Typography

 

 

Adidas Nine Months 2007 Results

Nine Months 2007 Results:

Net income attributable to shareholders up 22% in the third quarter. Q3 gross margin increases strongly by 3.6 percentage points to 48.6%. Adidas currency-neutral backlogs increase 16%, highest growth rate in over nine years.

1- Currency-neutral Group sales increase 5% in the first nine months
2- First nine months net income attributable to shareholders grows 13%
3= Reebok currency-neutral backlogs down 2% versus prior year with strong sequential improvement in footwear
4-Full year guidance reconfirmed

Third quarter adidas Group currency-neutral sales grow 3%

Third quarter Group revenues grew 3% on a currency-neutral basis. This development was driven by sales increases at both adidas and TaylorMade-adidas Golf. Reebok sales, however, declined. On a regional basis, sales grew solidly in all regions except North America. Currency movements negatively impacted revenues in euro terms. Group sales in euro terms remained virtually stable at € 2.941 billion in the third quarter of 2007 (2006: € 2.949 billion).

Third quarter net income attributable to shareholders up 22%

Third quarter gross margin increased 3.6 percentage points to 48.6% (2006: 45.0%) as a result of underlying improvements in all segments. Cost synergies resulting from the combination of adidas and Reebok sourcing activities and, to a lesser extent, the non-recurrence of negative impacts from purchase price allocation in the Reebok segment also positively impacted gross margin development. Group gross profit increased 8% to € 1.429 billion (2006: € 1.327 billion). As a result of the strong gross margin increase, which more than offset higher operating expenses as a percentage of sales, the Group’s operating margin increased 2.2 percentage points to 16.0% in the third quarter of 2007 versus 13.9% in the prior year. Operating profit grew 15% to € 471 million versus € 409 million in 2006. The Group’s net income attributable to shareholders increased 22% to € 298 million (2006: € 244 million) due to higher operating profit as well as lower net financial expenses which more than offset a higher tax rate.

"Our third quarter performance is clear evidence that we are on track to achieve all of our full year targets," commented adidas AG Chairman and CEO Herbert Hainer. "We are continuing to realize material net benefits from the Reebok integration process. Brand adidas is in top shape and has the highest backlog growth in over nine years. Our Group’s strong margin and earnings improvements reflect our focused commitment to drive long-term sustainable growth."

Currency-neutral Group sales grow 5% in the first nine months of 2007

During the first nine months of 2007, Group revenues increased 5% on a currency-neutral basis, driven by sales growth in the adidas segment, the inclusion of an additional month in the Reebok segment versus the prior year and underlying sales increases at TaylorMade-adidas Golf. On a reported basis, however, TaylorMade-adidas Golf revenues declined, negatively impacted by the divestiture of the Greg Norman Collection (GNC) wholesale business. From a regional perspective, adidas Group currency-neutral sales grew in all regions except North America. Currency movements negatively impacted Group sales in euro terms. In the first nine months of 2007, Group revenues grew 1% in euro terms to € 7.879 billion from € 7.836 billion in 2006. On a like-for-like basis, including Reebok’s revenues for the full nine-month periods of both years and excluding the effect from the divestiture of the GNC wholesale business, sales increased 4%.

adidas segment drives top-line growth in the first nine months of 2007

The adidas segment set the pace for the Group’s organic sales growth in the first nine months of 2007. Currency-neutral adidas segment revenues increased 8% during the period. Currency-neutral sales in the Reebok segment grew 2%, driven by the inclusion of January, which was not consolidated in 2006. On a like-for-like basis, sales declined 4%. This comparison reflects sales for the full nine-month periods of both years and excludes the transfer of the NBA and Liverpool licensed businesses to brand adidas completed in the first half of 2006. At TaylorMade-adidas Golf, currency-neutral revenues decreased 1%, negatively impacted by the divestiture of the GNC wholesale business. On a like-for-like basis, TaylorMade-adidas Golf sales increased 8%. Currency translation effects negatively impacted sales at all brands in euro terms. adidas sales increased 4% to € 5.465 billion in the first nine months of 2007 from € 5.248 billion in 2006. Sales at Reebok decreased 3% to € 1.765 billion versus € 1.828 billion in the prior year. TaylorMade-adidas Golf sales declined 8% to € 609 million in 2007 from € 658 million in 2006.

 

 

 

Nine Months
2007

Nine Months 2006

Change y-o-y in euro terms

Change y-o-y currency-neutral

 

€ in millions

€ in millions

in %

in %

adidas

5,465

5,248

4

8

Reebok

1,765

1,828

(3)

2

TaylorMade-adidas Golf

609

658

(8)

(1)

HQ/Consolidation

40

101

(61)

(58)

Total

7,879

7,836

1

5

Nine months net sales growth by segment

Sales increase in nearly all regions

adidas Group sales grew in all regions except North America. This growth was driven by positive development at adidas and TaylorMade-adidas Golf as well as the consolidation of nine months of Reebok’s revenues in 2007 versus only eight months in the prior year. adidas Group sales in Europe during the first nine months of 2007 grew 5% on a currency-neutral basis. In North America, Group sales declined 3% on a currency-neutral basis. Sales for the adidas Group in Asia increased 15% on a currency-neutral basis. In Latin America, currency-neutral sales increased 35%. Currency translation effects negatively impacted sales in euro terms in all regions. Sales in Europe increased 3% in euro terms to € 3.455 billion in 2007 from € 3.339 billion in 2006. Sales in North America decreased 10% to € 2.248 billion in 2007 from € 2.492 billion in the prior year. Revenues in Asia grew 8% to € 1.616 billion in 2007 from € 1.494 billion in 2006. Sales in Latin America grew 29% to € 484 million in 2007 from € 375 million in the prior year.

 

Nine Months
2007

Nine Months 2006

Change y-o-y in euro terms

Change y-o-y currency-neutral

 

€ in millions

€ in millions

in %

in %

Europe

3,455

3,339

3

5

North America

2,248

2,492

(10)

(3)

Asia

1,616

1,494

8

15

Latin America

484

375

29

35

Total

7,879

7,836

1

5

Nine months net sales growth by region

Group gross margin increases by 2.8 percentage points

The gross margin of the adidas Group increased by 2.8 percentage points to 47.7% in the first nine months of 2007 (2006: 44.9%), driven by underlying improvements in all segments. Cost synergies resulting from the combination of the adidas and Reebok sourcing activities, which positively affected both segments’ cost of sales, as well as the non-recurrence of negative impacts from purchase price allocation in the Reebok segment (2006: € 64 million) also positively impacted gross margin development. As a result, gross profit for the adidas Group rose 7% in the first nine months of 2007 to reach € 3.755 billion versus € 3.518 billion in the prior year.

Operating margin reaches 11.3%

The operating margin of the adidas Group increased 0.7 percentage points to 11.3% in the first nine months of 2007 (2006: 10.6%). This improvement reflects the Group gross margin increase which more than offset higher operating expenses as a percentage of sales. Operating expenses grew primarily due to one-time costs associated with the Reebok integration. Increased expenses in the Reebok segment for advertising, product development and initiatives to grow the brand in emerging markets also contributed to this development. As a result, operating profit for the adidas Group increased 7% in the first nine months of 2007 to reach € 889 million versus € 829 million in 2006.

Net financial expenses decrease 14%

Net financial expenses decreased 14% to € 104 million in the first nine months of 2007 from € 121 million in the prior year as a result of lower financial expenses following the strong reduction of net borrowings.

Income before taxes increases by 11%

As a result of the Group’s operating profit increase and lower net financial expenses, income before taxes for the adidas Group increased 11% to € 785 million in the first nine months of 2007 from € 709 million in 2006.

Net income attributable to shareholders up 13%

The Group’s net income attributable to shareholders increased 13% to € 530 million in the first nine months of 2007 from € 469 million in 2006. The increase in the Group’s operating profit, lower net financial expenses and lower minority interests contributed to this development. The Group’s minority interests declined by 72% to € 4 million in the first nine months of 2007 (2006: € 14 million) due to the buyout of the Group’s joint venture partner in Korea. The Group’s tax rate increased 0.1 percentage points to 32.0% in the first nine months of 2007 from 31.9% in the prior year.

Basic and diluted earnings per share increase 13%

In line with the increase of the Group’s net income attributable to shareholders, basic earnings per share increased 13% to € 2.60 in the first nine months of 2007 versus € 2.31 in 2006. Diluted earnings per share in the first nine months of 2007 also increased 13% to € 2.46 from € 2.18 in the prior year. The dilutive effect mainly results from approximately sixteen million additional potential shares that could be created in relation to the outstanding convertible bond, for which conversion criteria were met for the first time at the end of the fourth quarter of 2004.

Working capital development highlights business momentum

Group inventories increased 7% to € 1.596 billion at the end of the third quarter of 2007 versus € 1.498 billion in 2006. On a currency-neutral basis, inventories increased 14%. This development mainly reflects the Group’s sales expectations for the fourth quarter of 2007 as well as increased inventory levels related to the buyback of Reebok distribution rights in several countries. Group receivables were stable compared to the prior year at € 1.918 billion (2006: € 1.914 billion). On a currency-neutral basis, receivables grew 5%.

Net borrowings reduced by € 527 million

Net borrowings at September 30, 2007 were € 2.201 billion, down 19% or € 527 million versus € 2.728 billion in the prior year. Strong bottom-line profitability and continued tight working capital management were the drivers of this reduction.

Highest adidas backlog growth in over nine years

Backlogs for the adidas brand at the end of September 2007 increased 16% versus the prior year on a currency-neutral basis. This improvement is the highest in over nine years and highlights the brand’s strong product pipeline as well as orders for the UEFA EURO 2008™, which positively impacted backlogs in Europe. In euro terms, this represents an increase of 11%. Footwear backlogs grew 14% in currency-neutral terms (+9% in euros). Double-digit growth in both Asia and Europe more than offset a modest decline in North America. Apparel backlogs grew 21% on a currency-neutral basis (+15% in euros), driven by strong increases in all regions.

 

Footwear

Apparel

Total

 

in €

currency-neutral

in €

currency-neutral

in €

currency-neutral

Europe

17

18

25

26

19

20

North America

(14)

(4)

(2)

9

(8)

2

Asia

17

25

13

21

13

21

Total

9

14

15

21

11

16

Year-over-year development of adidas order backlogs by product category and region as at
September 30, 2007 (in %)

Reebok backlogs down 2%, strong sequential improvement in footwear

Reebok backlogs at the end of the third quarter of 2007 were down 2% versus the prior year on a currency-neutral basis. In euro terms, this represents a decline of 8%. Footwear backlogs decreased 10% in currency-neutral terms (–15% in euros), which represents a strong sequential improvement versus the prior quarter as a result of improving orders in Asia and North America. Apparel backlogs grew by 9% on a currency-neutral basis (+3% in euros), albeit on a lower level than in the prior quarter due to the seasonality of Reebok’s licensed apparel business.

 

Footwear

Apparel

Total

 

in €

currency-neutral

in €

currency-neutral

in €

currency-neutral

Europe

(8)

(7)

(9)

(7)

(7)

(5)

North America

(30)

(22)

(1)

8

(20)

(11)

Asia

60

75

234

261

100

117

Total

(15)

(10)

3

9

(8)

(2)

Year-over-year development of Reebok order backlogs by product category and region as at
September 30, 2007 (in %)

Full year guidance reconfirmed

adidas Group sales in 2007 are expected to grow at a mid-single-digit rate on a currency-neutral basis. Sales in the adidas segment are now projected to increase at a high-single-digit rate on a currency-neutral basis in 2007. Previously, currency-neutral sales were forecasted to grow at a mid-single-digit rate. Sales expectations for Reebok and TaylorMade-adidas Golf remain unchanged. Currency-neutral revenues at Reebok are forecasted to improve at a low-single-digit rate compared to the prior year. TaylorMade-adidas Golf revenues will increase at a mid-single-digit rate on a like-for-like basis. However, due to the divestiture of the GNC wholesale business in November 2006, reported sales for TaylorMade-adidas Golf are likely to decline compared to the prior year. The Group gross margin is expected to reach the upper end of the guidance of 45 to 47%, driven by underlying improvements in all three brand segments. The Group’s operating margin is forecasted to be around 9%. Net income attributable to shareholders for the adidas Group is expected to grow at a double-digit rate, approaching 15%. In 2008, adidas Group revenues are forecasted to increase at a high-single-digit rate on a currency-neutral basis. Net income will grow at a higher rate compared to 2007.

Herbert Hainer stated: "Our Group is set for continued growth in the rest of 2007 and beyond. Next year’s major sporting events will help brand adidas increase market leadership in key regions. And at Reebok, we will be launching the next phases of brand revitalization. I’m confident in our Group’s ability to successfully overcome challenges from macroeconomic headwinds and difficult retail conditions to even accelerate sales and earnings momentum in 2008 and beyond."

 

Comments (0)

There are no comments posted here yet

Leave your comments

Posting comment as a guest. Sign up or login to your account.
Attachments (0 / 3)
Share Your Location
Type the text presented in the image below

LATEST FOOTBALL KITS

Coventry City 17/18 Nike EFL Play-Off Final Shirt

Coventry City 17/18 Nike EFL Play-Off Final Shirt

Coventry City will be wearing a one-off special shirt for the League Two Play-Off Final against Exeter City. The Sky Blues will face the Grecians on…
Arsenal 2018-19 Puma Home Kit

Arsenal 2018-19 Puma Home Kit

The new Arsenal 18/19 Home Shirt by Puma retains the traditional red and white colours that are synonymous with Arsenal Football Club but with a…
Valencia 2018-19 Adidas Away Kit

Valencia 2018-19 Adidas Away Kit

Valencia CF launched the new 2018-19 away football shirt by Adidas. The team make a bold statement outside the Mestalla, with the Valencia CF 2018-19…
China 2018 Nike Home Kit

China 2018 Nike Home Kit

With a red chest and yellow sleeves, the China 2018 home shirt colors represent prosperity and blessings. On the chest is the iconic federation crest…
Deportivo de La Coruña 2018-19 Macron Third Shirt

Deportivo de La Coruña 2018-19 Macron Third Shirt

Macron and Deportivo de La Coruña have presented the new white third shirt with a diagonal blue band across the front where the words of the Galician…
Senegal 2018 World Cup Puma Home Shirt

Senegal 2018 World Cup Puma Home Shirt

This is the new Senegal 2018 home football shirt by Puma. The white and pepper green home kit will be used during the 2018 World Cup in Russia. Buy…
Senegal 2018 World Cup Puma Away Shirt

Senegal 2018 World Cup Puma Away Shirt

This is the new Senegal 2018 away football shirt by Puma. The pepper green and white away kit will be used during the 2018 World Cup in Russia. Buy…
Galatasaray 2018-19 Nike Home Kit

Galatasaray 2018-19 Nike Home Kit

This is the new Galatasaray 2018 home football shirt by Nike. The new home kit will be worn during the 2018–19 Süper Lig, which is the 61st season of…
New Zealand 2018 Nike Home Kit

New Zealand 2018 Nike Home Kit

This is the New Zealand 2018 home football shirt by Nike. In Māori legend, New Zealand’s endemic silver fern represents strength, resistance and…
Barcelona 2018-19 Nike Home Kit

Barcelona 2018-19 Nike Home Kit

This is the new FC Barcelona 18/19 home football shirt by Nike. The new Barcelona home kit, designed for the 2018-19 season, is inspired by Camp…
Rotherham United 2018-19 Puma Home Kit

Rotherham United 2018-19 Puma Home Kit

Rotherham United revealed their brand new 2018/19 home kit, manufactured by Puma Teamwear. The Millers will once again retain their traditional home…
Finland 2018 Nike Home Kit

Finland 2018 Nike Home Kit

This is the new Finland 2018 home football shirt by Nike. For 2018, the Finnish national team will wear a home kit dubbed Lethal Winter — white from…
Finland 2018 Nike Away Kit

Finland 2018 Nike Away Kit

This is the new Finland 2018 away football shirt by Nike. For 2018, the Finnish national team will wear an away shirt in deep royal blue with an…
Netherlands 2018 Nike Away Kit

Netherlands 2018 Nike Away Kit

A polarized blue Netherlands 2018 away shirt pays homage to the team’s classic 1988 kit, while a deep royal blue geometric pattern celebrates “Total…
Slovakia 2018 Nike Home Kit

Slovakia 2018 Nike Home Kit

This is the new Slovakia 2018 home football shirt by Nike. The stylish zig-zag design on the shoulders and sleeves of Slovakia’s 2018 national team…

Miami FC 2018 Macron Away Kit

Macron and Miami FC have unveiled the new away kit that the team will wear in their 2018 US Open Cup matches. The away shirt is royal blue with…
Miami FC 2018 Macron Home Kit

Miami FC 2018 Macron Home Kit

Macron and Miami FC have unveiled the new home kit that the team will wear in their 2018 US Open Cup matches. The home kit, in it’s now traditional…
Dundee United 2018/19 Nike Home Kit

Dundee United 2018/19 Nike Home Kit

Nike and Just Sport Pro have officially revealed the 2018/19 Dundee United home kit. The kit features traditional black shorts and bespoke socks for…
St. Pauli 2018-19 Under Armour Home Kit

St. Pauli 2018-19 Under Armour Home Kit

The new St. Pauli home shirt for the 2018/19 is being unveiled in the US. The innovative design is a reference to the past and catches the eye with a…
Canada 2018 Umbro Home Shirt

Canada 2018 Umbro Home Shirt

Canada Soccer and Umbro have proudly unveiled their new 2018 home shirt for Canada Soccer's National Teams. Presented with the powerful words drawn…