Adidas Ag · XETR:ADS
Adidas — Q3 2016 Earnings Presentation
35 slides from Adidas's earnings presentation, 2016
Slide 1: Q3 2016 Roadshow Presentation
HOW Q3 2016 WE ROADSHOW PRESENTATION CREATE THE NEW
Slide 2: Operational Highlights
OPERATIONAL HIGHLIGHTS 2
Slide 3: Major Developments in Q3
MAJOR DEVELOPMENTS IN Q3 ADIDAS GROUP WITH STRONG FINANCIAL PERFORMANCE GROUP REVENUES GROW 17% CURRENCY-NEUTRAL OR 14% IN EURO TERMS TO € 5.4 BILLION ADIDAS BRAND UP 20% CURRENCY-NEUTRAL WITH DOUBLE-DIGIT GROWTH ACROSS ALL KEY REGIONS REEBOK REVENUES INCREASE 7% CURRENCY-NEUTRAL AS A RESULT OF SALE
Slide 4: Strong Momentum in Sport Performance Continues
STRONG MOMENTUM IN SPORT PERFORMANCE CONTINUES DRIVEN BY DOUBLE-DIGIT INCREASES IN NEARLY ALL KEY CATEGORIES +13% 4
Slide 5: Lifestyle Business with Outstanding Performance
LIFESTYLE BUSINESS WITH OUTSTANDING PERFORMANCE 6TH CONSECUTIVE QUARTER OF +30% GROWTH +42% 5
Slide 6: Robust Top-Line Momentum at Reebok
ROBUST TOP-LINE MOMENTUM AT REEBOK GROWTH IN ALL MARKET SEGMENTS +7% 6
Slide 7: Restructuring Measures Initiated at Reebok
RESTRUCTURING MEASURES INITIATED AT REEBOK TO STRENGTHEN THE BRAND’S GROWTH FOUNDATION CREATE GLOBAL TEAM FOCUSED ON REEBOK MOVE AND STREAMLINE ORGANISATION SALE OF CANTON PREMISES STORE NETWORK OPTIMISATION 7
Slide 8: Top-Line Recovery at TMaG Continues
TOP-LINE RECOVERY AT TMAG CONTINUES DOUBLE-DIGIT GROWTH IN THE METALWOODS AND PUTTERS CATEGORIES +6% 8
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS 9
Slide 10: Broad-Based Top-Line Growth
BROAD-BASED TOP-LINE GROWTH DOUBLE-DIGIT SALES INCREASES ACROSS MOST REGIONS NORTH AMERICA +20% RUSSIA/CIS +7% JAPAN +21% WESTERN EUROPE +15% MEAA +19% GREATER CHINA +25% LATIN AMERICA +16% CURRENCY-NEUTRAL. FIGURES REFLECT COMBINED REVENUES OF THE ADIDAS AND REEBOK BUSINESSES. 10
Slide 11: Western Europe
STRONG BRAND MOMENTUM CONTINUES WESTERN CURRENCY-NEUTRAL SALES INCREASE 15% IN Q3, WITH DOUBLE-DIGIT GROWTH ACROSS ALL KEY EUROPE MARKETS ADIDAS REVENUES UP 15%, DRIVEN BY DOUBLE- DIGIT SALES INCREASES AT ADIDAS ORIGINALS AND ADIDAS NEO REEBOK SALES INCREASE 15%, REFLECTING DOUBLE-DIGIT GROWTH IN TR
Slide 12: North America
ADIDAS GAINS FURTHER TRACTION AMONGST US CONSUMERS NORTH CURRENCY-NEUTRAL SALES GROW 20% IN Q3, 3RD CONSECUTIVE QUARTER OF STRONG DOUBLE-DIGIT AMERICA GROWTH ADIDAS SALES UP 24%, REFLECTING DOUBLE-DIGIT GROWTH IN SPORT PERFORMANCE AS WELL AS AT ADIDAS ORIGINALS AND ADIDAS NEO RETAIL SALES GROW 18%,
Slide 13: Greater China
ONGOING BRAND HEAT AT ADIDAS AND REEBOK GREATER CURRENCY-NEUTRAL SALES UP 25% IN Q3, REPRESENTING 10TH CONSECUTIVE QUARTER OF CHINA DOUBLE-DIGIT GROWTH SALES AT ADIDAS GROW 25%, FUELLED BY STRONG DOUBLE-DIGIT GROWTH IN KEY PERFORMANCE AND LIFESTYLE CATEGORIES REEBOK REVENUES UP 19%, DRIVEN BY DOUBLE
Slide 14: Latin America
RIO 2016 OLYMPIC GAMES SPUR BRAND MOMENTUM LATIN CURRENCY-NEUTRAL SALES GROW 16% IN Q3, SUPPORTED BY DOUBLE-DIGIT GROWTH IN AMERICA ARGENTINA, PERU AND COLOMBIA REVENUES AT ADIDAS UP 18%, DRIVEN BY DOUBLE- DIGIT SALES GROWTH IN KEY PERFORMANCE AND LIFESTYLE CATEGORIES REEBOK SALES INCREASE 4%, SUPPO
Slide 15: Other Businesses
SIGNIFICANT TOP- AND BOTTOM-LINE IMPROVEMENTS IN Q3 OTHER CURRENCY-NEUTRAL REVENUES OF OTHER BUSINESSES UP 7% IN Q3 BUSINESSES SALES AT TMAG INCREASE 6%, REFLECTING GROWTH AT TAYLORMADE AND ADIDAS GOLF CCM HOCKEY SALES DOWN 7%, REFLECTING DECLINES IN THE LICENSED APPAREL BUSINESS GROSS MARGIN IN OTH
Slide 16: Other Operating Expenses as a Percentage of Sales Decrease 0.8pp to 38.0% in Q3
OTHER OPERATING EXPENSES AS A PERCENTAGE OF SALES DECREASE 0.8PP TO 38.0% IN Q3 Q3 2016 9M 2016 GROSS (0.9pp) (0.1pp) MARGIN 47.6% 48.6% OTHER OPERATING EXPENSES +12% € 2,058 MILLION +12% € 5,916 MILLION OTHER OPERATING EXPENSES (0.8pp) 38.0% (0.8pp) 40.5% AS A PERCENTAGE OF SALES OPERATING PROFIT +
Slide 17: Increased FX Headwinds Drive Gross Margin Decline
INCREASED FX HEADWINDS DRIVE GROSS MARGIN DECLINE DESPITE STRONG UNDERLYING IMPROVEMENT INCREASE OF DECLINE OF 40 BPS 90 BPS -380 BPS +420 BPS -490 BPS +400 BPS FX UNDERLYING FX UNDERLYING GM Q32016 GM H1 2015 HEADWINDS IMPROVEMENT GM H1 2016 GM Q3 2015 HEADWINDS IMPROVEMENT 17
Slide 18: Underlying Net Income Up 15% to €387 Million in Q3
UNDERLYING NET INCOME UP 15% TO € 387 MILLION IN Q3 Q3 2016 9M 2016 FINANCIAL INCOME (23%) € 6 MILLION +10% € 35 MILLION FINANCIAL EXPENSES +30% € 24 MILLION 0% € 51 MILLION INCOME BEFORE TAXES +10% € 545 MILLION +34% € 1,452 MILLION NET INCOME FROM CONTINUING OPERATIONS +15% € 387 MILLION +39% € 1,
Slide 19: Average OWC in % of Sales
AVERAGE OWC IN % OF SALES DOWN 0.4PP TO 20.3% INVENTORIES GROW 18% (CN) TO SUPPORT TOP-LINE 20,7% MOMENTUM 20,5% 20,4% RECEIVABLES UP 9% (CN) 20,3% 20,2% PAYABLES GROW 15% (CN), REFLECTING THE INCREASE IN INVENTORIES Q3/15* Q4/15* Q1/16* Q2/16* Q3/16* Average operating working capital in % of sales
Slide 20: Net Debt Position
NET DEBT POSITION OF € 769 MILLION DECREASE DUE TO AN INCREASE IN CASH GENERATED FROM OPERATING ACTIVITIES (460) RATIO OF NET DEBT/EBITDA AMOUNTS TO 0.4 (2015: 0.6) EQUITY RATIO REMAINS AT (769) STRONG LEVEL OF 43.0% (809) (2015: 44.0%) (903) (1.028) Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Net debt at quarter
Slide 21: Share Buyback Programme
SHARE BUYBACK PROGRAMME THIRD TRANCHE COMMENCED FIRST & SECOND TRANCHE: - 9,018,769 SHARES REPURCHASED - CORRESPONDING TO 4.31% OF NOMINAL CAPITAL THIRD TRANCHE: - TOTAL VOLUME UP TO € 300 MILLION - STARTING NOVEMBER 8, 2016 AND ENDING LATEST ON JANUARY 31, 2017 21
Slide 22: Outlook
OUTLOOK 22
Slide 23: Football Needs Creators
FOOTBALL NEEDS CREATORS LATEST CHAPTER OF THE ADIDAS SPORT 16 CAMPAIGN 23
Slide 24: Football
FOOTBALL STELLAR PACK – MOON LANDING FOR ACE & X 24
Slide 25: Running
RUNNING REFLECTIVE PACK TO CREATE HYPE AROUND KEY RUNNING FRANCHISES 25
Slide 26: Running
RUNNING ULTRABOOST UNCAGED PARLEY USING OCEAN PLASTIC 26
Slide 27: Training
TRAINING INTRODUCING THE ATHLETICS FRANCHISE 27
Slide 28: Basketball
BASKETBALL WAKING THE GAME UP WITH HARDEN VOL. 1 28
Slide 29: Originals
ORIGINALS ACCELERATION OF FRANCHISE STRATEGY 29
Slide 30: Reebok
REEBOK JOINING FORCES WITH GLOBAL STYLE ICON GIGI HADID 30
Slide 31: Reebok
REEBOK INTRODUCING THE NEW LIQUID FACTORY 31
Slide 32: Point of Sale
POINT OF SALE NYC FLAGSHIP OPENING ON DEC 1 32
Slide 33: Outlook
OUTLOOK ADIDAS GROUP CONFIRMS FULL YEAR GUIDANCE GROUP SALES TO INCREASE AT A RATE IN THE HIGH TEENS GROSS MARGIN TO BE BETWEEN 48.0% AND 48.3% OPERATING MARGIN TO INCREASE TO A LEVEL OF UP TO 7.5% UNDERLYING NET INCOME TO INCREASE AT A RATE OF BETWEEN 35% AND 39% TO A LEVEL BETWEEN € 975 MILLION AN
Slide 34: Q&A
Q&A 34
Slide 35: Upcoming Events
UPCOMING EVENTS DATE EVENT MARCH 08, 2017 FULL YEAR 2016 RESULTS MARCH 14, 2017 STRATEGY UPDATE MAY 04, 2017 FIRST QUARTER 2017 RESULTS MAY 11, 2017 ANNUAL GENERAL MEETING AUGUST 03, 2017 FIRST HALF 2017 RESULTS 35