Adidas Ag · XETR:ADS
Adidas — adidas-Salomon — Q1 2002 Earnings Presentation
39 slides from Adidas's earnings presentation, May 2, 2002
Slide 1: 1st Quarter 2002 Financial Results Presentation
adidas-Salomon AG 1st Quarter 2002 Financial Results Presentation May 2, 2002 1 1st Quarter 2002 Financial Results Presentation
Slide 2: Operational Highlights
Operational Highlights Herbert Hainer, CEO 2 1st Quarter 2002 Financial Results Presentation
Slide 3: 2002: Big Events on the Way!
2002: Big Events on the Way! • World Cup • NBA championships • New product lines • ClimaCoolTM • a3 3 1st Quarter 2002 Financial Results Presentation
Slide 4: First Quarter 2002: Great Start to a Big Year
First Quarter 2002: Great Start to a Big Year • Group sales grow 5% • Strong growth in Asia and North America • New product sales accelerating • Backlogs up 7%, best since Q3 1998 • 2002 sales and earnings targets confirmed 4 1st Quarter 2002 Financial Results Presentation
Slide 5: North America Turnaround Delivering Results
North America Turnaround Delivering Results • Sales increase 7% • Positive underlying sales development for the first time in 10 quarters • Backlogs up 10% 5 1st Quarter 2002 Financial Results Presentation
Slide 6: Positive European Outlook
Positive European Outlook • Stable sales development • adidas Italy buyout • Positive backlogs 6 1st Quarter 2002 Financial Results Presentation
Slide 7: Strong Growth in Asia Continues
Strong Growth in Asia Continues • Sales increase 22% • World Cup momentum grows • TMaG success continues 7 1st Quarter 2002 Financial Results Presentation
Slide 8: T-MAC: New, Exciting, Successful
T-MAC: New, Exciting, Successful • #1 selling shoe in the US in February • $90 retail price • High brand visibility 8 1st Quarter 2002 Financial Results Presentation
Slide 9: Product Innovation Leads to a Hit: ClimaCool
Product Innovation Leads to a Hit: ClimaCool • 2002 sales target revised upward: 750,000 pairs • Positive response in all regions 9 1st Quarter 2002 Financial Results Presentation
Slide 10: a3: Capturing Attention
a³: Capturing Attention • Major publicity at marathon events • Strong sell-through in running specialty • Broader launch for back-to-school 10 1st Quarter 2002 Financial Results Presentation
Slide 11: New adidas Product: Originals
New adidas Product: Originals • Global launch of apparel and accessories to fashion retail • Further diversification of footwear line • Print campaign in leading trend magazines • Continued double-digit growth in Q1 11 1st Quarter 2002 Financial Results Presentation
Slide 12: Time's 2002 Shoe of the Year
Time’s 2002 Shoe of the Year 12 1st Quarter 2002 Financial Results Presentation
Slide 13: Financial Highlights and Outlook
Financial Highlights and Outlook Robin Stalker, CFO 13 1st Quarter 2002 Financial Results Presentation
Slide 14: Key Financial Targets for 2002
Key Financial Targets for 2002 • Gross margin leadership a priority • Spending on key initiatives • Continued working capital improvements • Cash flow emphasis • Debt reduction 14 1st Quarter 2002 Financial Results Presentation
Slide 15: Group Sales Increase 5% in Q1 2002
Group Sales Increase 5% in Q1 2002 1,800 * +5% (+ 4%) 1,600 2001 1,400 2002 1,200 * Euros in millions 1,000 (Currency-neutral Q1 Q2 Q3 Q4 figures) 15 1st Quarter 2002 Financial Results Presentation
Slide 16: adidas Sales Grow on Strength in Asia and North America
adidas Sales Grow on Strength in Asia and North America % of Group Europe -1% 56 North America 7% 26 Asia 24% 15 Latin America -6% 3 Total 4% Total: € 1.3b 100 -10% 0% 10% 20% 30% 16 1st Quarter 2002 Financial Results Presentation
Slide 17: Salomon Grows Despite Tough Market Conditions
Salomon Grows Despite Tough Market Conditions % of Group Europe 5% 65 North America 0% 29 Asia -27% 5 Latin America 140% 1 Total 2% Total: € 123m 100 -30% -5% 0% 0% 10% 5% 20% 10% 150% 15% 17 1st Quarter 2002 Financial Results Presentation
Slide 18: Positive TaylorMade-adidas Golf Sales
Positive TaylorMade-adidas Golf Sales* % of Group Europe 19% 17 8% 53 North America 26% Asia 30 14% Total: € 176m Total 100 -10% 0% 10% 20% 30% -10% 0% 10% 20% 30% * Includes Maxfli/Slazenger 18 1st Quarter 2002 Financial Results Presentation
Slide 19: Gross Margin Improves in Q1 2002
Gross Margin Improves in Q1 2002 39.0% down 0.1 pp 32.8% down 2.6 pp 50.0% up 0.1 pp Group* 41.8% up 0.1 pp *Includes HQ/consolidation 19 1st Quarter 2002 Financial Results Presentation
Slide 20: Operating Expenses Reflect Strategic Initiatives
Operating Expenses Reflect Strategic Initiatives • Start-up costs associated with adidas Italy • World Cup • ClimaCool • Increased adidas own-retail activities 20 1st Quarter 2002 Financial Results Presentation
Slide 21: Q1 2002 Earnings in Line with Expectations
Q1 2002 Earnings in Line with Expectations • Operating profit declines 21% • Financial expenses at € 19m • IBT at € 79m • Tax rate down 0.8pp to 41.9% • Minority interests down 51% to € 3m • Earnings per share decline 7% to € 0.95 21 1st Quarter 2002 Financial Results Presentation
Slide 22: Working Capital Improvements Continue
Working Capital Improvements Continue • Inventories down 4% year-over-year • Aging improvement continues • Receivables increase 12% • Driven by success in Asia at adidas and TMaG • Net debt nearly stable despite acquisitions 22 1st Quarter 2002 Financial Results Presentation
Slide 23: Big Improvements in adidas Order Backlog
Big Improvements in adidas Order Backlog (in % yoy) euros currency • Strongest underlying neutral backlog improvements in 14 quarters Footwear + 15% + 15% • Footwear growth Apparel - 3% - 3% supported by resurgence in Total + 7% + 6% USA & Asia 23 1st Quarter 2002 Financial Results Presentation
Slide 24: Double-Digit Backlog Increase in N. America
Double-Digit Backlog Increase in N. America (in % yoy) euros currency • Highest growth rate in neutral over 3 years Footwear + 18% + 17% • Double-digit footwear backlog Apparel - 1% - 2% gains in all distribution channels Total + 10% + 9% • Apparel improves in basketball, tennis and running categori
Slide 25: European Backlogs Return to Growth
European Backlogs Return to Growth (in % yoy) euros currency • Order improvements neutral driven by strong new products Footwear + 11% + 11% • Apparel basics under Apparel - 5% - 6% pressure across Europe Total + 3% + 3% 25 1st Quarter 2002 Financial Results Presentation
Slide 26: Strong Growth in Asian Backlogs Continues
Strong Growth in Asian Backlogs Continues (in % yoy) euros currency • Major gains in both neutral footwear and apparel Footwear + 19% + 22% • Strongest growth again in Japan Apparel + 4% + 5% Total + 12% + 15% 26 1st Quarter 2002 Financial Results Presentation
Slide 27: Strategic Outlook
Strategic Outlook Herbert Hainer, CEO 27 1st Quarter 2002 Financial Results Presentation
Slide 28: Winning in Europe Initiative
Winning in Europe Initiative • New head of Europe Roland Auschel • Higher sales and profitability targeted • Product harmonization as key priority 28 1st Quarter 2002 Financial Results Presentation
Slide 29: Originals Strategy Targets Diverse Retailers
Originals Strategy Targets Diverse Retailers • Two-tiered plan to attack both Sport and Fashion • Unique product offering for both channels • Separate sales team and product launch dates • High growth in apparel and accessories expected 29 1st Quarter 2002 Financial Results Presentation
Slide 30: 2002 Retail Strategy
2002 Retail Strategy • At least 5 new Originals stores to open, including: New York, 2 in Europe and 2 in Asia • 15 new sport concept stores • 15 new factory outlets 30 1st Quarter 2002 Financial Results Presentation
Slide 31: Building a Basketball Legacy
Building a Basketball Legacy • Global basketball business booming • Kobe Bryant MVP in NBA All-Star game • Tracy McGrady signed to lifetime contract • ABCD camp commitment for new talent 31 1st Quarter 2002 Financial Results Presentation
Slide 32: TMaG: Becoming the Undisputed Golf Industry Leader
TMaG: Becoming the Undisputed Golf Industry Leader • #1 premium metalwood • Strong growth opportunities in irons, putters and soft goods • Golf ball potential • Increasing profitability 32 1st Quarter 2002 Financial Results Presentation
Slide 33: Salomon: Growth in New Categories
Salomon: Growth in New Categories • Soft goods and summer goods as growth drivers for the future • Focus on the bottom line continues 33 1st Quarter 2002 Financial Results Presentation
Slide 34: Focus on Group Financial Health Continues
Focus on Group Financial Health Continues • Continued working capital improvements • Focus on cash-flow generation • Investing to support the core business 34 1st Quarter 2002 Financial Results Presentation
Slide 35: Targets Remain Unchanged in 2002
Targets Remain Unchanged 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 initiatives • DSO and stock turn improvement • EPS growth: 5 - 10% 35 1st Quarter 2002 Financial Results Presentation
Slide 36: 2002 adidas-Salomon Outlook
2002 adidas-Salomon Outlook • Turnaround in North America to accelerate • Brand excitement highlighted by new products • World Cup 2002 mania hits full stride • Continued margin strength • Earnings improvements to grow each quarter 36 1st Quarter 2002 Financial Results Presentation
Slide 37: End of Presentation
End of Presentation Question and Answer Session to Follow 37 1st Quarter 2002 Financial Results Presentation
Slide 38: Question and Answer Session
Question and Answer Session 38 1st Quarter 2002 Financial Results Presentation
Slide 39: Next Reporting Dates
Next Reporting Dates Q2 2002 Results August 7, 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 39 1st Quarter 2002 Financial Results Presentation