Adidas Ag · XETR:ADS
Adidas — Non-Deal Roadshow (March 2013)
63 slides from Adidas's roadshow presentation, Mar 26, 2013
Slide 1: Roadshow Presentation Denver/San Francisco, March 26-27, 2013
Roadshow Presentation Denver/ San Francisco, March 26-27, 2013
Slide 2: Operational Highlights
OPERATIONAL HIGHLIGHTS 2
Slide 3: adidas Group Achieves Record Results In 2012
adidas Group Achieves Record Results In 2012 • Record sales of € 14.9 billion • Sales increase 6% currency-neutral • Growth across all geographies and channels • Operating margin improves 80 bps to 8.0%1) • 29% increase in net income and EPS1) • Net cash of € 448 million 1) Excluding goodwill impair
Slide 4: Currency-Neutral Sales Growth In All Regions In 2012
Currency-Neutral Sales Growth In All Regions In 2012 +3% Western Europe +15% European Emerging Markets +2% North America +15% Greater China +7% Other Asian Markets +8% Latin America 4
Slide 5: Double-Digit Growth Per Quarter In Greater China In 2012
Double-Digit Growth Per Quarter In Greater China In 2012 • Sales grow 15% currency-neutral in 2012 • adidas Sport Performance up 14% driven by strong momentum in all major categories • adidas Originals and adidas NEO label drive Sport Style sales up 17% • Reebok and TMaG also grow at double-digit ra
Slide 6: adidas And TMaG Drive Growth In North America
adidas And TMaG Drive Growth In North America • Sales up 2% currency-neutral in 2012 • Excluding NFL, Group revenues grow 6% • adidas and TMaG increase 9% and 25%, respectively • Originals continues to be the hottest lifestyle brand • Mall and Sporting Goods channels driving success 6
Slide 7: Solid Comp Store Sales Growth In Russia/CIS
Solid Comp Store Sales Growth In Russia/CIS • European Emerging Markets up 15% currency- neutral in 2012 • Russia/CIS sales increase 17% on a currency- neutral basis • Comp store sales in European Emerging Markets up 8% in 2012 7
Slide 8: Resilient Performance In Western Europe
Resilient Performance In Western Europe • Sales up 3% currency-neutral in 2012 • Strong performance in the UK and Poland • Tremendous brand visibility and engagement during the major sports events 8
Slide 9: South Korea & Japan Drive Growth In Other Asian Markets
South Korea & Japan Drive Growth In Other Asian Markets • Revenues in Other Asian Markets increase 7% currency-neutral • Extension of market leadership in Japan with sales up 11% 9
Slide 10: Broad-Based Momentum In Latin America
Broad-Based Momentum In Latin America • Revenues up 8% currency-neutral in 2012 • Double-digit sales growth in most markets • Strong growth at adidas Sport Performance driven by Football and Running • Retail sales increase over 20% 10
Slide 11: adidas Brand Sales Grow 10% Currency-Neutral
adidas Brand Sales Grow 10% Currency-Neutral Q4 2012 Change FY 2012 Change Net sales (€ in millions) 2,536 2%1) 11,344 10%1) Gross margin 45.1% +1.5pp 46.1% (0.0pp) Net sales (€ in millions) 428 (12%)1) 1,667 (18%)1) Gross margin 38.2% +4.5pp 35.9% (0.1pp) 1) currency-neutral 11
Slide 12: adidas Brand Sales Grow 10% In 2012
adidas Brand Sales Grow 10% In 2012 12
Slide 13: adidas Takes The Stage At London 2012 Olympic Games
adidas Takes The Stage At London 2012 Olympic Games 13
Slide 14: adidas Football Achieves Record Sales In 2012
adidas Football Achieves Record Sales In 2012 • Sales increase 13% on a currency-neutral basis in 2012 • Market share gains continue following UEFA EURO 2012 • adidas sponsored Chelsea FC wins UEFA Champions League 14
Slide 15: Second Year Of Double-Digit Growth For adidas Running
Second Year Of Double-Digit Growth For adidas Running • Sales up 13% currency-neutral in 2012 • Strong growth in Clima and adizero franchises • Award-winning and market-leading innovation driving success 15
Slide 16: adidas Basketball Growth Rate Doubles In 2012
adidas Basketball Growth Rate Doubles In 2012 • Sales growth accelerates to 22% in 2012 • Footwear and apparel both up over 20% • Footwear momentum driven by D Rose 3 and Crazy Light 2 • Strong social media buzz from Rose Recovery Campaign 16
Slide 17: adidas Outdoor Climbing High With The Success Of Terrex
adidas Outdoor Climbing High With The Success Of Terrex • Sales increase 14% on a currency-neutral basis in 2012 • Strong growth in the emerging markets • Growth in both footwear and apparel 17
Slide 18: TMaG Surpasses Route 2015 Goal Already in 2012
TMaG Surpasses Route 2015 Goal Already in 2012 • Sales grow 20% currency-neutral to over € 1.3 billion • Dominant market leader in metalwoods with more than 40% market share • Launch of RocketBladez catapults market share in irons to over 30% 18
Slide 19: Reebok Underlying Sales Trend Continues To Improve
Reebok Underlying Sales Trend Continues To Improve • Sales down 18% currency-neutral in 2012 • Revenues up 3% in Q4 excl. licence impacts • ‘The House Of Fitness’ introduced, brand organisation restructured • Introduction of ‘Reebok Delta’ collection 19
Slide 20: adidas Group Achieves Goals In 2012
adidas Group Achieves Goals In 2012 • Group sales development outperforms macroeconomic growth • Significant market share gains in several categories and markets • Gross margin improved despite significant pressure from input costs • Operating margin improved in line with expectations • Tight operat
Slide 21: Financial Highlights
FINANCIAL HIGHLIGHTS 21
Slide 22: Restatement Of Financial Statements According To IAS 8
Restatement Of Financial Statements According To IAS 8 • High level of criminal energy and collusion between former employees and external business partners • Practice of inflating sales and profits had been going on for several years • Reduction of net income attributable to shareholders of € 58 mi
Slide 23: Goodwill Impairment Of € 265 million
Goodwill Impairment Of € 265 million • Non-cash in nature and not affecting Amount the adidas Group’s financial position Unit (€ in million) • Re-evaluation of future growth prospects WHS NAM 106 for specific markets and segments WHS LAM 41 • Increase in the country-specific discount WHS Brazil 15 r
Slide 24: Gross Margin Improves Despite Input Cost Pressure
Gross Margin Improves Despite Input Cost Pressure Q4 2012 FY 2012 • Positive impact from product Wholesale 39.1% 40.3% price increases +2.8pp +0.4pp • Overproportionate growth in Retail 60.7% 60.9% emerging markets (0.4pp) (1.7pp) • Larger share of higher-margin Other Businesses 38.5% 42.8% Retail s
Slide 25: FY Group Operating Margin Reaches 8.0%
FY Group Operating Margin Reaches 8.0%1) Q4 20121) FY 20121) Royalty and commission income € 27 million € 105 million (11%) +13% Other operating income € 46 million € 127 million (4%) +29% Other operating expenses € 1,650 million € 6,150 million +7% +10% Other operating expenses 49.0% 41.3% as a per
Slide 26: Diluted EPS Ahead Of Initial Expectations
Diluted EPS Ahead Of Initial Expectations1) Q4 20121) FY 20121) Financial income € 7 million € 36 million (6%) +17% Financial expenses € 21 million € 105 million +21% (8%) Income before taxes € 12 million € 1,116 million +61% +28% Income tax rate 164.8% 29.3% +76.5pp (0.7pp) Net income attributable
Slide 27: Wholesale Segmental Operating Margin Up 1.0pp In 2012
Wholesale Segmental Operating Margin Up 1.0pp In 2012 Wholesale Q4 2012 Change FY 2012 Change Net sales (€ in millions) 2,063 (4%)1) 9,533 +2%1) Gross margin 39.1% +2.8pp 40.3% +0.4pp Segmental operating margin 28.0% +3.6pp 31.1% +1.0pp 1) currency-neutral 27
Slide 28: Retail Comparable Store Sales Increase 7% In 2012
Retail Comparable Store Sales Increase 7% In 2012 Retail Q4 2012 Change FY 2012 Change Net sales (€ in millions) 883 +9%1) 3,373 +14%1) adidas comp store sales +1%1) +7%1) Reebok comp store sales +1%1) +7%1) Total comp store sales +1%1) +7%1) Gross margin 60.7% (0.4pp) 60.9% (1.7pp) Segmental operat
Slide 29: Retail Store Development In 2012
Retail Store Development In 2012 • 2,446 stores operated at year-end • A net increase of 62 or 3% versus the prior year of 2,384 • 323 new stores opened, 261 stores closed, 92 stores remodelled • 1,353 adidas and 363 Reebok branded; 730 factory outlets 29
Slide 30: Other Businesses Grow 17% Currency-Neutral In 2012
Other Businesses Grow 17% Currency-Neutral In 2012 Other Businesses Q4 2012 Change FY 2012 Change Net sales (€ in millions) 424 +7%1) 1,977 +17%1) Gross margin 38.5% (2.3pp) 42.8% (0.8pp) Segmental operating 22.5% (1.0pp) 27.4% +0.4pp margin 1) currency-neutral 30
Slide 31: Operating Working Capital As A Percentage Of Sales At Year-End Record Low
Operating Working Capital As A Percentage Of Sales At Year-End Record Low • Inventories increase 1% 22 on a currency-neutral basis • Reflects strong focus on inventory management 21 • Receivables up 8% on a 20.4 currency-neutral basis 20.2 20.0 20.0 20 19.9 • Reflects the growth of our business • Pa
Slide 32: Net Cash Position Improves Significantly
Net Cash Position Improves Significantly Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 500 448 • Net cash improves € 358 million to € 448 million 90 100 • Ratio of net borrowings/EBITDA decreases to -0.3 from -0.1 in 2011 • Equity ratio decreases slightly -300 -221 to 45.5% (2011: 45.7%) -31
Slide 33: 35% Higher Dividend Proposed
35% Higher Dividend Proposed 1,60 • adidas Group highly cash generative 1,40 1.35 • Proposed dividend of € 1.35 per 1,20 1.00 share, reflecting a 35% increase 1,00 0.80 versus prior year 0,80 0,60 0.50 0.50 • Payout ratio increases to 35.7% 0,40 0.33 0.33 0.42 0.35 • In line with dividend policy of
Slide 34: Strategic Initiatives And Outlook
STRATEGIC INITIATIVES AND OUTLOOK 34
Slide 35: Route 2015 – The Story So Far
Route 2015 – The Story So Far • Strong growth in key attack markets and categories • Controlled space of 45% at the end of 2012 • Strong operational leverage • EPS growth at a compound rate of 18% • Cash flow from operations of € 1.75 billion 35
Slide 36: adidas Launches Ground-Breaking Innovation Boost
adidas Launches Ground-Breaking Innovation Boost 36
Slide 37: Continue To Be Disruptive In Basketball Category
Continue To Be Disruptive In Basketball Category 37
Slide 38: Build-Up Begins In Latin America For 2014 FIFA World Cup
Build-Up Begins In Latin America For 2014 FIFA World Cup 38
Slide 39: Launch Of Team Messi Social Platform
Launch Of Team Messi Social Platform 39
Slide 40: myGirls Campaign
myGirls Campaign 40
Slide 41: Unite All Originals Campaign
Unite All Originals Campaign 41
Slide 42: adidas Sport Style Sales Exceed € 3.2 billion
adidas Sport Style Sales Exceed € 3.2 billion • adidas Sport Style sales increase 16% in 2012 • Double-digit growth at adidas Originals and adidas NEO label 42
Slide 43: Reebok To Introduce New Innovations And Partnerships
Reebok To Introduce New Innovations And Partnerships 43
Slide 44: Reebok Launches Global Live With Fire Campaign
Reebok Launches Global Live With Fire Campaign 44
Slide 45: TMaG Adding More Distance In Metalwoods
TMaG Adding More Distance In Metalwoods 45
Slide 46: 2013 Full Year Outlook
2013 Full Year Outlook Group sales (currency-neutral) 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-single-digit increase Gross ma
Slide 47: adidas Group Well Prepared For New Records In 2013
adidas Group Well Prepared For New Records In 2013 • Strong product pipeline to fuel new record sales • Gross and operating margins to increase • Significant double-digit earnings growth 47
Slide 48: adidas Group
adidas GROUP 48
Slide 49: Route 2015 Financial Milestones
Route 2015 Financial Milestones
Slide 50: Revised Sales Targets For Global Brands
Revised Sales Targets For Global Brands 2010 OLD NEW 50
Slide 51: 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% 51
Slide 52: 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% 52
Slide 53: adidas Sport Performance – Making The Athlete Better
adidas Sport Performance – Making The Athlete Better 53
Slide 54: adidas Sport Style – Multi-Label Strategy
adidas Sport Style – Multi-Label Strategy 54
Slide 55: Slide 55
Slide 56: New Organisation: Focus On Fitness Categories
New Organisation: Focus On Fitness Categories 56
Slide 57: From An Activity To A Lifestyle…
From An Activity To A Lifestyle… 57
Slide 58: Reebok To Focus On Building Sustainable Fitness Categories
Reebok To Focus On Building Sustainable Fitness Categories 58
Slide 59: Meet Consumers Where They Live Within Their Fitness Life
Meet Consumers Where They Live Within Their Fitness Life 59
Slide 60: 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 60
Slide 61: Questions & Answers
QUESTIONS & ANSWERS 61
Slide 62: IR And Media App – Available For iPhone And iPad
IR And Media App – Available For iPhone And iPad Investor Relations and Media App 62
Slide 63: Upcoming Event Dates
Upcoming Event Dates May 3, 2013 First Quarter 2013 Results May 8, 2013 Annual General Meeting May 9, 2013 Dividend Payment1) Aug 8, 2013 First Half 2013 Results Nov 7, 2013 Nine Months 2013 Results 1) Subject to Annual General Meeting Approval. 63