Adidas Ag · XETR:ADS
Adidas — Commerzbank Sector Conference Week 2013
59 slides from Adidas's conference presentation, Aug 29, 2013
Slide 1: First Half Year 2013 Results
First Half Year 2013 Results Commerzbank Sector Conference Week Frankfurt August 29, 2013
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS 2
Slide 3: adidas Group Delivers Record Earnings In H1
adidas Group Delivers Record Earnings In H1 • Sales remain stable on a currency- neutral basis • Growth across all regions except Western Europe • Gross margin improves 2.1pp to 50.1% • Operating margin improves 0.7pp to 9.7% • Net income and EPS increase 6% • Net borrowings reduced by € 223 million
Slide 4: Sales Momentum Continues In Emerging Markets
Sales Momentum Continues In Emerging Markets (9%) Western Europe +1% European Emerging Markets +1% North America +6% Greater China +1% +16% Other Asian Markets Latin America Sales development on a currency-neutral basis. 4
Slide 5: Latin America Accelerates With Sales Up 21%
Latin America Accelerates With Sales Up 21% • Currency-neutral sales in Latin America increase 21% in Q2 • Double-digit sales increases in most of the region’s major markets • Comp store sales up 13% in Q2 • adidas Football grows over 40% in Q2 5
Slide 6: adidas With Leading Momentum In Greater China
adidas With Leading Momentum In Greater China • Strong momentum continues with sales growing 6% in Q2 • adidas continues to gain significant market share • Comp store sales grow 11% currency-neutral 6
Slide 7: Sales In European Emerging Markets Stable In Q2
Sales In European Emerging Markets Stable In Q2 • Sales in European Emerging Markets increase 1% in H1 • Wholesale and Other Businesses up 4% and 10%, respectively in Q2 • Comp store sales negatively impacted by declines in traffic 7
Slide 8: Macroeconomic Challenges Weigh On Western Europe
Macroeconomic Challenges Weigh On Western Europe • Sales down 9% currency-neutral YTD, heavily impacted by prior year event-related sales • Retail up 9% in Q2, with comp store sales turning positive, up 2% during the quarter • Running and Training grow at a mid-single-digit rate in Q2 8
Slide 9: North America Impacted By Challenging Golf Market
North America Impacted By Challenging Golf Market • Sales increase 1% currency-neutral in H1 driven by 3% growth at adidas • Comp store sales grow 13% at adidas own retail in Q2 • Strong performance in Running and Training • Reebok sales increase 1% excluding NFL 9
Slide 10: Other Asian Markets Up 7% Currency-Neutral In Q2
Other Asian Markets Up 7% Currency-Neutral In Q2 • Sales in Other Asian Markets grow 1% currency-neutral in H1 • Significant sales increases in South Korea, India and Australia • Double-digit sales increases at adidas Originals 10
Slide 11: adidas And Reebok Gross Margins Up In Q2
adidas And Reebok Gross Margins Up In Q2 Q2 2013 Change H1 2013 Change Net sales (€ in millions) 2,546 0%1) 5,404 0%1) Gross margin 48.5% +2.6pp 48.3% +2.2pp Net sales (€ in millions) 355 +11%1) 733 (4%)1) Gross margin 39.7% +7.6pp 39.4% +4.1pp 1) currency-neutral 11
Slide 12: Strong Growth In Running Across Every Geography
Strong Growth In Running Across Every Geography • Running sales up 16% in Q2 • Double-digit sales increases in both footwear and apparel • Continued roll-out of Boost technology into various franchises and colourways 12
Slide 13: adidas Outdoor Terrex Range Reaches New Heights
adidas Outdoor Terrex Range Reaches New Heights • Sales in Outdoor increase 25% in Q2 • Growth driven by Terrex footwear and apparel 13
Slide 14: Football Nitrocharged As It Laps Tough Comparisons
Football Nitrocharged As It Laps Tough Comparisons • Football sales down 5% on a currency-neutral basis in Q2 • Strong double-digit sales increases in Latin America • Footwear sales grow 6% in Q2 14
Slide 15: Growth At adidas Originals Accelerates 8% In Q2
Growth At adidas Originals Accelerates 8% In Q2 • Robust growth of both footwear and apparel in Q2 • Strong momentum in Greater China and Latin America • Action sports sales almost double 15
Slide 16: adidas Sport Style Up 9% Currency-Neutral in Q2
adidas Sport Style Up 9% Currency-Neutral in Q2 16
Slide 17: adidas NEO Label Resonating With Consumers Globally
adidas NEO Label Resonating With Consumers Globally • Sales increase 12% currency-neutral in Q2 • "Live Your Style" campaign featuring brand ambassadors Eddie Peng and Angelababy 17
Slide 18: Reebok Returns To Growth In Q2
Reebok Returns To Growth In Q2 • Reebok sales for Q2 up 11% currency-neutral • Solid sales increases in India, South Korea, Germany, France • North America increases 1% excluding NFL 18
Slide 19: Reebok Activates New Collaborations
Reebok Activates New Collaborations 19
Slide 20: Reebok Classics A Hit At Retail
Reebok Classics A Hit At Retail 20
Slide 21: TaylorMade-adidas Golf Up 2% In H1
TaylorMade-adidas Golf Up 2% In H1 • TMaG sales down 8% currency- neutral in Q2 • Number of rounds played negatively impacted by unseasonable weather • TMaG launches new R1 Black driver and Daddy Long Legs and Spider Blade putters • adidas Golf introduces the successful adicross Tour shoe 21
Slide 22: H1 Group Gross Margin Improves 2.1pp
H1 Group Gross Margin Improves 2.1pp Q2 2013 H1 2013 • Pricing and favourable Wholesale 41.1% 42.9% product mix +2.8pp +2.7pp • Overproportionate growth in Retail 65.4% 63.2% emerging markets +2.5pp +1.0pp • Larger share of higher-margin Other Businesses 43.4% 44.0% Retail sales (1.9pp) (0.5pp) 50.1
Slide 23: H1 Group Operating Margin Increases 0.7pp
H1 Group Operating Margin Increases 0.7pp Q2 2013 H1 2013 Royalty and commission income € 26 million € 51 million (5%) (2%) Other operating income € 29 million € 47 million +32% (0%) Other operating expenses € 1,497 million € 2,980 million +1% +1% Other operating expenses 44.3% 41.8% as a percentage
Slide 24: Net Income Increases 6% In H1
Net Income Increases 6% In H1 Q2 2013 H1 2013 Financial income € 6 million € 10 million (34%) (41%) Financial expenses € 22 million € 40 million (30%) (30%) Income tax rate 27.5% 27.5% (3.0pp) +0.1pp Net income attributable to € 172 million € 480 million shareholders +4% +6 % Diluted earnings per sh
Slide 25: H1 Wholesale Segmental Operating Margin Up 2.6pp
H1 Wholesale Segmental Operating Margin Up 2.6pp Wholesale Q2 2013 Change H1 2013 Change Net sales (€ in millions) 2,014 (1%)1) 4,495 (2%)1) Gross margin 41.1% +2.8pp 42.9% +2.7pp Segmental operating margin 31.4% +1.6pp 33.9% +2.6pp 1) currency-neutral 25
Slide 26: Retail Sales Increase 6% Currency-Neutral In H1
Retail Sales Increase 6% Currency-Neutral In H1 Retail Q2 2013 Change H1 2013 Change Net sales (€ in millions) 867 +5%1) 1,589 +6%1) adidas comp store sales (1)%1) (1)%1) Reebok comp store sales (3)%1) (1)%1) Total comp store sales (2)%1) (1)%1) Gross margin 65.4% +2.5pp 63.2% +1.0pp Segmental opera
Slide 27: Retail Store Development
Retail Store Development • 2,542 stores operated at quarter-end • Net openings of 84 stores in Q2 • 156 new stores opened, 72 stores closed, 18 stores remodelled • 1,437 adidas and 356 Reebok branded; 749 factory outlets 27
Slide 28: Other Businesses Grow 2% Currency-Neutral In H1
Other Businesses Grow 2% Currency-Neutral In H1 Other Businesses Q2 2013 Change H1 2013 Change Net sales (€ in millions) 502 (4%)1) 1,050 +2%1) Gross margin 43.4% (1.9pp) 44.0% (0.5pp) Segmental operating 27.8% (3.2pp) 29.6% (0.2pp) margin 1) currency-neutral 28
Slide 29: Operating Working Capital As A Percentage Of Sales Remains At Low Levels
Operating Working Capital As A Percentage Of Sales Remains At Low Levels 22 • Inventories remain stable on a currency-neutral basis 21 • Receivables up 2% on a 20,3 20,3 20,2 currency-neutral basis 20,0 19,9 20,0 20 • Payables decrease 5% on a currency-neutral basis 19 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13
Slide 30: Net Borrowings Decline 70%
Net Borrowings Decline 70% Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 448 400 • Net borrowings reduced by € 223 million to € 94 million • Ratio of net borrowings/EBITDA 0 decreases to 0.1 (2012: 0.2) (94) • Equity ratio increases significantly (180) to 47.5% (2012: 45.5%) -400 (318) (337) (640) -800 Net bo
Slide 31: Strategic Initiatives and Outlook 2013
STRATEGIC INITIATIVES AND OUTLOOK 2013 31
Slide 32: adidas Running Introduces Revolutionary Springblade
adidas Running Introduces Revolutionary Springblade 32
Slide 33: Leveraging Assets To Drive Basketball Momentum
Leveraging Assets To Drive Basketball Momentum 33
Slide 34: Football Gearing Up For New Season
Football Gearing Up For New Season 34
Slide 35: World Cup Activation To Accelerate
World Cup Activation To Accelerate 35
Slide 36: Bringing More To The Game: miCoach smart_ball
Bringing More To The Game: micoach smart_ball 36
Slide 37: Reebok One Series Footwear And Apparel Collection
Reebok One Series Footwear And Apparel Collection 37
Slide 38: Celebrating 30 Years With Reebok Classic Leather
Celebrating 30 Years With Reebok Classic Leather 38
Slide 39: ReebokONE Platform Rapidly Gaining Instructors
ReebokONE Platform Rapidly Gaining Instructors 39
Slide 40: Reebok To Announce Exciting New Partnership
Reebok To Announce Exciting New Partnership 40
Slide 41: Reebok To Open First Fit Hub In Western Europe
Reebok To Open First Fit Hub In Western Europe • 6 Fit Hub stores to open in UK in 2013 41
Slide 42: TaylorMade-adidas Golf Launches New SLDR Driver
TaylorMade-adidas Golf Launches New SLDR Driver 42
Slide 43: adidas Group Well On Track For Future Success
adidas Group Well On Track For Future Success • Innovation to drive further market share gains in key adidas focus categories • Reebok back to growth and on path to sustainable success • Undisputed leader in golf with unparalleled track record • Strong balance sheet to invest in operational and grow
Slide 44: adidas Group Updates 2013 Full Year Outlook
adidas Group Updates 2013 Full Year Outlook Group sales (currency-neutral) low- to mid-single-digit increase Wholesale sales (currency-neutral) low-single-digit increase Retail sales (currency-neutral) high-single- to low-double-digit increase Other Businesses sales (currency-neutral) mid- to high-s
Slide 45: adidas Group
adidas GROUP 45
Slide 46: Route 2015 Financial Milestones
Route 2015 Financial Milestones
Slide 47: Revised Sales Targets For Global Brands
Revised Sales Targets For Global Brands 2010 OLD NEW 47
Slide 48: 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 SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 48
Slide 49: Brand Architecture – Business Reality
Brand Architecture – Business Reality 8% 14% 22% 14% 26% 10% 6% PURE ATHLETIC ATHLETIC BRAND SPORT STYLE STYLE PERFORMER STYLE CLASSIC DRIVEN INSPIRED ADOPTER SETTER SPORTS COMPETITIVE SPORTS ACTIVE SPORTS CASUAL SPORTS FASHION 12% 78% 10% 49
Slide 50: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better 50
Slide 51: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 51
Slide 52: Slide 52
Slide 53: From An Activity To A Lifestyle…
From An Activity To A Lifestyle… 53
Slide 54: Reebok To Focus On Building Sustainable Fitness Categories
Reebok To Focus On Building Sustainable Fitness Categories 54
Slide 55: Meet Consumers Where They Live Within Their Fitness Life
Meet Consumers Where They Live Within Their Fitness Life 55
Slide 56: Well On Track To Deliver 11% Operating Margin By 2015
Well On Track To Deliver 11% Operating Margin By 2015 Quality of distribution Emerging Market Manufacturing Growth excellence Retail Performance proficiency driven Trade Terms Organisational Infrastructure set-up modernisation Range reduction 56
Slide 57: IR And Media App – Available For iPhone And iPad
IR And Media App – Available For iPhone And iPad Investor Relations and Media App 57
Slide 58: Questions & Answers
QUESTIONS & ANSWERS 58
Slide 59: Upcoming Event Dates
Upcoming Event Dates Nov 7, 2013 Nine Months 2013 Results Dec 2-3, 2013 Investor Trip, Herzogenaurach Mar 5, 2014 Full Year 2013 Results May 6, 2014 First Quarter 2014 Results May 8, 2014 Annual General Meeting May 9, 2014 Dividend Payment1) 1) Subject to Annual General Meeting Approval. 59
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