Adidas Ag · XETR:ADS
Adidas — FY2008 Earnings Presentation
49 slides from Adidas's earnings presentation, Mar 4, 2009
Slide 1: 2008 Full Year Results Analyst Conference
2008 Full Year Results Analyst Conference Herzogenaurach, March 4, 2009
Slide 2: Introduction
INTRODUCTION John-Paul O’Meara Head of adidas Group Investor Relations 2
Slide 3: Operational Highlights
OPERATIONAL HIGHLIGHTS Herbert Hainer adidas Group CEO and Chairman 3
Slide 4: Strong Momentum At adidas And TaylorMade
Strong Momentum At adidas And TaylorMade • adidas never stronger in 60- year history • TaylorMade-adidas Golf on its way to be the number 1 golf company in the world • Important strategic decisions taken at Reebok 4
Slide 5: Investing To Support Long-Term Goals
Investing To Support Long-Term Goals 5
Slide 6: Eight Years Of Double-Digit Earnings Growth
Eight Years Of Double-Digit Earnings Growth Net income attributable to shareholders, € in millions (change compared to prior year) 642 700 (+16%) 551 600 483 (+14%) (+26%) 500 383 400 314 (+22%) 260 (+21%) 208 229 300 (+14%) (+15%) (+10%) 182 200 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 6
Slide 7: Major Sporting Events Reinforce adidas Brand Image
Major Sporting Events Reinforce adidas Brand Image 7
Slide 8: Growth In All Major Performance Categories
Growth In All Major Performance Categories 8
Slide 9: Partnership Portfolio Secured And Extended
Partnership Portfolio Secured And Extended 9
Slide 10: adidas Signs IAAF To Multi-Year Partnership
adidas Signs IAAF To Multi-Year Partnership 10
Slide 11: adidas Sport Style Sales Advance 10%
adidas Sport Style Sales Advance 10% 11
Slide 12: adidas Style Essentials Gains Momentum
adidas Style Essentials Gains Momentum 12
Slide 13: adidas Delivers Excellent Financial Performance
adidas Delivers Excellent Financial Performance Q4 FY Sales growth +7% +14% (currency-neutral) Gross margin 47.0% 48.6% +0.6pp +1.2pp Operating margin 8.1% 14.0% +4.2pp +1.1pp 13
Slide 14: Reebok Brand Priorities Refined
Reebok Brand Priorities Refined 14
Slide 15: Better Distribution Through Controlled Space Rollout
Better Distribution Through Controlled Space Rollout 15
Slide 16: Reebok Ready To Implement Joint Operating Model
Reebok Ready To Implement Joint Operating Model 16
Slide 17: Reebok Still A Work In Progress
Reebok Still A Work In Progress Q4 FY Sales growth (3%) (2%) (currency-neutral) Gross margin 34.1% 37.0% (4.0pp) (1.7pp) Operating margin (1.5%) (0.3%) (5.1pp) (5.0pp) 17
Slide 18: TMaG Metalwoods Market Share Grows Strongly
TMaG Metalwoods Market Share Grows Strongly • Most-played driver on tours • Metalwoods leadership further strengthened • Progress made in balls and putters 18
Slide 19: Acquisition of Ashworth Adds New Lifestyle Dimension
Acquisition of Ashworth Adds New Lifestyle Dimension • Authentic golf-inspired lifestyle brand • TaylorMade-adidas Golf now global market leader in golf apparel • Integration under way 19
Slide 20: TaylorMade-adidas Golf Delivers Solid Performance
TaylorMade-adidas Golf Delivers Solid Performance Q4 FY Sales growth (4%) +7% (currency-neutral) Gross margin 41.0% 44.3% (5.1pp) (0.5pp) 12.2% 9.6% Operating margin +0.1pp +1.5pp 20
Slide 21: Strong 2008 Creates Solid Foundation
Strong 2008 Creates Solid Foundation • 2008 an important year for all our brands • Challenges ahead • Decisive measures taken 21
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS Robin Stalker adidas Group CFO 22
Slide 23: Full Year Currency-Neutral Group Revenues Up 9%
Full Year Currency-Neutral Group Revenues Up 9% 14% 10% (2%) (8%) 7% 1% 9% 5% (10%) (5%) 0% 5% 10% 15% 20% In euros Currency-neutral 23
Slide 24: Record Group Gross Margin
Record Group Gross Margin Q4 2008 Full Year 2008 47.0% 48.6% +0.6pp +1.2pp 34.1% 37.0% (4.0pp) (1.7pp) 41.0% 44.3% (5.1pp) (0.5pp) 46.4%1) 48.7%1) (0.2pp) +1.3pp 1) Includes HQ/Consolidation 24
Slide 25: Group Operating Margin Approaches 10%
Group Operating Margin Approaches 10% Q4 2008 Full Year 2008 R&C income € 25m € 89m (20%) (13%) Opex as a % of 45.1% 40.5% sales (1.8pp) +0.6pp Operating profit € 107m € 1,070m +77% +13% Operating margin 4.2% 9.9% +1.7pp +0.7pp 25
Slide 26: Basic EPS Grow 20% in 2008
Basic EPS Grow 20% in 2008 Q4 2008 Full Year 2008 Net financial expenses € 53m € 166m +71% +23% Income before taxes +82% € 54m +11% € 904m Effective tax rate 1.6% 28.8% (26.1pp) (3.0pp) Net income attrib. to € 54m € 642m shareholders +151% +16% Basic EPS € 0.28 € 3.25 +164% +20% 26
Slide 27: Progress On Operating Working Capital Reduction
Progress On Operating Working Capital Reduction • Average operating 26 25.8 working capital as a 25.5 25.6 25.7 26 percentage of sales 25.2 reduced by 70bp 25 24.7 to 24.5% 24.5 24.5 25 24.2 • Inventories increase 24 21% on a currency- 24 neutral basis 23 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3
Slide 28: Reduction Of Net Borrowings A Key Priority
Reduction Of Net Borrowings A Key Priority • Net borrowings 3,000 increase 24% to 2,750 2,593 € 2.189 billion 2,500 2,519 2,395 2,231 2,260 2,250 2,201 2,189 • Financial leverage 2,000 2,073 increases 6.2pp 1,750 1,766 to 64.6% 1,500 1,250 1,000 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08
Slide 29: Dividend Level Maintained
Dividend Level Maintained 0.50 0.50 0.50 0.42 0.40 0.33 0.33 0.30 0.25 0.25 0.23 0.20 0.10 0.00 2001 2002 2003 2004 2005 2006 2007 2008 Dividend per share (in €), 2008 subject to Annual General Meeting approval 29
Slide 30: Foreign Exchange Rate Volatility To Affect Results
Foreign Exchange Rate Volatility To Affect Results • Exchange rate volatility to potentially impact Group top- and bottom-line results • Several important currencies have significantly depreciated compared to the prior year • No gross margin support from hedging 30
Slide 31: Strategic Initiatives And Outlook
STRATEGIC INITIATIVES AND OUTLOOK Herbert Hainer adidas Group CEO and Chairman 31
Slide 32: adidas Currency-Neutral Backlogs Decline 6%
adidas Currency-Neutral Backlogs Decline 6% Europe North Asia Total • Order decline America reflects tougher environment FW (3) 4 (11) (4) • Non-recurrence of UEFA EURO 2008™ APP (4) (5) (8) (6) impacts backlogs in Europe Total1 (5) 0 (10) (6) • Differences in order Currency-neutral development of a
Slide 33: Reebok Backlogs Not Indicative Of Future Sales
Reebok Backlogs Not Indicative Of Future Sales Europe North Asia Total • UK and Spain America continue to weigh on European FW (12) (22) (11) (10) backlogs • Declines in licensed APP (22) (50) (16) (33) apparel business affect North Total1 (15) (29) (13) (17) American backlogs Currency-neutral devel
Slide 34: Challenging Market Conditions In 2009
Challenging Market Conditions In 2009 34
Slide 35: 2009 Sales And Earnings Per Share To Decline
2009 Sales And Earnings Per Share To Decline adidas Group Sales (currency-neutral) Low- to mid-single-digit decline Gross margin Decline Operating margin Decline Net income Decline 35
Slide 36: Cost Control Measures Already In Full Swing
Cost Control Measures Already In Full Swing ; Joint operating model in Europe and Latin America ; Streamlining Complexity programme at adidas ; Cut back on travel costs, external consultants ; Hiring freeze implemented ; Scale back of workforce in the US and UK 36
Slide 37: Committed To Long-Term Strategic Priorities
Committed To Long-Term Strategic Priorities Long-term strategies Invest Reduce costs Product & Innovation Hiring Freeze Controlled Space Joint Operating Models Travel Cost Reductions Promotion Partnerships “Streamlining Complexity” Infrastructure Projects Programme Retail Support 37
Slide 38: adidas Taking Interactive Training To A New Level
adidas Taking Interactive Training To A New Level 38
Slide 39: Extending Leadership In High-Performance Apparel
Extending Leadership In High-Performance Apparel 39
Slide 40: Launch of adidas SLVR Label
Launch of adidas SLVR Label 40
Slide 41: Build-Up To 2010 FIFA World Cup
Build-Up To 2010 FIFA World Cup™ 41
Slide 42: Women's Takes Centre Stage For Reebok In 2009
Women’s Takes Centre Stage For Reebok In 2009 42
Slide 43: Groundbreaking Partnership With Cirque Du Soleil
Groundbreaking Partnership With Cirque Du Soleil • Cirque du Soleil renowned for athleticism and artistic flair • Sharpens Reebok’s brand image in women’s fitness • “Change the way women experience the gym” 43
Slide 44: JUKARI Fit to Fly Revolutionises Women's Workout
JUKARI Fit to Fly™ Revolutionises Women’s Workout 44
Slide 45: Exciting Reebok Product Innovations For 2009
Exciting Reebok Product Innovations For 2009 45
Slide 46: TMaG Initiatives Already Making Headlines
TMaG Initiatives Already Making Headlines 46
Slide 47: adidas Group Ready For The Challenges Ahead
adidas Group Ready For The Challenges Ahead • Leading industry position • Well-balanced product, brand and partnership portfolio • Building a long-term sustainable growth company 47
Slide 48: Questions & Answers
QUESTIONS & ANSWERS 48
Slide 49: Upcoming Financial Reporting Dates
Upcoming Financial Reporting Dates May 5, 2009 First Quarter 2009 Results May 7, 2009 Annual General Meeting May 8, 2009 Dividend Payment1) Aug 5, 2009 First Half 2009 Results Nov 4, 2009 Nine Months 2009 Results 1) Subject to Annual General Meeting approval 49