Adidas Ag · XETR:ADS
Adidas — Q3 2008 Earnings Presentation
30 slides from Adidas's earnings presentation, Nov 6, 2008
Slide 1: Nine Months 2008 Results Analyst Presentation
Nine Months 2008 Results Analyst Presentation Herzogenaurach, November 6, 2008
Slide 2: Introduction
INTRODUCTION Natalie Knight Vice President Investor Relations 2
Slide 3: Operational Highlights
OPERATIONAL HIGHLIGHTS Herbert Hainer adidas Group CEO and Chairman 3
Slide 4: Strong adidas Performance Continues
Strong adidas Performance Continues Q3 YTD Sales growth +15% +16% (currency-neutral) Gross margin 49.8% 49.1% +0.5pp +1.4pp Operating margin 19.8% 15.8% +0.2pp +0.2pp 4
Slide 5: adidas Most Visible Brand At Beijing 2008 Olympics
adidas Most Visible Brand At Beijing 2008 Olympics 5
Slide 6: adidas Backlogs Increase 4%
adidas Backlogs Increase 4% North • Orders up despite Europe Asia Total tough prior year America comparables FW 1 11 12 6 • Strongest North American backlogs APP (2) (3) 8 1 in five quarters • Continued growth in Total 0 5 8 4 emerging markets offset by declines in Currency-neutral development of ad
Slide 7: TaylorMade-adidas Golf Delivers Solid Performance
TaylorMade-adidas Golf Delivers Solid Performance Q3 YTD Sales growth +12% +11% (currency-neutral) Gross margin 42.9% 45.3% (1.4pp) +1.0pp Operating margin 5.7% 8.8% (2.1pp) +2.0pp 7
Slide 8: TaylorMade-adidas Golf Increases Market Share
TaylorMade-adidas Golf Increases Market Share • US metalwoods market share now exceeds 30% • Europe metalwoods market share exceeds 20% • Exciting new product innovations 8
Slide 9: Reebok Still A Work In Progress
Reebok Still A Work In Progress Q3 YTD Sales growth (1%) (2%) (currency-neutral) Gross margin 36.4% 38.0% (3.8pp) (0.9pp) Operating margin 3.8% 0.1% (7.8pp) (4.9pp) 9
Slide 10: Reebok Backlogs Not Indicative Of Future Sales
Reebok Backlogs Not Indicative Of Future Sales North • Declines in UK and Europe Asia Total Iberia weigh on America European backlogs FW (10) (22) (41) (10) • North American backlogs similar to APP (23) (22) (36) (23) prior quarter • Asian backlogs not Total (14) (21) (39) (13) indicative of future
Slide 11: Reebok Brand Initiatives
Reebok Brand Initiatives • Becoming the leading Women’s fitness and training brand • Reducing excess inventory in the marketplace • Executing a clear distribution strategy • Removing low entry price point products 11
Slide 12: On Track For Record 2008 Performance
On Track For Record 2008 Performance 12
Slide 13: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 13
Slide 14: Double-Digit Revenue Growth Continues in Q3
Double-Digit Revenue Growth Continues in Q3 15% 10% (1%) (9%) 12% 4% 11% 5% (10%) (5%) 0% 5% 10% 15% 20% In euros Currency-neutral 14
Slide 15: Gross Margin Expansion Continues
Gross Margin Expansion Continues Q3 2008 Nine Months 2008 49.8% 49.1% +0.5pp +1.4pp 36.4% 38.0% (3.8pp) (0.9pp) 42.9% 45.3% (1.4pp) +1.0pp 49.0% 49.4% +0.4pp +1.7pp 1) Includes HQ/Consolidation 15
Slide 16: Stable Q3 Operating Profit
Stable Q3 Operating Profit Q3 2008 Nine Months 2008 R&C income € 23m € 64m (12%) (9%) Opex as a % of 34.4% 38.5% sales +1.0pp +1.2pp Operating profit € 473m € 963m 0% +8% Operating margin 15.3% 11.7% (0.7pp) +0.4pp 16
Slide 17: Third Quarter EPS Increases 6%
Third Quarter EPS Increases 6% Q3 2008 Nine Months 2008 Net financial expenses +36% € 42m +9% € 113m Income before taxes (2%) € 431m +8% € 850m Effective tax rate 29.6% (1.5pp) 30.5% (2.4pp) Net income attrib. to € 302m € 588m shareholders +2% +11% Basic EPS +6% € 1.54 +14% € 2.96 17
Slide 18: Buyback Supports Overproportionate EPS Growth
Buyback Supports Overproportionate EPS Growth Number of shares repurchased 180,000 50.00 Average purchase price 160,000 45.00 Number of shares repurchased 40.00 Average purchase price 140,000 35.00 120,000 30.00 100,000 25.00 80,000 20.00 60,000 15.00 40,000 10.00 20,000 5.00 0 0.00 30-Jan 19-Feb 20
Slide 19: Further Operating Working Capital Progress
Further Operating Working Capital Progress • 15% currency-neutral inventory growth reflects emerging market expansion • Receivables increase below Q3 sales growth rate Average operating working capital as a percentage of sales reduced by 1.2pp to 24.5% 19
Slide 20: Net Borrowings Increase
Net Borrowings Increase • Net borrowings up 18% 3.250 3.000 to € 2.593 billion 2.750 2.728 2.593 2.519 • Strategic investments 2.500 2.231 2.395 2.201 2.260 drive increase 2.250 2.073 2.000 1.766 • Financial leverage 1.750 increases 7.3pp to 78.5% 1.500 1.250 1.000 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/0
Slide 21: Outlook
OUTLOOK Herbert Hainer adidas Group CEO and Chairman 21
Slide 22: 2008 Financial Outlook Confirmed
2008 Financial Outlook Confirmed adidas Group Targets 2008 Currency-neutral sales growth high-single-digit Gross margin to exceed 48.0% Operating margin approaching 10.0% Net income growth at least 15% 22
Slide 23: adidas Group Growth To Continue In 2009
adidas Group Growth To Continue In 2009 • 2009 financial guidance retracted due to uncertain global macroeconomic environment • Group sales and net income expected to grow in 2009 • Proactive business approach • Long-term strategic focus 23
Slide 24: Smart Investments To Continue
Smart Investments To Continue 24
Slide 25: Sources For Ongoing Growth
Sources For Ongoing Growth • Strong brand positioning for adidas and TaylorMade-adidas Golf • Group-wide efficiency program introduced • Market challenges proactively addressed 25
Slide 26: Questions & Answers
adidas GROUP QUESTIONS & ANSWERS
Slide 27: Appendix
APPENDIX 27
Slide 28: 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 28
Slide 29: Group Revenues Increase 11% YTD September
Group Revenues Increase 11% YTD September 16% 10% (2%) (10%) 11% 1% 11% 4% (15%) (10%) (5%) 0% 5% 10% 15% 20% In euros Currency-neutral 29
Slide 30: Q3 Sales Grow At Double-Digit Rate In All Regions Except North America
Q3 Sales Grow At Double-Digit Rate In All Regions Except North America 10% Europe 6% (5%) North America (13%) Asia 20% 14% Latin America 55% 53% 11% 5% (20%) (10%) 0% 10% 20% 30% 40% 50% 60% In euros Currency-neutral 30