Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (August 2012)
63 slides from Adidas's roadshow presentation, Aug 7, 2012
Slide 1: Roadshow Presentation – Half Year 2012
Roadshow Presentation – Half Year 2012 Benelux, August 07-08, 2012 Robin Stalker, CFO adidas Group
Slide 2: Operational Highlights
OPERATIONAL HIGHLIGHTS 2
Slide 3: adidas Group Delivers Record H1 Performance
adidas Group Delivers Record H1 Performance • Record sales of over € 7.3 billion • Strong top-line growth across all geographies • Operating margin improves 0.7pp to 9.1% • 30% increase in net income and EPS • Reduction in net borrowings by 63% to € 318 million 3
Slide 4: Sales Grow Across All Regions In H1
Sales Grow Across All Regions In H1 +6% Western Europe* +16% European Emerging Markets* +11% North America* +19% Greater China* +13% Other Asian Markets* +6% Latin America* *currency-neutral 4
Slide 5: Ongoing Success In Greater China
Ongoing Success In Greater China • Sales grow 19% on a currency-neutral basis in H1 • Great momentum at adidas Sport Performance driven by ClimaCool franchise • Double-digit growth in order books and healthy inventory situation • Extension of market share 5
Slide 6: North America Targeting Hat-Trick Of Years Of Double-Digit Growth
North America Targeting Hat-Trick Of Years Of Double-Digit Growth For adidas Brand • Sales up 11% on a currency- neutral basis in H1 • Double-digit sales increases at adidas and TMaG • Great momentum in Basketball, resulting in further market share gains • Originals continues setting the pace with r
Slide 7: Russia/CIS Strengthening Its Dominance
Russia/CIS Strengthening Its Dominance • H1 sales increase 15% on a currency-neutral basis • Comparable store sales expand 10% in Q2 • adidas and Reebok grow at double-digit rates in H1 7
Slide 8: Growth In Western Europe Supported By Major Events
Growth In Western Europe Supported By Major Events • Revenue growth of 6% currency-neutral in H1 • Growth driven by strong performances in the UK • Excitement built around major sports events 8
Slide 9: adidas Brand Drives Growth In H1
adidas Brand Drives Growth In H1 Q2 2012 Change H1 2012 Change Net sales (€ in millions) 2,649 11%1) 5,537 14%1) Gross margin 45.9% (1.3pp) 46.1% (1.4pp) Net sales (€ in millions) 336 (26%)1) 787 (16%)1) Gross margin 32.1% (4.0pp) 35.4% (1.3pp) 1) currency-neutral 9
Slide 10: adidas Football Innovation Driving Consumer Demand
adidas Football Innovation Driving Consumer Demand • Sales increase 25% on a currency-neutral basis in the first half of 2012 • New record sales of over € 1.6 billion expected for 2012 10
Slide 11: adidas Leading The Way At The UEFA EURO 2012
adidas Leading The Way At The UEFA EURO 2012™ • Unprecedented visibility on and off the field • Most recognised and talked-about sponsor of the event • Increasing market share in host countries 11
Slide 12: adidas Running Keeps Growing At Double-Digit Rates
adidas Running Keeps Growing At Double-Digit Rates • Sales up 13% on a currency-neutral basis in the first half of 2012 • Ongoing success with adizero and Clima 12
Slide 13: Footwear Crazyness Drives adidas Basketball
Footwear “Crazy”ness Drives adidas Basketball • Sales up 18% on a currency- neutral basis in H1, driven by strong growth in footwear • adizero Crazy Light 2 major success generating sell-through rates of over 30% in just six weeks 13
Slide 14: Sport Style Continues Success Story
Sport Style Continues Success Story • Revenues in the first half of 2012 up 14% on a currency-neutral basis • Growth driven by double-digit sales increases in adidas Originals and the adidas NEO Label • Y-3 and adidas SLVR contributing to the success with strong sales increases 14
Slide 15: adidas NEO Making Further Progress
adidas NEO Making Further Progress • Sales up 16% on a currency- neutral basis in H1 • Growth across all product categories at double-digit rates • Traffic continues to strengthen • Hitting important milestones in terms of conversion, product and gender mix 15
Slide 16: Consolidation Of Reebok Positioning In 2012
Consolidation Of Reebok Positioning In 2012 • Sales down 16% on a currency-neutral basis • Clean-up of operations in India with significant impact on sales development • Latin America negatively impacted by difficulties at joint venture partner • Considerable success in controlled space driven marke
Slide 17: Commercial Irregularities At Reebok India
Commercial Irregularities At Reebok India • Co-operation with the various authorities on commercial irregularities discovered • Cash and carry model to protect the Group from further losses • Customer review to move towards a more profitable business model for the brand in the market • Reebok set up
Slide 18: TMaG Extends Leadership In Golf
TMaG Extends Leadership In Golf • Record first half top-line growth of 29% currency-neutral • Increases across all categories with metalwoods, irons, putters and footwear all recording growth rates above 20% • Successful acquisition of Adams Golf, Inc. effective June 1, 2012 18
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS 19
Slide 20: Q2 Group Sales Increase In Nearly All Regions
Q2 Group Sales Increase In Nearly All Regions Q2 2012 H1 2012 Western Europe 5% 6% 7% 7% European Emerging 18% 16% Markets 28% 22% North America 10% 11% 22% 19% Greater China 13% 19% 29% 33% Other Asian 2% 13% Markets 12% 22% Latin America (2%) 6% (2%) 6% 7% 11% 15% 16% currency-neutral (5%) 5% 15%
Slide 21: H1 Group Gross Margin Down 0.8pp
H1 Group Gross Margin Down 0.8pp Q2 2012 H1 2012 • Higher input costs Wholesale 38.3% 40.2% (1.2pp) (1.2pp) Retail 62.8% 62.2% • Overproportionate growth in (3.0pp) (1.5pp) emerging markets Other Businesses 45.3% 44.5% +0.4pp (0.7pp) • More favourable sales mix • Higher Retail sales at higher 48.2%1
Slide 22: H1 Group Operating Margin Increases 0.7pp
H1 Group Operating Margin Increases 0.7pp Q2 2012 H1 2012 Royalty and commission income € 27 million € 52 million +23% +28% Other operating income € 22 million € 47 million +21% +32% Other operating expenses € 1.490 billion € 2.956 billion +12% +12% Other operating expenses 42.4% 40.3% as a percenta
Slide 23: Net Income Increases 30% In H1
Net Income Increases 30% In H1 Q2 2012 H1 2012 Financial income € 8 million € 17 million +0% +29% Financial expenses € 29 million € 57 million (4%) (10%) Income tax rate 30.5% 27.4% +1.6pp (0.1pp) Net income attributable to € 165 million € 455 million shareholders +18% +30 % Diluted earnings per sha
Slide 24: Q2 Wholesale Segmental Operating Margin Up 0.1pp
Q2 Wholesale Segmental Operating Margin Up 0.1pp Wholesale Q2 2012 Change H1 2012 Change Net sales (€ in millions) 2,113 +1%1) 4,727 +6%1) Gross margin 38.3% (1.2pp) 40.2% (1.2pp) Segmental operating 29.8% +0.1pp 31.3% (1.0pp) margin 1) currency-neutral 24
Slide 25: Retail Comparable Store Sales Increase 9% In H1
Retail Comparable Store Sales Increase 9% In H1 Retail Q2 2012 Change H1 2012 Change Net sales (€ in millions) 854 +16%1) 1,547 +16%1) adidas comp store sales +8%1) +9%1) Reebok comp store sales +9%1) +8%1) Total comp store sales +8%1) +9%1) Gross margin 62.8% (3.0pp) 62.2% (1.5pp) Segmental operati
Slide 26: Other Businesses Grow 27% In H1
Other Businesses Grow 27% In H1 Other Businesses Q2 2012 Change H1 2012 Change Net sales (€ in millions) 550 +22%1) 1,067 +27%1) Gross margin 45.3% +0.4pp 44.5% (0.7pp) Segmental operating 31.0% +3.1pp 29.9% +1.9pp margin 1) Currency-neutral 26
Slide 27: Operating Working Capital As A Percentage Of Sales Continues To Improve
Operating Working Capital As A Percentage Of Sales Continues To Improve • Inventories increase 8% 22 on a currency-neutral basis 21.7 • Sequential decline in growth rate (+13% in Q1) 21 20.9 20.9 20.8 20.8 20.7 20.7 20.6 • Reflects FOB impact and growth expectations 20.5 • Receivables up 5% on a 20
Slide 28: Net Borrowings Decrease 63%
Net Borrowings Decrease 63% Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 • Net debt declines € 545 million versus prior year to € 318 million 90 100 • Ratio of net borrowings/EBITDA decreases to 0.2 from 0.7 in 2011 (300) (221) (318) • Equity ratio increases 3.0 percentage points to 46.5% (
Slide 29: Strategic Initiatives And Outlook
STRATEGIC INITIATIVES AND OUTLOOK 29
Slide 30: Olympic And Paralympic Games London 2012
Olympic And Paralympic Games London 2012 30
Slide 31: Sustainable Performance Innovations Announced
Sustainable Performance Innovations Announced 31
Slide 32: miCoach Elite System Launched At The MLS All-Star
miCoach Elite System Launched At The MLS All-Star • The world's first "smart game" integrating the miCoach Elite System • Providing a detailed view of each player's real-time performance metrics • In the 2013 season, all 19 MLS clubs will use the data-tracking technology 32
Slide 33: all Originals represent Brand Campaign Launched
“all Originals represent” Brand Campaign Launched August 1 33
Slide 34: Reebok Kicks Off CrossFit Games For The Second Time
Reebok Kicks Off CrossFit Games For The Second Time 34
Slide 35: Reebok To Open First Sport Of Fitness Hub In New York City
Reebok To Open First Sport Of Fitness Hub In New York City Creating a Brand Experience 35
Slide 36: Full Year Outlook Adjusted
Full Year Outlook Adjusted Group sales (currency-neutral) increase at a rate approaching 10% Wholesale sales (currency-neutral) mid-single-digit increase Retail sales (currency-neutral) low-teens increase Other Businesses sales (currency-neutral) high-teens increase Gross margin around 47.5% Operati
Slide 37: Questions & Answers
QUESTIONS & ANSWERS 37
Slide 38: Upcoming Event Dates
Upcoming Event Dates Sep 20 to 21, 2012 adidas Group Investor Field Trip, Carlsbad/California Nov 8, 2012 Nine Months 2012 Results Mar 6, 2013 Full Year 2012 Results May 3, 2013 First Quarter 2013 Results May 8, 2013 Annual General Meeting May 9, 2013 Dividend Payment1) 1) Subject to Annual General
Slide 39: Appendix: 2015 Aspirations
APPENDIX: 2015 ASPIRATIONS 39
Slide 40: Global Brands Game Changing Growth Projects
Global Brands Game Changing Growth Projects REEBOK NEO ADIDAS FITNESS EMPIRE FAST FASHION RUNNING BASKETBALL CUSTOMIZATION INTERACTIVITY 40
Slide 41: Brand Architecture – Portfolio Strategy
Brand Architecture – Portfolio Strategy 8% 14 % 22 % 14 % 26 % 10 % 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS SPORTS FASHION 12 % 78 % 10 % 41
Slide 42: Brand Architecture – Business Reality
Brand Architecture – Business Reality 42
Slide 43: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better 43
Slide 44: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 44
Slide 45: adidas Originals – Iconic And Authentic Street Style
adidas Originals – Iconic And Authentic Street Style 45
Slide 46: NEO Label Attributes And USP
NEO Label Attributes And USP 46
Slide 47: NEO Targets A Global Consumer With A Homogenous Fashion Style
NEO Targets A Global Consumer With A Homogenous Fashion Style 47
Slide 48: Reebok – Brand Positioning
Reebok – Brand Positioning 48
Slide 49: Three Elements Of Total Fitness
Three Elements Of Total Fitness 49
Slide 50: Reebok – The Fitness And Training Brand
Reebok – The Fitness And Training Brand 50
Slide 51: Reebok Classics Strategy
Reebok Classics Strategy • Fit for the Street - thru lens of music/dance • Building holistic product offering • Marketing communications • Introduce over time an American Sportswear line 51
Slide 52: Global Brands Growth
Global Brands Growth 2010 € 6.5 billion oe. € 1.9 billion 2015 € 8.5 billion € 3.0 billion 52
Slide 53: Sustainable Growth In Key Attack Markets
Sustainable Growth In Key Attack Markets North America • Biggest growth potential • Focus on High School Kids and Team Sports Greater China • Market leadership by 2015 • Increase store base Russia/CIS • Increase market share of currently 60% to 70% • Become leading sports brands in Outdoor 53
Slide 54: Focus On The High School Consumer
Focus On The High School Consumer • 16.3m high school kids • $16.1bn spending • 20% industry spend • 80% higher spending than college kids • Influencers and purchasers of sport and fashion 54
Slide 55: Generation US Focus Sports
Generation US Focus Sports 55
Slide 56: Chinese Consumer Becoming More Sophisticated
Chinese Consumer Becoming More Sophisticated 56
Slide 57: Category Attack In Higher Tier Cities
Category Attack In Higher Tier Cities 57
Slide 58: Time To Unleash Originals
Time To Unleash Originals 58
Slide 59: Increasing Store Footprint To Capture Growth
Increasing Store Footprint To Capture Growth • City-by-city footprint plan to match local retail environment • Segmentation to match purchase patterns of high vs. low spenders • Accessible pricing options to complement range • POS increase of 2,500 by 2015 59
Slide 60: Russia/CIS Driven By adidas And Reebok Own Retail
Russia/CIS Driven By adidas And Reebok Own Retail ~800 own retail stores in 2011 ~1,200 own retail stores by 2015 >90% of sales through own retail in 2011 YTD December 2011 comp store sales +24% 60
Slide 61: Opportunities Outweigh Challenges In Russia/CIS
Opportunities Outweigh Challenges In Russia/CIS 61
Slide 62: adidas In Superior Competitive Position
adidas In Superior Competitive Position Significant coverage and Distribution market penetration Broad range covering Product Range multiple consumer targets Unmatched partnership portfolio Brand Marketing Strong POS activation 62
Slide 63: Reebok Has Strong Momentum
Reebok Has Strong Momentum • Inherited solid foundation • Brand strength second only to India • Powerful Brand representation in ~200 stores • Success with Toning, Zig and Flex • KPI’s approaching adidas levels 63