Adidas Ag · XETR:ADS
Adidas — Q1 2010 Earnings Presentation
26 slides from Adidas's earnings presentation, May 4, 2010
Slide 1: First Quarter 2010 Results Analyst Presentation
First Quarter 2010 Results Analyst Presentation Herzogenaurach May 4, 2010
Slide 2: Introduction
INTRODUCTION John-Paul O’Meara Vice President Investor Relations 2
Slide 3: Operational Highlights
OPERATIONAL HIGHLIGHTS Herbert Hainer adidas Group CEO 3
Slide 4: adidas Group Delivers Record First Quarter Revenues
adidas Group Delivers Record First Quarter Revenues Q1 2010 Change Net sales (€ in millions) 2,674 4%1) Gross margin 48.6% +3.5pp Operating margin 9.7% +7.5pp Diluted earnings per share € 0.80 n/a 1) Currency-neutral 4
Slide 5: Wholesale Revenues Driven By Improvements In North America And Western Europe
Wholesale Revenues Driven By Improvements In North America And Western Europe Wholesale Q1 2010 Change Net sales (€ in millions) 1,898 1%1) Gross margin 43.1% +0.5pp Segmental operating 33.0% +0.2pp margin 1) Currency-neutral 5
Slide 6: Retail Segment Sales Increase 16% Currency-Neutral
Retail Segment Sales Increase 16% Currency-Neutral Retail Q1 2010 Change Net sales (€ in millions) 459 16%1) adidas comp store sales 5% Reebok comp store sales 15% Total comp store sales 7% Gross margin 58.2% +3.7pp Segmental operating 11.3% +7.6pp margin 1) Currency-neutral 6
Slide 7: adidas Generates Record Football Revenues
adidas Generates Record Football Revenues 7
Slide 8: adidas Makes Progress In Several Key Categories
adidas Makes Progress In Several Key Categories 8
Slide 9: adidas Sport Style Sales Advance 22% Currency-Neutral
adidas Sport Style Sales Advance 22% Currency-Neutral 9
Slide 10: Reebok Turnaround Gathering Pace Driven By Toning
Reebok Turnaround Gathering Pace Driven By Toning 10
Slide 11: Reebok Second Product Pillar ZigTech Another Consumer Hit
Reebok Second Product Pillar ZigTech™ Another Consumer Hit 11
Slide 12: Other Businesses Grow 8% In Q1 Currency-Neutral
Other Businesses Grow 8% In Q1 Currency-Neutral Q1 2010 Change Net sales (€ in millions) 316 8%1) Gross margin 45.0% +5.7pp Segmental operating 29.0% +14.4pp margin 1) Currency-neutral 12
Slide 13: TaylorMade-adidas Golf Takes Significant Share In Balls
TaylorMade-adidas Golf Takes Significant Share In Balls 13
Slide 14: 2010 Guidance Increased
2010 Guidance Increased Group sales (currency-neutral) mid-single-digit increase Wholesale sales (currency-neutral) low- to mid-single-digit increase Retail sales (currency-neutral) low-double-digit increase Other Businesses sales (currency-neutral) low-single-digit increase Gross margin 46.5% to 47
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 15
Slide 16: Group Sales Growth Driven By Retail Segment
Group Sales Growth Driven By Retail Segment Q1 2010 1% Wholesale 1% 16% Retail 15% Other 8% Businesses 7% 4% 4% 0% 10% 20% In euros Currency-neutral Total Group Includes HQ/Consolidation 16
Slide 17: Improving Sales Momentum In Most Regions
Improving Sales Momentum In Most Regions Q1 2010 Western Europe 4% 5% Europ. Emerging 1% Markets (1%) 14% North America 10% (15%) Greater China (20%) Other Asian (3%) Markets 1% Latin America 18% 24% 4% 4% (25%) (5%) 15% In euros Currency-neutral Total Group Includes HQ/Consolidation 17
Slide 18: Group Gross Margin Up 3.5pp
Group Gross Margin Up 3.5pp • Q1 gross margin Wholesale 43.1% increase driven by 0.5pp • lower input costs Retail 58.2% • higher Retail sales at 3.7pp better margins Other 45.0% • less clearance sales Businesses 5.7pp • currency appreciation effects 48.6%1) 3.5pp Group gross profit increases 12% to
Slide 19: First Quarter Operating Margin Improves 7.5pp
First Quarter Operating Margin Improves 7.5pp Q1 2010 Royalty and commission income € 22 million +7% Other operating income € 47 million +75% Other operating expenses € 1.109 billion (4%) Other operating expenses as a percentage 41.5% of sales (3.3pp) Operating profit € 260 million +349% Operating m
Slide 20: First Quarter Diluted EPS Grow Substantially
First Quarter Diluted EPS Grow Substantially Q1 2010 Financial income € 12 million +91% Financial expenses (48%) € 29 million Income tax rate 30.5% (21.2pp) Net income attributable to shareholders € 168 million n/a Basic earnings per share € 0.80 n/a Diluted earnings per share € 0.80 n/a 20
Slide 21: Inventories Decline 20% Currency-Neutral
Inventories Decline 20% Currency-Neutral • Inventories decrease 20% on a currency-neutral basis, 21% 18% 20% down 17% to € 1.680 billion 16% 15% 8% 10% • Declines at all brands and in all regions 0% Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 • Reduction of production (10%) (8%) volumes in 2009
Slide 22: Operating Working Capital Improves Significantly
Operating Working Capital Improves Significantly • Receivables flat on a currency-neutral basis, 27 increase 5% in euro terms 26.2 26 to € 1.987 billion 25.6 25.6 25 • Reflects strict discipline in 24.2 24.5 24.5 24.3 implementing the Group’s 24 trade terms 22.9 23 • Payables increase 25% on a curre
Slide 23: Net Debt Declines By More Than € 1.5 Billion
Net Debt Declines By More Than € 1.5 Billion • Net borrowings decrease 53% versus prior year to 3,000 2,883 2,732 € 1.359 billion 2,500 2,593 2,260 2,294 2,189 • Ratio of net 2,000 borrowings/EBITDA 1,359 decreases to 1.4 from 2.7 1,500 in 2009 1,000 917 500 0 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/
Slide 24: adidas Group Has A Strong Start Into 2010
adidas Group Has A Strong Start Into 2010 • Strong profitability improvements in Q1 • Financial outlook increased • Reebok turnaround gathers pace • FIFA World Cup™ kicks off in a few weeks 24
Slide 25: Questions & Answers
QUESTIONS & ANSWERS 25
Slide 26: Upcoming Financial Reporting Dates
Upcoming Financial Reporting Dates May 6, 2010 Annual General Meeting May 7, 2010 Dividend Payment1) Aug 4, 2010 First Half 2010 Results Sep 9, 2010 Investor Day (Herzogenaurach) Nov 4, 2010 Nine Months 2010 Results 1) Subject to Annual General Meeting approval 26