Adidas Ag · XETR:ADS
Adidas — adidas-Salomon — H1 2002 Earnings Presentation
31 slides from Adidas's earnings presentation, Aug 7, 2002
Slide 1: adidas-Salomon AG 1st Half Year 2002 Financial Results Presentation
adidas-Salomon AG 1st Half Year 2002 Financial Results Presentation August 7, 2002 1 1st Half Year 2002 Financial Results Presentation
Slide 2: Operational Highlights and Strategic Outlook
Operational Highlights and Strategic Outlook Herbert Hainer, CEO 2 1st Half Year 2002 Financial Results Presentation
Slide 3: First Half 2002: World Cup Excitement
First Half 2002: World Cup Excitement • Group sales grow 7% • Strong growth in Asia and North America • New product sales accelerating • Currency-neutral backlogs up 11% • 2002 sales and earnings targets confirmed 3 1st Half Year 2002 Financial Results Presentation
Slide 4: North America Turnaround Delivering Results
North America Turnaround Delivering Results • 1H sales increase 8% • adidas America currency- neutral sales up 13% in Q2 • Double-digit growth in footwear in Q2 • Currency-neutral backlogs up 15% 4 1st Half Year 2002 Financial Results Presentation
Slide 5: Europe Momentum Grows
Europe Momentum Grows • 1H sales increase 3% • Sales momentum in all major markets • Currency-neutral backlogs up 7% 5 1st Half Year 2002 Financial Results Presentation
Slide 6: Sales Momentum in Asia Continues
Sales Momentum in Asia Continues • 1H sales increase 26% • adidas Japan sales up more than 50% in Q2 • Momentum continues after World Cup • TMaG success continues 6 1st Half Year 2002 Financial Results Presentation
Slide 7: World Cup Success
World Cup Success • More than 1.5 million jerseys sold • 6 million footballs sold • 500,000 Predator® Mania sold 7 1st Half Year 2002 Financial Results Presentation
Slide 8: TMaG: Becoming the Undisputed Golf Industry Leader
TMaG: Becoming the Undisputed Golf Industry Leader • Ernie Els wins British Open • #1 driver, iron and fairway wood on PGA Tour • 500 Series success 8 1st Half Year 2002 Financial Results Presentation
Slide 9: Booming Basketball Business
Booming Basketball Business • Sales up more than 60% in 1st half • 2 of the top 3 draft picks under contract • Excellent sell-throughs of ADAN II • Exciting product offering in 2H 9 1st Half Year 2002 Financial Results Presentation
Slide 10: 2002 Product Initiatives All On Track
2002 Product Initiatives All On Track • ClimaCoolTM • a3® • Hyperspeed II • Sport Heritage products 10 1st Half Year 2002 Financial Results Presentation
Slide 11: Sport Style Division
Sport Style Division • Yohji Yamamoto as creative director • Focus on fashion market • Launch October, retail introduction SS03 11 1st Half Year 2002 Financial Results Presentation
Slide 12: Ross McMullin named to Executive Board
Ross McMullin named to Executive Board • Responsible for adidas- Salomon activities in North America • With Group since 2000 • 20 years consumer and packaged goods experience 12 1st Half Year 2002 Financial Results Presentation
Slide 13: 2002 adidas-Salomon Outlook
2002 adidas-Salomon Outlook • Challenging marketplace • Turnaround in North America accelerates • Brand excitement highlighted by new products • Earnings growth of 5-10% 13 1st Half Year 2002 Financial Results Presentation
Slide 14: Financial Highlights and Outlook
Financial Highlights and Outlook Robin Stalker, CFO 14 1st Half Year 2002 Financial Results Presentation
Slide 15: Key Financial Targets for 2002
Key Financial Targets for 2002 • Gross margin strength a priority • Spending on key initiatives • Continued working capital improvements • Cash flow emphasis • Debt reduction 15 1st Half Year 2002 Financial Results Presentation
Slide 16: Group Sales Increase 10% in Q2 2002
Group Sales Increase 10% in Q2 2002 1,800 * +5% (+ 4%) 1,600 +10% (+ 14%) 2001 1,400 2002 1,200 * Euros in millions 1,000 (Currency-neutral Q1 Q2 Q3 Q4 figures) 16 1st Half Year 2002 Financial Results Presentation
Slide 17: 1H adidas Sales Grow on Strength in Asia and North America
1H adidas Sales Grow on Strength in Asia and North America % of Group Europe 1% 53 North America 8% 27 Asia 29% 17 Latin America -5% 3 Total 7% Total: € 2.6b 100 -10% -10% 0% 0% 10% 10% 20% 20% 30% 30% 40% 40% 17 1st Half Year 2002 Financial Results Presentation
Slide 18: Salomon Stable Despite Tough Market Conditions in 1H 2002
Salomon Stable Despite Tough Market Conditions in 1H 2002 % of Group Europe 8% 64 North America -4% 28 Asia -28% 7 Latin America 4% 1 Total 0% Total: € 194m 100 -30% -10% -5% -5% 0% 0% 5% 5% 10% 10% 18 1st Half Year 2002 Financial Results Presentation
Slide 19: Double-Digit Sales Gains at TaylorMade-adidas Golf in 1H 2002
Double-Digit Sales Gains at TaylorMade-adidas Golf in 1H 2002* % of Group Europe 22% 17 North America 12% 56 24% Asia 27 17% Total: € 379m Total 100 0% 0% 10% 10% 20% 20% 30% 30% * Includes Maxfli/Slazenger 19 1st Half Year 2002 Financial Results Presentation
Slide 20: Near Stable Gross Margin in 1H 2002
Near Stable Gross Margin in 1H 2002 39.5% up 0.3 pp 34.6% down 1.8 pp 49.1% down 4.3 pp Group* 43.2% down 0.1 pp *Includes HQ/consolidation 20 1st Half Year 2002 Financial Results Presentation
Slide 21: Operating Expenses Reflect Strategic Initiatives
Operating Expenses Reflect Strategic Initiatives • World Cup • Increased adidas own-retail activities • Start-up activities associated with adidas Italy 21 1st Half Year 2002 Financial Results Presentation
Slide 22: 1H 2002 Earnings in Line with Expectations
1H 2002 Earnings in Line with Expectations • Operating profit declines 16% • Financial expenses at € 46m • IBT at € 121m • Tax rate down 2.7pp to 40.1% • Minority interests down 50% to € 4m • Earnings per share decline 3% to € 1.50 22 1st Half Year 2002 Financial Results Presentation
Slide 23: Major Progress in Working Capital and Debt Reduction
Major Progress in Working Capital and Debt Reduction • Inventories 12% lower year-over-year Aging improvement continues • Receivables increase 4% Lower than sales growth Net debt reduction of € 212m 23 1st Half Year 2002 Financial Results Presentation
Slide 24: Best adidas Order Backlogs since 1998
Best adidas Order Backlogs since 1998 (yoy) euros currency • Strongest underlying neutral backlog in 15 quarters Footwear + 12% + 23% • Apparel improvement in all regions Apparel - 8% +/- 0% • Footwear growth Total + 2% + 11% supported by strong growth in USA & Asia 24 1st Half Year 2002 Financial R
Slide 25: Double-Digit Backlog Increase in N. America
Double-Digit Backlog Increase in N. America (yoy) euros currency • Highest growth rate in neutral over 3 years Footwear + 8% + 27% • Major footwear backlog gains in all Apparel - 14% + 1% distribution channels Total - 2% + 15% • Positive underlying apparel backlogs for first time in more than three
Slide 26: European Backlog Momentum Returns
European Backlog Momentum Returns (yoy) euros currency • Order improvements neutral driven by strong new products Footwear + 13% + 17% • Apparel basics under Apparel - 5% - 3% pressure across Europe Total + 4% + 7% 26 1st Half Year 2002 Financial Results Presentation
Slide 27: Strong Growth in Asian Backlogs Continues
Strong Growth in Asian Backlogs Continues (yoy) euros currency • Major gains in both neutral footwear and apparel Footwear + 21% + 36% • Strong growth in all major markets Apparel - 5% + 7% Total + 8% + 21% 27 1st Half Year 2002 Financial Results Presentation
Slide 28: Targets Remain Unchanged in 2002
Targets Remain Unchanged in 2002 • Group sales to increase at least 5% • Double-digit sales growth in North America, Asia and TMaG • Gross margin 41 - 43% • Spending € 100m on key initiatives • DSO and stock turn improvement • EPS growth: 5 - 10% 28 1st Half Year 2002 Financial Results Presentation
Slide 29: End of Presentation
End of Presentation Question and Answer Session to Follow 29 1st Half Year 2002 Financial Results Presentation
Slide 30: Question and Answer Session
Question and Answer Session 30 1st Half Year 2002 Financial Results Presentation
Slide 31: Upcoming Events
Upcoming Events • Investor Day September 25, 2002 London • Q3 2002 Results November 7, 2002 Press Release 7:30 CET 1:30 EST Q3 Report & Presentation 12:00 CET 5:00 EST available online Conference Call 15:30 CET 9:30 EST 31 1st Half Year 2002 Financial Results Presentation