Adidas Ag · XETR:ADS
Adidas — adidas-Salomon — 9M 2004 Earnings Presentation
34 slides from Adidas's earnings presentation, Nov 3, 2004
Slide 1: Nine Months 2004 Financial Results Presentation
adidas-Salomon AG NINE MONTHS 2004 FINANCIAL RESULTS PRESENTATION November 3, 2004
Slide 2: Operational Highlights & Outlook
adidas-Salomon AG Nine Months 2004 Financial Results Presentation NINE MONTHS 2004 OPERATIONAL HIGHLIGHTS & OUTLOOK HERBERT HAINER, CEO 2
Slide 3: Excellent Performance in First Nine Months of 2004
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Excellent Performance in First Nine Months of 2004 • Strong brand momentum in major markets • Outstanding brand representation • Excellent financial performance 3
Slide 4: Strong Brand Presence at 2004 Athens Olympics
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strong Brand Presence at 2004 Athens Olympics 4
Slide 5: adidas by Stella McCartney
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas by Stella McCartney • First sports performance design collection for women • Products in four sports categories • High-end department stores US distribution focus 5
Slide 6: adidas and Missy Elliott: Respect ME
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas and Missy Elliott: Respect ME • Urban fashion for women • Available in the US since September • Strong sell-throughs 6
Slide 7: Ali by adidas
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Ali by adidas • Complete range of men’s Ö Apparel Ö Footwear Ö Accessories • Debut in Spring/Summer 2005 7
Slide 8: T-MAC 4 Launch
adidas-Salomon AG Nine Months 2004 Financial Results Presentation T-MAC 4 Launch • Features revolutionary laceless HUG technology • Footwear and apparel • Excellent initial sell-throughs 8
Slide 9: Salomon Gains Ground in New Segment
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Salomon Gains Ground in New Segment • Apparel and footwear offerings grow • Cooperation between Mavic and adidas Cycling delivers first results 9
Slide 10: Successful Quarter for TaylorMade-adidas Golf
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Successful Quarter for TaylorMade-adidas Golf 10
Slide 11: Q3 Currency-Neutral Sales Gain Momentum at Every Brand and Region
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Q3 Currency-Neutral Sales Gain Momentum at Every Brand and in Every Region ✓ Europe + 6% ✓ adidas + 9% ✓ North America + 7% ✓ Salomon + 6% ✓ Asia + 18% ✓ TMaG + 5% ✓ Latin America + 37% Group Sales +9% 11
Slide 12: North America Improves on All Fronts in Q3
adidas-Salomon AG Nine Months 2004 Financial Results Presentation North America Improves on All Fronts in Q3 ✓ Currency-neutral sales grow 7% ✓ adidas revenues up 11% ✓ Operating profit increases 28% ✓ Currency-neutral footwear backlogs up 6% 12
Slide 13: Mixed Development in Europe
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Mixed Development in Europe ✓ Currency-neutral sales grow 6% in Q3 ✓ adidas revenues up 5% in Q3 ✓ YTD operating profit up 24% ✖ Currency-neutral backlogs down 4% ✖ Negative Q4 2004 backlogs ✓ Positive Q1 2005 backlogs 13
Slide 14: Strength in Asia Continues
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strength in Asia Continues ✓ Currency-neutral sales up 18% in Q3 ✓ adidas revenues grow 21% in Q3 ✓ YTD operating profit increases 24% ✓ Currency-neutral backlogs up 30% 14
Slide 15: On Track for Improved 2004 Targets
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas-Salomon on Track for Improved 2004 Targets • Currency-neutral sales growth of around 5% • Gross margin to clearly exceed 45% • Earnings to grow by around 20% 15
Slide 16: 2005 Outlook
adidas-Salomon AG Nine Months 2004 Financial Results Presentation 2005 Outlook • Mid- to high-single-digit currency-neutral sales growth • 10-15% earnings improvement 16
Slide 17: Nine Months 2004 Financial Highlights
adidas-Salomon AG Nine Months 2004 Financial Results Presentation NINE MONTHS 2004 FINANCIAL HIGHLIGHTS ROBIN STALKER, CFO 17
Slide 18: Sales Momentum Accelerates in Q3
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Sales Momentum Accelerates in Q3 9% 2,000 (+5%) 1,800 3% (-3%) 1,600 7% (+5%) 1,400 -36% 1,200 1,000 € in millions 2003 2004 2003 2004 2003 2004 2003 (Figures in euro terms) Q1 Q2 Q3 Q4 18
Slide 19: YTD Currency-Neutral Sales Increase at All Brands
adidas-Salomon AG Nine Months 2004 Financial Results Presentation YTD Currency-Neutral Sales Increase at All Brands % of Total 7% (+3%) 82 5% (+2%) 8 4% (-2%) Total: 10 € 5.044b 6% 100 Group (+3%) 0% 2% 4% 6% 8% (Figures in euro terms) 19
Slide 20: All adidas Divisions Grow YTD
adidas-Salomon AG Nine Months 2004 Financial Results Presentation All adidas Divisions Grow YTD • YTD currency-neutral sales increase 7% (+3% in euros) • Sport Performance sales driven by football and success of “Apparel Breakthrough” initiative • Strong double-digit growth in Sport Heritage in Q3 2
Slide 21: YTD Salomon Sales Grow Further
adidas-Salomon AG Nine Months 2004 Financial Results Presentation YTD Salomon Sales Grow Further • YTD currency-neutral sales grow 5% (+2% in euros) • Both summer and winter business growing • Drivers: apparel, nordic and cycling categories 21
Slide 22: Successful Metalwood Launches Drive TMaG YTD Sales Growth
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Successful Metalwood Launches Drive Currency-Neutral YTD Sales Growth at TMaG • YTD currency-neutral revenues increase 4% (-2% in euros) • Drivers: Ö Strong metalwood launches Ö Double-digit growth in apparel and putter categories 22
Slide 23: Strong YTD Gross Margin Development at adidas
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strong YTD Gross Margin Development at adidas Drives Improvement at Group Level 44.5% Ï 4.6pp 38.5% Ð 2.2pp 47.6% Ï 0.7pp Group* 47.4% Ï 3.3pp *Includes HQ/consolidation 23
Slide 24: YTD Operating Margin Improves 180 Basis Points
adidas-Salomon AG Nine Months 2004 Financial Results Presentation YTD Operating Margin Improves 180 Basis Points • Operating expenses increase 7% • Operating expenses as a percentage of net sales increase 1.5 percentage points to 36.5% due to higher marketing and sales expenses • Operating margin in
Slide 25: Strong Operating Performance Drives YTD IBT and EPS Increase
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strong Operating Performance Drives YTD IBT and EPS Increase • Financial expenses rise by 6% to € 47 million • IBT grows 24% to € 499 million • Tax rate stable at 38.6%, minority interests at € 12 million Basic earnings per share incr
Slide 26: Strong Working Capital Management Continues
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strong Working Capital Management Continues • Inventories 4% higher year-over-year (+8% currency- neutral) Ö Due to higher goods in transit to meet increasing demand in North America and Asia • Receivables reduced by 4% (-1% currency-
Slide 27: Strong Debt Reduction Continues
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Strong Debt Reduction Continues 2,000 1,600 1,200 -36% -39% -36% 800 400 0 2003 2004 2003 2004 2003 2004 2003 € in millions Q1 Q2 Q3 Q4 27
Slide 28: adidas Backlog Growth Driven by Apparel
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas Backlog Growth Driven by Apparel (YOY) euros currency • 10th consecutive neutral quarter of positive underlying apparel Footwear +/-0% + 3% backlog growth Apparel + 5% + 8% • Strongest currency- neutral footwear Total + 2% + 5%
Slide 29: adidas Backlog Development in Europe
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas Backlog Development in Europe Reflects Difficult Retail Environment (YOY) euros currency neutral • Reflects tougher Western European Footwear - 3% - 3% market conditions and changed Apparel - 6% - 6% ordering habits Total - 4%
Slide 30: adidas Backlogs in North America Further Improve
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas Backlogs in North America Further Improve (YOY) euros currency • Significant sequential neutral improvement Footwear +/- 0% + 6% • Both currency-neutral Apparel - 1% + 5% footwear and apparel backlogs positive for Total +/-0% +
Slide 31: adidas Backlog Momentum in Asia Continues
adidas-Salomon AG Nine Months 2004 Financial Results Presentation adidas Backlog Momentum in Asia Continues (YOY) euros currency • 13th consecutive neutral quarter of double- digit currency-neutral Footwear + 8% + 14% backlog growth Apparel + 44% + 53% • Drivers: China and Total + 23% + 30% Japan 31
Slide 32: Continuing Momentum in Q4 2004 and Beyond
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Continuing Momentum in Q4 2004 and Beyond • Maximizing brand image and value • Growing the top line • Driving operating margin improvement Taking our Group to the next level 32
Slide 33: Question and Answer Session
adidas-Salomon AG Nine Months 2004 Financial Results Presentation QUESTION AND ANSWER SESSION 33
Slide 34: Upcoming Reporting Date
adidas-Salomon AG Nine Months 2004 Financial Results Presentation Upcoming Reporting Date 2004 Full Year Results March 9, 2005 • Press Release 7:30 CET 1:30 EST • Annual Report & Presentation 12:00 CET 6:00 EST Available Online • Analyst Conference 14:00 CET 8:00 EST 34