Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (August 2014)
57 slides from Adidas's roadshow presentation, August 2014
Slide 1: Roadshow Presentation August – October 2014
1 Roadshow Presentation August – October 2014
Slide 2: Operational and Financial Highlights
OPERATIONAL AND FINANCIAL HIGHLIGHTS
Slide 3: adidas Group Sales Up 10% Currency-Neutral In Q2
adidas Group Sales Up 10% Currency-Neutral In Q2 3 • Currency-neutral sales increase across all regions in Q2 • Revenues at adidas and Reebok accelerate, up 14% and 9%, respectively • Negative currency effects and continued weakness in golf weigh on Group results • Diluted EPS down 16% in Q2 and 27%
Slide 4: Currencies Significantly Impact Financial Performance
Currencies Significantly Impact Financial Performance 4 • € 450 million negative impact on sales in the first six months • € 100 million negative impact on Group operating margin in the first six months
Slide 5: Sales Increase Across All Regions In Q2
Sales Increase Across All Regions In Q2 5 +13% Western Europe +14% +1% European Emerging Markets North America +11% Greater China +33% +0% Latin America Other Asian Markets Sales development on a currency-neutral basis.
Slide 6: Positive Retail Comparable Store Sales Around The World
Positive Retail Comparable Store Sales Around The World 6 European Emerging Markets +5% +17% Western +6% Europe North +8% Greater China America +29% +6% Latin Other Asian America Markets H1 2014: Own-retail regional comparable store sales growth.
Slide 7: 2014 FIFA World Cup Boosts Sales In Latin America
2014 FIFA World Cup™ Boosts Sales In Latin America 7 • Currency-neutral sales increase 33% in Q2 • Double-digit sales increases in all major markets • adidas Football grows triple-digits in Argentina and Colombia in Q2
Slide 8: Closing In On Market Leadership In Greater China
Closing In On Market Leadership In Greater China 8 • Currency-neutral sales increase 11% in Q2 • Comp store sales grow 18% currency-neutral • adidas Originals and adidas NEO continue to enjoy strong momentum
Slide 9: European Emerging Markets Up 14% In Q2
European Emerging Markets Up 14% In Q2 9 энергия бесконечна • Russia/CIS up 13% currency-neutral in Q2 • adidas and Reebok grow double-digits currency- neutral
Slide 10: Revenues In Western Europe Accelerate In Q2
Revenues In Western Europe Accelerate In Q2 10 • Sales grow 13% currency- neutral • Revenues at both Wholesale and Retail up double-digits • Germany, the UK, Spain and Italy grow at double-digit rates
Slide 11: North America Turns Positive In Q2
North America Turns Positive In Q2 11 • Currency-neutral revenues up 1% in Q2 • Retail sales increase 24% currency-neutral • Sport Performance up 13% driven by strong growth in Football (+52%) and Running (+13%)
Slide 12: adidas And Reebok Revenues Accelerate In Q2
adidas And Reebok Revenues Accelerate In Q2 12 Q2 2014 Change H1 2014 Change Net sales (€ in millions) 2,713 +14%1) 5,540 +10%1) Gross margin 47.3% (1.2pp) 47.4% (0.9pp) Net sales (€ in millions) 354 +9%1) 712 +6%1) Gross margin 38.6% (1.2pp) 39.1% (0.3pp) 1) Currency-neutral.
Slide 13: adidas Has Clean Sweep At 2014 FIFA World Cup
adidas Has Clean Sweep At 2014 FIFA World Cup™ 13 • Football sales up 41% in Q2 • Double-digit growth in all regions • adidas underpins leadership in football Football
Slide 14: World Cup Success On Every Measure
World Cup Success On Every Measure 14
Slide 15: Pureboost Enters The Running Market
Pureboost Enters The Running Market 15 • Double-digit growth in all regions in Q2 Running • >2 million pairs of Boost sold in H1 • Running sales up 16% currency- neutral in Q2
Slide 16: Sales In Training Grow 5% In H1
Sales In Training Grow 5% In H1 16 • Currency-neutral sales up 2% in Q2 • Apparel sales grow high-single-digits, driven by successful launch of ClimaChill Training
Slide 17: Basketball Rebounds During Q2
Basketball Rebounds During Q2 17 • Revenues grow 2% currency- neutral in Q2 • Apparel sales up 8% in H1 • Introduction of Boost into Basketball highly anticipated Basketball
Slide 18: adidas Originals Regains Strength In Q2
adidas Originals Regains Strength In Q2 18 • Revenues up 8% in Q2 currency-neutral • Apparel sales increase 14% in Q2 • ZX Flux top-selling boot at Foot Locker Europe
Slide 19: adidas NEO Revenues Up 21% In Q2
adidas NEO Revenues Up 21% In Q2 19 • Sales increase 23% currency-neutral in H1 • Double-digit growth in footwear and apparel • Revenues in Western Europe grow 32% in Q2
Slide 20: Momentum At Reebok Accelerates In Q2
Momentum At Reebok Accelerates In Q2 20 • Revenues up 9% in Q2 • Retail sales increase 13% • Sales growth driven by Fitness Training, Walking and Studio categories
Slide 21: Reebok Classics Grows At A Double-Digit Rate
Reebok Classics Grows At A Double-Digit Rate 21 • Classics up 24% currency- neutral in Q2 • Footwear and apparel sales up double-digits • GL 6000 series and Pump Fury remain top-sellers
Slide 22: TMaG Impacted By Continued Weakness In Golf Market
TMaG Impacted By Continued Weakness In Golf Market 22 • Sales decline 18% in Q2 • TMaG remains market leader in metalwoods and irons • SLDR continues to be the #1 driver on the PGA Tour #1 Driver in Golf
Slide 23: Group Gross Margin Down 0.9pp In Q2
Group Gross Margin Down 0.9pp In Q2 23 Q2 2014 H1 2014 • Overproportionate growth in emerging markets Wholesale 41.3% 42.6% +0.2pp (0.2pp) • More favourable product mix Retail 60.5% 60.2% (4.9pp) (3.0pp) • Lower margins in Retail and Other Businesses 38.5% 38.8% at TMaG (4.8pp) (5.2pp) • Less favour
Slide 24: Group Operating Profit Heavily Impacted By TMaG And Currencies
Group Operating Profit Heavily Impacted By TMaG And 24 Currencies Q2 2014 H1 2014 Royalty and commission income € 26 million € 50 million (1%) (1%) Other operating income € 36 million € 85 million +22% +81% Other operating expenses € 1,546 million € 3,053 million +3% +2% Other operating expenses 44.
Slide 25: Diluted EPS Down 16% In Q2
Diluted EPS Down 16% In Q2 25 Q2 2014 H1 2014 Financial income € 5 million € 12 million (9%) +16% Financial expenses € 20 million € 40 million (5%) (1%) Income before taxes € 205 million € 495 million (13%) (25%) Income tax rate 29.1% 29.0% +1.6pp +1.5pp Net income attributable to € 144 million € 34
Slide 26: Wholesale Up 10% Currency-Neutral In Q2
Wholesale Up 10% Currency-Neutral In Q2 26 Wholesale Q2 2014 Change H1 2014 Change Net sales (€ in millions) 2,085 +10%1) 4,442 +5%1) Gross margin 41.3% +0.2pp 42.6% (0.2pp) Segmental operating margin 32.1% +0.8pp 34.0% +0.0pp 1) Currency-neutral.
Slide 27: Retail Sales Increase 22% Currency-Neutral
Retail Sales Increase 22% Currency-Neutral 27 Retail Q2 2014 Change H1 2014 Change Net sales (€ in millions) 958 +22%1) 1,752 +22%1) adidas comp store sales +12%1) +10%1) Reebok comp store sales (0%) 1) +2%1) Total comp store sales +10%1) +9%1) Gross margin 60.5% (4.9pp) 60.2% (3.0pp) Segmental oper
Slide 28: Retail Segment Profitability Impacted By Russia/CIS
Retail Segment Profitability Impacted By Russia/CIS 28 • Gross margins in the Retail segment decline 4.9pp in Q2 • Almost 4pp due to promotional activity in Russia/CIS and devaluation of the Russian rouble
Slide 29: Retail Store Development
Retail Store Development 29 • 2,825 stores operated at quarter-end • Net increase of 85 stores versus 2,740 last year • 199 new stores opened, 114 stores closed, 64 stores remodelled • 1,590 adidas and 427 Reebok branded; 808 factory outlets
Slide 30: Operating Working Capital Negatively Impacted By Increase In Inventories
Operating Working Capital Negatively Impacted 30 By Increase In Inventories 22 21.6 • Inventories increase 16% 20.9 21.1 21 on a currency-neutral basis 20.6 • Receivables up 6% on a 20.3 20.3 currency-neutral basis 20 • Payables increase 2% on a currency-neutral basis 19 Q1/13 Q2/13 Q3/13 Q4/13 Q1/1
Slide 31: Net Borrowings Negatively Impacted By Higher Capital Expenditure
Net Borrowings Negatively Impacted By Higher Capital 31 Expenditure Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 500 448 295 • Net borrowings increase € 360 million to € 454 million 100 • Ratio of net borrowings/EBITDA increases to 0.3 from 0.1 in 2013 (94) • Equity ratio decreases to
Slide 32: Strategic Initiatives and Outlook
STRATEGIC INITIATIVES AND OUTLOOK
Slide 33: Predator Instinct Takes Over
Predator Instinct Takes Over 33
Slide 34: Boost Changes Everything In Basketball
Boost Changes Everything In Basketball 34
Slide 35: RG3 Energy Boost Signature Training Shoe Launched
RG3 Energy Boost Signature Training Shoe Launched 35
Slide 36: ClimaHeat – The Hottest Revolution In Apparel
ClimaHeat – The Hottest Revolution In Apparel 36
Slide 37: ZX Flux Takes Customisation To Next Level
ZX Flux Takes Customisation To Next Level 37
Slide 38: Creating Hype Through New Collaborations
Creating Hype Through New Collaborations 38 • xxxxxxx • xxxxxxxxx
Slide 39: Reebok Building On Key Partnerships With New Products
Reebok Building On Key Partnerships With New Products 39
Slide 40: Actions To Stimulate Growth & Profitability Improvements
Actions To Stimulate Growth & Profitability Improvements40
Slide 41: Clean-Up Of Golf Market And Restructuring TMaG
Clean-Up Of Golf Market And Restructuring TMaG 41 • Poor retail sentiment and slow liquidation of old inventory in the golf market • Restructuring programme at TMaG to be started in H2 2014 • xxxxxxx • Impact of•around € 50 million to € 60 million xxxxxxxxx on H2 operating profit expected
Slide 42: Adjusted Store Opening Plan In Russia/CIS
Adjusted Store Opening Plan In Russia/CIS 42 • Increasing risks to consumer sentiment and spending • Reduction in net store openings in 2014 and 2015 • 80 stores (net) planned to be opened in 2014, versus initial plan of 150 stores • Impact of around € 50 million on H2 operating profit expected
Slide 43: Increasing Investment In Brands
Increasing Investment In Brands 43
Slide 44: Strengthen Brand Leadership
Strengthen Brand Leadership 44
Slide 45: adidas Group Updates 2014 Full Year Outlook
adidas Group Updates 2014 Full Year Outlook 45 mid- to high-single-digit increase Group sales (currency-neutral) (prev.: high-single-digit increase) Wholesale sales (currency-neutral) mid-single-digit increase Retail sales (currency-neutral) low-double-digit increase double-digit decrease Other Busi
Slide 46: Lifting Our Game To Drive More Consistency In Earnings
Lifting Our Game To Drive More Consistency In Earnings 46 • Momentum returning in key markets • Driving more agility through new organisational set-up • Taking consequent and necessary decisions to prepare the Group for the future
Slide 47: Questions & Answers
QUESTIONS & ANSWERS
Slide 48: Upcoming Event Dates
Upcoming Event Dates 48 Nov 6, 2014 Nine Months 2014 Results Mar 5, 2015 Full Year 2014 Results May 5, 2015 First Quartal 2015 Results May 7, 2015 Annual General Meeting May 8, 2015 Dividend Payment1) 1) Subject to Annual General Meeting Approval.
Slide 49: Appendix
APPENDIX
Slide 50: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better 50 stronger natural cooler smarter faster
Slide 51: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 51 12 - 19 YEARS 16 - 24 YEARS 24 - 36 YEARS 35+ YEARS FOR THE FROM THE FOR THE OUTWARDLY FOR THE STYLE-ADOPTING TRENDSETTER CONFIDENT, FORWARD- SOPHISTICATED, HIGH SCHOOL KID TO THE THINKING INDIVIDUAL ACTIVE MAN MAINSTREAM KID
Slide 52: Reebok Building Sustainable Fitness Activities
Reebok Building Sustainable Fitness Activities 52
Slide 53: Fitness Is The Formula For Reebok's Success
Fitness Is The Formula For Reebok’s Success 53 PARTICIPATION GYMS SPEND
Slide 54: Training - The Brand Of The CrossFit Community
Training - The Brand Of The CrossFit Community 54
Slide 55: Running - Building With The Spartan Race
Running - Building With The Spartan Race 55
Slide 56: Studio – Accelerating Visibility Through Les Mills
Studio – Accelerating Visibility Through Les Mills 56
Slide 57: Reebok ONE – Bringing The Fitness Community Together
Reebok ONE – Bringing The Fitness Community Together 57