Adidas Ag · XETR:ADS
Adidas — FY2009 Earnings Presentation
43 slides from Adidas's earnings presentation, Mar 3, 2010
Slide 1: 2009 Full Year Results Analyst Presentation
2009 Full Year Results Analyst Presentation Herzogenaurach March 3, 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: Record Levels Of Cash Generated In 2009
Record Levels Of Cash Generated In 2009 • Net cash from operating activities increases 141% to € 1.2 billion • Inventories reduced by 27% currency-neutral versus the prior year • Net borrowings decrease by € 1.272 billion to reach € 917 million • Tight control of costs in challenging environment 4
Slide 5: Reorganisation To Support Long-Term Growth
Reorganisation To Support Long-Term Growth Group CEO Herbert Hainer Global Brands Global Sales Erich Herbert Hainer Stamminger Wholesale Retail 5
Slide 6: adidas Sport Style Achieves New Record Sales
adidas Sport Style Achieves New Record Sales 6
Slide 7: adidas Successfully Launches World Cup Initiatives
adidas Successfully Launches World Cup Initiatives 7
Slide 8: EasyTone Drives Reebok Q4 Sales Up 4% In North America
EasyTone™ Drives Reebok Q4 Sales Up 4% In North America 8
Slide 9: TaylorMade-adidas Golf Takes Market Share Lead In Irons
TaylorMade-adidas Golf Takes Market Share Lead In Irons 9
Slide 10: Rockport Operational Capabilities Improved
Rockport Operational Capabilities Improved 10
Slide 11: Reebok-CCM Hockey Heightens Visibility Through Innovative Marketing
Reebok-CCM Hockey Heightens Visibility Through Innovative Marketing 11
Slide 12: Group Financial Results Improve In H2
Group Financial Results Improve In H2 Q4 FY 2,458 10,381 Net sales (€ in millions) 0% c-n (6%) c-n 46.2% 45.4% Gross margin (0.2pp) (3.3pp) € 0.09 € 1.22 Diluted earnings per share (65%) (60%) 12
Slide 13: Wholesale Revenues Impacted By Weakness In North America And Greater China
Wholesale Revenues Impacted By Weakness In North America And Greater China Q4 FY 1,650 7,174 Net sales (€ in millions) (4%) c-n (9%) c-n 41.6% 41.6% Gross margin 1.1pp (2.1pp) 32.4% 32.7% Operating margin 1.3pp (2.0pp) 13
Slide 14: Retail Segment Sales Increase 14% Currency-Neutral
Retail Segment Sales Increase 14% Currency-Neutral Q4 FY 497 1,906 Net sales (€ in millions) 14% c-n 7% c-n 60.7% 58.6% Gross margin (0.8pp) (2.9pp) 13.3% 14.0% Operating margin (2.3pp) (4.8pp) 14
Slide 15: Other Businesses Grow 2% In Q4
Other Businesses Grow 2% In Q4 Q4 FY 308 1,283 Net sales (€ in millions) 2% c-n (4%) c-n 41.9% 39.4% Gross margin 3.4pp (2.8pp) 25.2% 21.9% Operating margin 3.8pp (4.3pp) 15
Slide 16: Solid Platform From Which To Drive Growth In 2010
Solid Platform From Which To Drive Growth In 2010 • Big improvement in the Group’s financial position • Closer to the consumer through reorganisation initiatives • Early signs the consumer environment is beginning to improve 16
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 17
Slide 18: New Segmental Reporting Structure Implemented
New Segmental Reporting Structure Implemented WHOLESALE RETAIL OTHER BUSINESSES adidas Sport Performance TaylorMade adidas Golf adidas Sport Style Ashworth Other centrally managed brands 18
Slide 19: Currency-Neutral Group Sales Stable In Q4
Currency-Neutral Group Sales Stable In Q4 Q4/2009 Full Year 2009 (4%) (9%) Wholesale (8%) (8%) Retail 14% 7% 7% 10% Other 2% (4%) Businesses (3%) 0% 0% (6%) (5%) (4%) (10%) 10% (10%) 10% In euros Currency-neutral 19
Slide 20: Improving Sales Momentum In Nearly All Regions In Q4
Improving Sales Momentum In Nearly All Regions In Q4 Q4/2009 Full Year 2009 Western Europe 3% (5%) 2% (8%) Europ. Emerging 8% (7%) Markets (3%) (5%) (7%) (10%) North America (16%) (6%) Greater China (22%) (16%) (29%) (10%) Other Asian 2% (3%) Markets 5% 4% Latin America 20% 19% 19% 13% 0% (6%) (5%)
Slide 21: Group Gross Margin Stabilises In Q4
Group Gross Margin Stabilises In Q4 Q4 2009 Full Year 2009 • Q4 gross margin stabilises due to lower 41.6% 41.6% clearance sales Wholesale 1.1pp (2.1pp) • Higher input costs and 60.7% 58.6% currency devaluation Retail (0.8pp) (2.9pp) effects negatively impact Q4 and FY Other 41.9% 39.4% Businesses 3
Slide 22: Full Year Group Operating Margin At 4.9%
Full Year Group Operating Margin At 4.9% Q4 2009 Full Year 2009 Royalty and commission income € 23 million € 86 million (8%) (4%) Other operating income € 28 million € 100 million (43%) (3%) Other operating expenses (1%) € 1.145 billion +0% € 4.390 billion Other operating expenses as a 46.6% 42.3% p
Slide 23: Full Year Diluted EPS In Line With Guidance
Full Year Diluted EPS In Line With Guidance Q4 2009 Full Year 2009 Financial expenses € 31 million € 169 million (48%) (17%) Income tax rate (27.1%) 31.5% (28.7pp) +2.7pp Minority interests +396% € 1 million (95%) € 0 million Net income attributable to € 19 million € 245 million shareholders (64%) (
Slide 24: Currency-Neutral Inventories Decline 27%
Currency-Neutral Inventories Decline 27% • Inventories decrease 27% on a currency-neutral basis, 21% 18% 20% down 26% to € 1.471 billion 16% 15% 13% 8% 10% • Declines at all brands and in all regions 0% Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 • Reduction of production (10%) (8%) volumes and
Slide 25: Operating Working Capital Improves Versus Prior Year
Operating Working Capital Improves Versus Prior Year • Receivables down 13% on a currency-neutral basis or 27 12% in euro terms to 26.2 € 1.429 billion 26 25.6 25.6 • Strict enforcement of 25 24.7 Group trade terms 24.5 24.5 24.3 24.2 • Payables decline 5% on a 24 currency-neutral basis or 4% in eur
Slide 26: Net Debt Down 1.272 Billion Euro Year-Over-Year
Net Debt Down 1.272 Billion Euro Year-Over-Year • € 1.198 billion net cash from operating activities 3,000 2,883 2,732 generated in 2009 2,500 2,593 2,260 2,294 2,189 2,073 • Net borrowings decrease 2,000 58% versus prior year to € 917 million 1,500 1,000 917 • Financial leverage decreases 40.3pp 50
Slide 27: Dividend Payout Ratio Increases
Dividend Payout Ratio Increases • New dividend policy: Payout ratio increased 0.50 0.50 0.50 to 20% to 40% of net 0.42 income attributable to 0.40 0.35 shareholders 0.33 0.33 0.30 0.25 0.25 • Proposed dividend of 0.23 € 0.35 per share 0.20 • Payout ratio increases 0.10 to 30% (2008: 15%) 0.00 2001 2
Slide 28: Strategic Outlook & Initiatives
STRATEGIC OUTLOOK & INITIATIVES Herbert Hainer adidas Group CEO 28
Slide 29: New Record Sales Expected In Football Category
New Record Sales Expected In Football Category 29
Slide 30: Continuing Momentum In adidas Sport Style
Continuing Momentum In adidas Sport Style 30
Slide 31: Reebok ReeLaunches Website
Reebok ReeLaunches Website 31
Slide 32: Building On The Success Of EasyTone Globally
Building On The Success Of EasyTone™ Globally 32
Slide 33: Expanding Toning Beyond Women's And Walking
Expanding Toning Beyond Women’s And Walking 33
Slide 34: Reebok Launches New Innovative Technology: ZigTech
Reebok Launches New Innovative Technology: ZigTech™ 34
Slide 35: Fun, Bold, Provocative Approach Towards Marketing
Fun, Bold, Provocative Approach Towards Marketing SI Gatefold 35
Slide 36: Fully Integrated Campaign "ReeZig" Launched
Fully Integrated Campaign “ReeZig” Launched 36
Slide 37: Innovation Pipeline Stronger Than Ever
Innovation Pipeline Stronger Than Ever 37
Slide 38: Driving Efficiencies In Key Distribution Channels
Driving Efficiencies In Key Distribution Channels • Roll-out of customer and range segmentation strategies • Increase controlled space with key retail partners • New official NBA shop-in-shops introduced with Champs 38
Slide 39: Investments To Strengthen Our Retail Operations
Investments To Strengthen Our Retail Operations 39
Slide 40: adidas Group Targets 2010
adidas Group Targets 2010 Group sales (currency-neutral) low- to mid-single-digit increase Wholesale sales (currency-neutral) low-single-digit increase Retail sales (currency-neutral) high-single-digit increase Other Businesses sales (currency-neutral) low-single-digit increase Gross margin 46.0% to
Slide 41: adidas Group Ready To Seize Opportunities Ahead
adidas Group Ready To Seize Opportunities Ahead • Strong financial position forms a solid base for future growth • Group organisational structure sharpened • Full pipeline of product and marketing innovations • Investments to focus on realisation of growth opportunities in 2010 41
Slide 42: Questions & Answers
adidas QUESTIONS & ANSWERS GROUP
Slide 43: Upcoming Financial Reporting Dates
Upcoming Financial Reporting Dates May 4, 2010 First Quarter 2010 Results 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