Q3 • adidas footwear as main growth driver • Sales momentum in all major markets 5 Nine Months 2002 Financial Results Presentation
Slide 6: Sales Momentum in Asia Accelerates
Sales Momentum in Asia Accelerates • YTD sales increase 21% (+27% currency-neutral), +14% in Q3 • adidas underlying footwear sales up 44% in Q3 6 Nine Months 2002 Financial Results Presentation
Slide 7: Product Initiatives Beat Expectations
Product Initiatives Beat Expectations Target Expectations ClimaCoolTM 500,000 1,000,000 a3 250,000 400,000 Originals double-digit growth > 20% 7 Nine Months 2002 Financial Results Presentation
Slide 8: T-MAC 2 Scores Big for adidas
T-MAC 2 Scores Big for adidas • Sales up more than 55% in 1st nine months • Excellent launch of T-MAC 2 8 Nine Months 2002 Financial Results Presentation
Slide 9: Sport Style Debut in Paris
Sport Style Debut in Paris • Collection launched October 7, 2002 in Paris • Excellent reviews • Orders far above initial expectations 9 Nine Months 2002 Financial Results Presentation
Slide 10: Salomon Efforts Focused in Tough Environment
Salomon Efforts Focused in Tough Environment • Very challenging winter market • YTD sales -1%, underlying sales +2% • Exciting products: 3V slalom racing ski X Wave 10.0 ski boot F snowboard boot 10 Nine Months 2002 Financial Results Presentation
Slide 11: TMaG: Strong R500 Series Launch
TMaG: Strong R500 Series Launch • R500 Series success • Golf balls and adidas Golf also drive growth • Sergio Garcia signs contract with TMaG 11 Nine Months 2002 Financial Results Presentation
Slide 12: Financial Highlights and Outlook
Financial Highlights and Outlook Robin Stalker, CFO 12 Nine Months 2002 Financial Results Presentation
Slide 13: Group Sales Increase 4% in Q3 2002
Group Sales Increase 4% in Q3 2002 2,000 * +4% (+10%) 1,800 +5% (+4%) 2001 1,600 +10% (+14%) 2002 1,400 * Euros in millions 1,200 (Currency-neutral Q1 Q2 Q3 Q4 figures) 13 Nine Months 2002 Financial Results Presentation
Slide 14: YTD adidas Sales Up 6%
YTD adidas Sales Up 6% % of Total Europe 3% 55 North America 3% 26 Asia 27% 16 Latin America -7% 3 Total 6% Total: € 4.1b 100 -10% 0% 10% 20% 30% 14 Nine Months 2002 Financial Results Presentation
Slide 15: YTD Salomon Sales Virtually Flat Due to Tough Market Conditions
YTD Salomon Sales Virtually Flat Due to Tough Market Conditions % of Total Europe 9% 55 North America -2% 36 Asia -31% 8 Latin America -1% 1 Total -1% Total: € 424m 100 -40% -10% -5% -5% 0% 0% 5% 5% 10% 10% 15 Nine Months 2002 Financial Results Presentation
Slide 16: Double-Digit YTD Sales Gains at TaylorMade-adidas Golf
Double-Digit YTD Sales Gains at TaylorMade- adidas Golf* % of Total Europe 22% 16 North America 16% 54 19% 30 Asia 18% Total: € 516m Total 100 0% 0% 10% 10% 20% 20% 30% 30% * Includes Maxfli/Slazenger 16 Nine Months 2002 Financial Results Presentation
Slide 17: Gross Margin Improves YTD 2002
Gross Margin Improves YTD 2002 39.8% up 1.1 pp 41.5% down 1.9 pp 49.4% down 2.2 pp Group* 43.4% up 0.6 pp *Includes HQ/consolidation 17 Nine Months 2002 Financial Results Presentation
Slide 18: Operating Expenses In Line with Expectations, Reflects Strategic Initiatives
Operating Expenses In Line with Expectations, Reflects Strategic Initiatives • World Cup • Increased adidas own-retail activities • Start-up activities associated with adidas Italy 18 Nine Months 2002 Financial Results Presentation
Slide 19: YTD 2002 Earnings in Line with Expectations
YTD 2002 Earnings in Line with Expectations • Operating profit declines 2% • Financial expenses at € 69m • IBT at € 341m • Tax rate down 0.8pp to 38.2% • Minority interests down 33% to € 11m • Earnings per share improve 8% to € 4.40 19 Nine Months 2002 Financial Results Presentation
Slide 20: Continued Progress in Working Capital and Debt Reduction
Continued Progress in Working Capital and Debt Reduction • Inventories 4% lower year-over-year Aging improvement continues • Receivables increase 4% In line with sales growth Net debt reduction of € 114m 20 Nine Months 2002 Financial Results Presentation
Slide 21: Excellent adidas Order Backlog Situation Continues
Excellent adidas Order Backlog Situation Continues (yoy) euros currency • Best backlogs in 4 neutral years Footwear + 19% + 24% • 5th straight quarter of positive underlying Apparel + 3% + 7% backlogs • Positive underlying Total + 11% + 16% apparel backlogs for the first time in more than 3 years 21
Slide 22: Strong Double-Digit Backlog Increases in North America
Strong Double-Digit Backlog Increases in North America (yoy) euros currency • Major footwear neutral backlogs gains in all distribution channels Footwear + 16% + 25% Apparel + 8% + 17% • Significant apparel backlogs Total + 13% + 22% improvement 22 Nine Months 2002 Financial Results Presentation
Slide 23: European Backlogs Momentum Accelerates
European Backlogs Momentum Accelerates (yoy) euros currency • Growth led by neutral footwear, in particular running Footwear + 22% + 23% Apparel + 1% + 1% • Best underlying apparel backlogs in Total + 12% + 13% 7 quarters 23 Nine Months 2002 Financial Results Presentation
Slide 24: Strong Growth in Asian Backlogs Continues
Strong Growth in Asian Backlogs Continues (yoy) euros currency • Major gains in both neutral footwear and apparel Footwear + 14% + 24% • Strong growth in all Apparel + 1% + 9% major markets Total + 7% + 15% 24 Nine Months 2002 Financial Results Presentation
Slide 25: Strategic Outlook
Strategic Outlook Herbert Hainer, CEO 25 Nine Months 2002 Financial Results Presentation
Slide 26: adidas-Salomon Today
adidas-Salomon Today • Strong performance in 2002 • Competitive position has never been better • Exciting product line-up But the environment is always changing 26 Nine Months 2002 Financial Results Presentation
Slide 27: Sporting Goods Sector Isn't Easy
Sporting Goods Sector Isn’t Easy • adidas changed early, priorities in place • Re-tooled and performance-oriented • Marketing and design initiatives in sync: delivering better products faster • Meeting and exceeding goals 27 Nine Months 2002 Financial Results Presentation
Slide 28: Key Markets Remain Challenging
Key Markets Remain Challenging Economic slowdown and low consumer confidence adidas in top form in major markets 28 Nine Months 2002 Financial Results Presentation
Slide 29: Keeping Our Focus to Ensure Success
Keeping Our Focus to Ensure Success • It’s about the brand: leveraging the potential further • Design & technology are key drivers • Delivering consumer-oriented product mix • The whole team is on board 29 Nine Months 2002 Financial Results Presentation
Slide 30: ClimaCool 2
ClimaCool 2TM 30 Nine Months 2002 Financial Results Presentation
Slide 31: The a3 Twinstrike
The a3 Twinstrike 31 Nine Months 2002 Financial Results Presentation
Slide 32: The Shells Basketball Program
The Shells Basketball Program 32 Nine Months 2002 Financial Results Presentation
Slide 33: The Colours Apparel Line
The Colours Apparel Line 33 Nine Months 2002 Financial Results Presentation
Slide 34: Mavic: Ksyrium SSC
Mavic: Ksyrium SSC 34 Nine Months 2002 Financial Results Presentation
Slide 35: Salomon: FSK Crossmax 2 Skate
Salomon: FSK Crossmax2 Skate 35 Nine Months 2002 Financial Results Presentation
Slide 36: TaylorMade: rac OS
TaylorMade: rac OS 36 Nine Months 2002 Financial Results Presentation
Slide 37: 2002 adidas-Salomon Outlook
2002 adidas-Salomon Outlook • Challenging market conditions expected to continue • Turnaround in North America remains on track • Brand excitement highlighted by events and new products • Sales growth of at least 5% • Earnings growth of 5-10% 37 Nine Months 2002 Financial Results Presentation
Slide 38: 2003 adidas-Salomon Outlook
2003 adidas-Salomon Outlook •Sales to grow 5% Double-digit increases in Asia and America •Gross margin 42-43% •Operating margin up at least 50 basis points •2003 earnings growth higher than 2002 level 38 Nine Months 2002 Financial Results Presentation
Slide 39: End of Presentation
End of Presentation Question and Answer Session to Follow 39 Nine Months 2002 Financial Results Presentation
Slide 40: Question and Answer Session
Question and Answer Session 40 Nine Months 2002 Financial Results Presentation
Slide 41: Upcoming Events
Upcoming Events • 2002 Full Year Results March 11, 2003 Press Release 7:30 CET 1:30 EST Annual Report & Presentation 12:00 CET 6:00 EST available online Analyst Conference 14:00 CET 8:00 EST 41 Nine Months 2002 Financial Results Presentation