Adidas Ag · XETR:ADS
Adidas — Q1 2008 Earnings Presentation
29 slides from Adidas's earnings presentation, May 6, 2008
Slide 1: First Quarter 2008 Results Analyst Presentation
First Quarter 2008 Results Analyst Presentation Herzogenaurach, May 6, 2008
Slide 2: Introduction
INTRODUCTION Natalie Knight Vice President Investor Relations 2
Slide 3: Operational Highlights
OPERATIONAL HIGHLIGHTS Herbert Hainer CEO and Chairman adidas Group 3
Slide 4: Strong Q1 Group Performance
Strong Q1 Group Performance • adidas momentum continues • TaylorMade-adidas Golf growth accelerates • Reebok focused on executional excellence 4
Slide 5: Financial Strength In Tough Markets
Financial Strength In Tough Markets 9 Currency-neutral sales grow 10% 9 Gross margin at record 49.1% 9 Highest Q1 operating margin since Reebok acquisition 9 Net income grows 32% 5
Slide 6: adidas Strength Continues
adidas Strength Continues 6
Slide 7: adidas Delivers Excellent Financial Performance
adidas Delivers Excellent Financial Performance • Currency-neutral sales grow 14% • Gross margin at 49.0% • New Q1 operating margin record at 17.1% 7
Slide 8: adidas Backlog Momentum Continues
adidas Backlog Momentum Continues • UEFA EURO 2008™ North Europe America Asia Total positively impacts backlog by 1pp FW 19 (5) 18 14 • North America impacted by tough APP 10 (2) 22 13 retail environment • 27th consecutive Total 14 (2) 19 13 quarter of double- digit currency- Currency-neutral develo
Slide 9: Reebok Financial Performance Highlights Brand's Strengths And Weaknesses
Reebok Financial Performance Highlights Brand’s Strengths And Weaknesses • Currency-neutral sales decline 6% • Gross margin grows 0.3pp to 37.1% • Operating margin declines to -2.8% 9
Slide 10: Reebok Backlogs Reflect Tougher Macroeconomic Environment
Reebok Backlogs Reflect Tougher Macroeconomic Environment • Declines driven by North Europe America Asia Total US, UK and Japan • Double-digit FW (8) (40) (6) (22) currency-neutral increases in Italy, APP (13) (15) 6 (12) Central Europe and emerging markets Total (8) (22) 4 (13) • Exclusion of at-on
Slide 11: Execution Is Clear Focus At Reebok
Execution Is Clear Focus At Reebok • Improving point-of-sale impact and distribution • Consistent fit and comfort focus in all products • Brand communication about individuality and choice 11
Slide 12: TaylorMade-adidas Golf Strengthens Leadership Position
TaylorMade-adidas Golf Strengthens Leadership Position 12
Slide 13: Impressive Profitability Gains At TMaG
Impressive Profitability Gains At TMaG • Currency-neutral sales grow 17% • Gross margin increases 2.7pp to 46.6% • Operating profit reaches € 23 million 13
Slide 14: UEFA EURO 2008 Just 32 Days Away
UEFA EURO 2008™ Just 32 Days Away 14
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker CFO adidas Group 15
Slide 16: Sales Increase At Double-Digit Rate In All Regions Except North America
Sales Increase At Double-Digit Rate In All Regions Except North America 12% Europe 9% -7% North America -17% Asia 25% 18% Latin America 18% 13% 10% 3% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% In euros Currency-neutral 16
Slide 17: Positive Gross Margin Developments In All Segments
Positive Gross Margin Developments In All Segments Positives: 49.0% • Product and regional mix +1.7pp • Currency benefits 37.1% +0.3pp • Own-retail 46.6% • Cost synergies +2.7pp Negatives: 49.1%1) • Input costs +2.3pp Record First Quarter Gross Margin 1) Includes HQ/Consolidation 17
Slide 18: Factors Driving Operating Expense Increase
Factors Driving Operating Expense Increase Positives: • Timing of marketing focused on big 2008 sporting events • Operating leverage at TaylorMade-adidas Golf Negatives: • Higher cost base at Reebok due to lower sales • Launch of Reebok’s global brand campaign • Emerging market infrastructure expans
Slide 19: First Quarter Operating Margin Increases Strongly
First Quarter Operating Margin Increases Strongly Q1 2008 Royalty and commission € 21 million income -7% Operating € 1.028 billion expenses +5% Operating profit € 282 million +23% Operating margin +1.7pp 10.8% 19
Slide 20: Net Income Growth Accelerates 32%
Net Income Growth Accelerates 32% Q1 2008 Net financial expenses € 32 million -16% Income before taxes € 250 million (IBT) +31% Effective tax rate 32.0% -0.4pp Net income attributable € 169 million to shareholders +32% 20
Slide 21: Operating Working Capital Improvements
Operating Working Capital Improvements • Average operating working capital as a percentage of sales reduced by 0.8pp to 24.7% • 13% currency-neutral inventory increase in line with growth expectations • Receivables stable on a currency-neutral basis despite strong sales growth 21
Slide 22: Net Borrowings Reduced By Nearly € 450 Million
Net Borrowings Reduced By Nearly € 450 Million • Net borrowings decrease 18% to € 2.073 billion 3.250 2.952 3.000 2.829 • Positive benefit from 2.728 2.750 2.519 currency movements 2.500 2.231 2.395 2.201 2.250 2.073 • Financial leverage 2.000 1.766 reduced 13 percentage 1.750 points 1.500 1.250 • F
Slide 23: Progress On Share Buyback Program Continues
Progress On Share Buyback Program Continues 180,000 Number of shares repurchased 45.00 Average purchase price 160,000 44.00 140,000 43.00 120,000 42.00 100,000 41.00 80,000 40.00 60,000 39.00 40,000 38.00 20,000 37.00 0 36.00 30-Jan 7-Feb 15-Feb 25-Feb 11-Mar 27-Mar 7-Apr 15-Apr 23-Apr 2-May 5.5 mil
Slide 24: 2008 Outlook Reconfirmed
2008 Outlook Reconfirmed adidas Group Targets 2008 Currency-neutral sales growth high-single-digit Gross margin 47.5 to 48.0% Operating margin at least 9.5% Net income growth at least 15% 24
Slide 25: Questions & Answers
adidas GROUP QUESTIONS & ANSWERS
Slide 26: adidas Group Investor Field Trip To China
adidas Group Investor Field Trip To China • June 10th to June 13th • Beijing and Shanghai • Meet adidas, Reebok, TaylorMade-adidas Golf regional management • Sneak preview of new adidas Beijing store • Shop and factory tours • RSVP by May 9 26
Slide 27: Appendix
APPENDIX 27
Slide 28: 2008 Financial Calendar
2008 Financial Calendar May 8 Annual General Meeting in Fürth (Bavaria), Germany Webcast May 9 Dividend Payment (subject to AGM approval) June 10-13 Investor Field Trip: China Beijing, Shanghai August 5 First Half 2008 Results Press release, conference call and webcast November 6 Nine Months 2008 Re
Slide 29: adidas Group Revenues Increase 10% In Q1 2008
adidas Group Revenues Increase 10% In Q1 2008 14% 8% -6% -13% 17% 6% 10% 3% -15% -10% -5% 0% 5% 10% 15% 20% In euros Currency-neutral 29