Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (September 2007)
38 slides from Adidas's roadshow presentation, September 2007
Slide 1: US Roadshow September 2007
US Roadshow September 2007
Slide 2: Our Guiding Principles
Our Guiding Principles Focus on Performance Diversified Portfolio Innovation, design and customization leadership Global organization Distribution and communication excellence Financial discipline 2
Slide 3: Focus On Performance
Focus On Performance Commitment to athletes 3
Slide 4: Diversified Portfolio
Diversified Portfolio Strength and flexibility through our multi-brand approach 4
Slide 5: Diversified Portfolio
Diversified Portfolio Hardware 12% Most #1 positions in Sport Performance categories 5
Slide 6: Global Apparel Leader
Global Apparel Leader 6
Slide 7: Global Sports Lifestyle Leader
Global Sports Lifestyle Leader 7
Slide 8: Unrivalled Partnership Network
Unrivalled Partnership Network 8
Slide 9: Leaders In Technological Innovation
Leaders In Technological Innovation Deliver at least one technological revolution per year 9
Slide 10: Cutting-Edge Design
Cutting-Edge Design adidas GROUP
Slide 11: Cutting-Edge Design – Extensive Design Cooperations
Cutting-Edge Design – Extensive Design Cooperations 11
Slide 12: Strong Positioning In Fastest Growing Markets
Strong Positioning In Fastest Growing Markets #1 in Doubled Europe #1 in Asia US sales since 2005 #1 in Latin America by 2010 25% of Group sales from emerging markets 12
Slide 13: Continued Growth In Europe
Continued Growth In Europe Growing key Western markets Establishing Reebok brand credibility Driving growth in emerging markets Making Russia the region’s biggest market Expanding market leadership 13
Slide 14: Gaining Momentum In North America
Gaining Momentum In North America Revitalize Reebok Extend adidas reach Gain share of voice at retail Capitalize on Group synergies Capturing the Group’s full potential 14
Slide 15: Market Leader In Asia
Market Leader In Asia #1 in China #1 in Japan in 2008 #1 in South Korea in 2007 #1 in Thailand and #1 in India Indonesia #1 in New Zealand 15
Slide 16: Japan And China Key To Growth In Asia
Japan And China Key To Growth In Asia Targeted to be #2 Tough consumer markets Group market Focus on brand strength High profitability and quality TaylorMade sales 4,000 stores growth continues adidas and Reebok China sales to exceed to grow again in 2008 € 1 billion in 2010 16
Slide 17: Gaining Critical Mass In Latin America
Gaining Critical Mass In Latin America Fastest growing region Focus on four key markets Running, football and lifestyle key Reebok distributor buyout potential Market leadership within reach 17
Slide 18: Changing Market Dynamics
Changing Market Dynamics Rapidly consolidating retail environment Increased consumer demand for interactivity Growing importance of point-of-sale Changing role of suppliers Anticipating and adapting to market conditions takes on additional importance 18
Slide 19: Leading The Field In Own Retail
Leading The Field In Own Retail • Close to the consumer • Growth driver in emerging markets • High profitability • adidas own-retail sales exceed € 1 billion Own retail extends outreach to consumers 19
Slide 20: Controlled Space Biggest Top-line Driver
Controlled Space Biggest Top-line Driver Controlled space to comprise at least 30% of Group sales by 2010 20
Slide 21: Increase Personalized Product and Communication
Increase Personalized Product and Communication 21
Slide 22: Financial Discipline Core To Strategy
Financial Discipline Core To Strategy Continuing top-line growth Maximizing operating leverage Improving working capital management Optimizing non-operational P&L items Shareholder value orientation 22
Slide 23: Synergy Targets All On Track
Synergy Targets All On Track 2008 2009 Branded apparel Licensed product Annual revenue € 250 € 500 synergies million million Regional initiatives Distributor buyouts € 105 € 175 Annual net cost synergies million million 23
Slide 24: 2007 Group Outlook Reconfirmed
2007 Group Outlook Reconfirmed adidas Group 2007 Targets Currency-neutral sales growth mid-single-digit Gross margin 45 to 47% Operating margin approx. 9% Net income growth double-digit, approaching 15% 24
Slide 25: Medium-Term Guidance Reiterated
Medium-Term Guidance Reiterated adidas Group Medium-Term Financial Targets to 2009 Annual currency-neutral sales high-single-digit growth Gross margin 46 to 48% Operating margin approx. 11% Annual net income growth double-digit 25
Slide 26: APPENDIX
APPENDIX adidas GROUP
Slide 27: Currency-Neutral Group Sales Grow 3% In Q2
Currency-Neutral Group Sales Grow 3% In Q2 7% 10% -14% -10% -9% -3% -1% 3% -15% -10% -5% 0% 5% 10% Currency-neutral In euros Q2 adidas Group sales growth versus prior year by segment 27
Slide 28: Q2 Sales Increase In All Regions But North America
Q2 Sales Increase In All Regions But North America Europe 3% 4% North America -12% -6% Asia 9% 16% Latin America 32% 35% Total -1% 3% -20% -10% 0% 10% 20% 30% 40% Currency-neutral In euros Q2 adidas Group sales growth versus prior year by region 28
Slide 29: First Half Year Group Sales By Segment
First Half Year Group Sales By Segment 4% 9% -1% 4% -10% -3% 1% 6% -12% -7% -2% 3% 8% Currency-neutral In euros First half year adidas Group sales growth versus prior year by segment 29
Slide 30: First Half Year Group Sales By Region
First Half Year Group Sales By Region Europe 6% 7% North America -10% -3% Asia 7% 15% Latin America 28% 36% Total 1% 6% -15% -5% 5% 15% 25% 35% 45% Currency-neutral In euros First half year adidas Group sales growth versus prior year by region 30
Slide 31: Strong Q2 Reebok Gross Margin Increase
Strong Q2 Reebok Gross Margin Increase Q2 adidas Group gross margin 47.4% (+2.8pp) adidas Reebok TMaG 46.1% (-0.2pp) 39.1% (+7.1pp) 44.7% (-0.4pp) - High-margin + Cost synergies - Lower putter World Cup + Improving margins product in 2006 distribution + Non- recurrence of negative PPA effect 31
Slide 32: Factors Driving Operating Expenses Increase In Q2
Factors Driving Operating Expenses Increase In Q2 Increases due to… Decreases due to… • Integration costs • Lower marketing working budget at brand adidas • Expenses to revitalize the Reebok brand • adidas own retail Operating expenses as a percentage of net sales increase 32
Slide 33: Q2 Operating Margin Improves
Q2 Operating Margin Improves Q2 2007 YTD 2007 Royalty and commission € 22 m € 45 m income -5% +17% Operating expenses as a 40.5% 39.6% percentage of net sales +2.0pp +2.6pp Operating profit € 188 m € 417 m +9% -1% Operating margin 7.8% 8.5% +0.7pp -0.2pp 33
Slide 34: Net Income Increases 3% In First Six Months
Net Income Increases 3% In First Six Months Q2 2007 YTD 2007 Net financial expenses € 36 m € 73 m -20% +1% Income before taxes (IBT) € 153 m € 344 m +19% -1% Effective tax rate 31.6% 32.0% -3.2pp -0.9pp Net income attributable to € 104 m € 232 m shareholders +27% +3% 34
Slide 35: Continued Operating Working Capital Improvements
Continued Operating Working Capital Improvements • Inventories increase 1% on a currency-neutral basis (-2% in euro terms) • Receivables up 3% on a currency-neutral basis (+1% in euro terms) • Improved operating working capital management • Net borrowings decrease 15% year-over-year to € 2.395 billi
Slide 36: adidas Backlogs Again Improve Sequentially
adidas Backlogs Again Improve Sequentially • European backlogs North strong across the region Europe America Asia Total • Increasing momentum in North America FW 7 (3) 21 7 • Asian backlogs driven by strong growth in China APP 8 15 12 11 Total 8 5 14 9 Currency-neutral development of adidas order ba
Slide 37: Reebok Backlogs Stable
Reebok Backlogs Stable • Strong apparel growth continues Europe North Total America • Footwear weakness driven by: FW (8) (27) (17) • Tough market conditions APP 10 22 21 • Mall-based customers Total (0) (4) (0) Currency-neutral development of Reebok order backlogs by product category and region at
Slide 38: Financial Calendar 2007/2008
Financial Calendar 2007/2008 November 8, 2007 Nine Months 2007 Results March 5, 2008 2007 Full Year Results May 6, 2008 First Quarter 2008 Results May 8, 2008 Annual General Meeting August 5, 2008 First Half 2008 Results November 6, 2008 Nine Months 2008 Results 38