adidas AG · XETR:ADS
adidas — adidas-Salomon — Deutsche Bank 8th German Corporate Conference 2005
32 slides from adidas's conference presentation, May 31, 2005
Slide 1: Deutsche Bank 8th German Corporate Conference
adidas-Salomon AG DEUTSCHE BANK 8th GERMAN CORPORATE CONFERENCE MAY 31, 2005 FRANKFURT/MAIN Robin Stalker, CFO
Slide 2: Agenda
adidas-Salomon AG 8th German Corporate Conference May 2005 Agenda • Exciting start to 2005 • Regional and brand perspectives • Excellent P&L and balance sheet • Salomon rationale • Outlook 2
Slide 3: An Exciting Start to 2005
adidas-Salomon AG 8th German Corporate Conference May 2005 An Exciting Start to 2005 • Strong sales, margin and profitability improvements • Successful new products and brand positioning • Strong improvements in North America and Asia 3
Slide 4: Outstanding Financial Performance
adidas-Salomon AG 8th German Corporate Conference May 2005 Outstanding Financial Performance • Currency-neutral sales grow 11% (+10% in euros) • Substantial gross and operating margin improvement • Net income attributable to shareholders grows 46% (+26% on a comparable basis) 4
Slide 5: Major Sports Marketing Deals Signed
adidas-Salomon AG 8th German Corporate Conference May 2005 Major Sports Marketing Deals Signed 5
Slide 6: Changes to Use of Sport Logos on Olympic Products
adidas-Salomon AG 8th German Corporate Conference May 2005 Changes to Use of Sport Logos on Olympic Products • Limited use of Three Stripes on Olympic apparel in the future • Olympic footwear not affected • New brand promotion opportunities to be developed 6
Slide 7: Agenda
adidas-Salomon AG 8th German Corporate Conference May 2005 Agenda 9 Exciting start to 2005 • Regional and brand perspectives • Excellent P&L and balance sheet • Salomon rationale • Outlook 7
Slide 8: Currency-Neutral Sales Increase Driven by adidas and TaylorMade-adidas Golf Segments
adidas-Salomon AG 8th German Corporate Conference May 2005 Currency-Neutral Sales Increase Driven by adidas and TaylorMade-adidas Golf Segments % of Total 11% (+10%) 85 -8% (-9%) 6 31% 9 (28%) 11% Total: 100 Group (+10%) € 1.778bn -10% 0% 10% 20% 30% 40% (Figures in euro terms) 8
Slide 9: Increasing Brand Profile in North America
adidas-Salomon AG 8th German Corporate Conference May 2005 Increasing Brand Profile in North America • Currency-neutral sales grow 20% • Focus on brands and profitability • High-single-digit sales growth expected in 2005 9
Slide 10: Strong Momentum in Asia Continues
adidas-Salomon AG 8th German Corporate Conference May 2005 Strong Momentum in Asia Continues • Sales and backlogs grow more than 30% on a currency-neutral basis • Strong economic and income development • Major step change expected from 2008 Olympics 10
Slide 11: All-Around Strength in Latin America
adidas-Salomon AG 8th German Corporate Conference May 2005 All-Around Strength in Latin America • Currency-neutral sales grow 45% • Double-digit improvement at all brands • Brand presence improves in key markets 11
Slide 12: Challenging Quarter in Europe
adidas-Salomon AG 8th German Corporate Conference May 2005 Challenging Quarter in Europe • Currency-neutral sales grow 1% • Growth in emerging markets, the UK and Italy • Excellent profitability • Improvements expected in remainder of 2005 12
Slide 13: TaylorMade-adidas Golf Delivers Impressive Growth
adidas-Salomon AG 8th German Corporate Conference May 2005 TaylorMade-adidas Golf Delivers Impressive Growth • Currency-neutral sales grow 31% • Double-digit increases in all regions • Leading categories: metalwoods, rac™ irons and adidas apparel • Excellent product pipeline and market position to s
Slide 14: Salomon Sales Down in Most Categories
adidas-Salomon AG 8th German Corporate Conference May 2005 Salomon Sales Down in Most Categories • Currency-neutral sales decline 8% due to tough winter conditions in North America and Japan • Delayed ordering cycles negatively impact Mavic sales • Better full year sales expected than first quarter
Slide 15: Agenda
adidas-Salomon AG 8th German Corporate Conference May 2005 Agenda 9 Exciting start to 2005 9 Regional and brand perspectives • Excellent P&L and balance sheet • Salomon rationale • Outlook 15
Slide 16: Highest First Quarter Gross Margin in Group's History
adidas-Salomon AG 8th German Corporate Conference May 2005 Highest First Quarter Gross Margin in Group’s History 47.1% Ï 3.0pp 28.3% Ð 3.2pp 42.7% Ð 1.6pp Group* 46.9% Ï 1.0pp *Includes HQ/consolidation 16
Slide 17: Impact of IFRS Changes on P&L
adidas-Salomon AG 8th German Corporate Conference May 2005 Impact of IFRS Changes on P&L Old IFRS Rules New IFRS Rules Gross profit Gross profit Royalty and commission income Operating expenses Operating expenses Goodwill amortization/impairment Operating profit Operating profit Goodwill amortizatio
Slide 18: Operating Margin Improves 140 Basis Points Despite Higher Operating Expenses
adidas-Salomon AG 8th German Corporate Conference May 2005 Operating Margin Improves 140 Basis Points Despite Higher Operating Expenses • Operating expenses increase by 11% - Launch schedule weighted towards Q1 and Q4 - Continued expansion of adidas own retail • Operating profit up 27% to € 179 mill
Slide 19: Strong IBT and Earnings Performance
adidas-Salomon AG 8th German Corporate Conference May 2005 Strong IBT and Earnings Performance • Financial expenses reduced by 19% • IBT grows 31% to € 170 million (+20% on a comparable basis) • Minority interests up 3% to € 5 million • Tax rate reduced Net income attributable to shareholders up 46%
Slide 20: Strong Working Capital Progress Continues
adidas-Salomon AG 8th German Corporate Conference May 2005 Strong Working Capital Progress Continues • Receivables reduced by 2% currency-neutral (-4% in euros) - Driven by trade terms management and concerted collection efforts • Inventories increased 3% on a currency-neutral basis - Significantly
Slide 21: Further Debt and Financial Leverage Improvements
adidas-Salomon AG 8th German Corporate Conference May 2005 Further Debt and Financial Leverage Improvements € 1,045 million • Group debt reduced by € 416 million vs. prior year -40% € 629 million • Main drivers: Strong bottom- line profitability, tight working capital management • Equity base furthe
Slide 22: Agenda
adidas-Salomon AG 8th German Corporate Conference May 2005 Agenda 9 Exciting start to 2005 9 Regional and brand perspectives 9 Excellent P&L and balance sheet • Salomon rationale • Outlook 22
Slide 23: Salomon Group of Brands to Be Sold
adidas-Salomon AG 8th German Corporate Conference May 2005 Salomon Group of Brands to Be Sold 23
Slide 24: Rapid Consolidation in Winter Sports Industry
adidas-Salomon AG 8th German Corporate Conference May 2005 Rapid Consolidation in Winter Sports Industry • Scale and synergies critical to success • Efficiency as key factor • Sale of Salomon to Amer Sports Corporation a win for all parties 24
Slide 25: The Salomon Divestiture
adidas-Salomon AG 8th German Corporate Conference May 2005 The Salomon Divestiture • Approx. € 485 million enterprise value of Salomon segment, adjusted for changes in capital employed • All-cash transaction • Subject to customary terms and conditions (e.g. approval of antitrust authorities) • Deal
Slide 26: Financial Implications of the Salomon Divestiture
adidas-Salomon AG 8th German Corporate Conference May 2005 Financial Implications of the Salomon Divestiture • Visibly improved profitability ratios, especially ROCE • Proceeds to be used to fund share buyback 26
Slide 27: Strategy Tied to Key Strengths
adidas-Salomon AG 8th German Corporate Conference May 2005 Strategy Tied to Key Strengths Focus on adidas and TaylorMade-adidas Golf Clear field of competition, precise priorities Cutting-edge innovation, technology and design Streamlined and stronger brand leader 27
Slide 28: Agenda
adidas-Salomon AG 8th German Corporate Conference May 2005 Agenda 9 Exciting start to 2005 9 Regional and brand perspectives 9 Excellent P&L and balance sheet 9 Salomon rationale • Outlook 28
Slide 29: adidas Backlog Growth Continues to Accelerate (YOY)
adidas-Salomon AG 8th German Corporate Conference May 2005 adidas Backlog Growth Continues to Accelerate (YOY) euros currency • Highest currency- neutral neutral backlogs in North America in more Footwear + 2% + 5% than two years (YOY) • 15th consecutive Apparel + 10% + 14% quarter of double-digit u
Slide 30: Increased Confidence in Full Year Sales Guidance
adidas-Salomon AG 8th German Corporate Conference May 2005 Increased Confidence in Full Year Sales Guidance • Europe: mid-single-digit growth rates • North America: high-single-digit growth rates (previously: mid- to high-single-digit) • Latin America: double-digit growth rates (previously: high- si
Slide 31: Profitability Improvement to Continue
adidas-Salomon AG 8th German Corporate Conference May 2005 Profitability Improvement to Continue • Gross margin to be at least at 2004 record level • Visible underlying operating margin improvement • Reported net income to increase around 20% 31
Slide 32: Question and Answer Session
adidas-Salomon AG 8th German Corporate Conference May 2005 QUESTION AND ANSWER SESSION 32
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