firmenpresse print | First Half Year 2009 Results:
05.08.2009
First Half Year 2009 Results:
Currency-neutral Group sales decrease 7% in the first half year
* First half financial results in line with guidance
* Currency-neutral Group sales decline 8% in the second quarter
* Inventory growth rate sequentially declines versus prior quarter
* Group outlook confirmed
Second quarter adidas Group currency-neutral sales decrease 8%
During the second quarter of 2009, Group sales declined 8% on a
currency-neutral basis due to sales declines in all segments with the
exception of TaylorMade-adidas Golf. Currency-neutral adidas segment
revenues decreased 9%. Growth in North America and in Latin America
was offset by declines in most major European and Asian markets.
Currency-neutral sales in the Reebok segment decreased 9% in the
second quarter of 2009 versus the prior year due to negative sales
development in most major markets. At TaylorMade-adidas Golf,
currency-neutral revenues increased 3%, driven by growth in nearly
all regions and supported by the consolidation of the Ashworth
business. Currency movements positively impacted Group sales in euro
terms. Group revenues decreased 3% in euro terms to ? 2.457 billion
in the second quarter of 2009 from ? 2.521 billion in 2008.
Second quarter diluted EPS ? 0.06
The Group's gross margin decreased 5.1 percentage points to 45.0%
(2008: 50.1%) in the second quarter as a result of higher input
costs, currency devaluation effects, in particular related to the
Russian rouble, as well as a highly promotional retail environment.
Group gross profit decreased 13% to ? 1.105 billion (2008: ? 1.263
billion). As a result of the lower gross margin as well as higher
other operating expenses as a percentage of sales the Group's
operating margin decreased 5.3 percentage points to 2.9% in the
second quarter of 2009 versus 8.2% in the prior year. Operating
profit decreased 66% to ? 72 million versus ? 208 million in 2008. In
the second quarter of 2009, the Group's net income attributable to
shareholders decreased 93% to ? 9 million (2008: ? 116 million)
mainly due to the Group's lower operating profit. Diluted earnings
per share for the second quarter declined 90% to ? 0.06.
"The impacts of the economic downturn and repercussions on consumer
spending are well documented and certainly continued to influence our
performance in the second quarter", commented Herbert Hainer, adidas
Group CEO and Chairman. "However, the good news is that we did not
see any fundamental deterioration in our business since publishing
our first quarter results. Our financials for the first half of 2009
are exactly in line with the guidance we provided in May - if not a
little better. As a result, I believe we have seen the bottom in our
financial performance this year."
adidas Group currency-neutral sales decline 7% in first half
In the first half of 2009, Group revenues decreased 7% on a
currency-neutral basis, as a result of lower sales in all business
segments. The adidas segment decreased 8%, the Reebok segment 6% and
the TaylorMade-adidas Golf segment 1%. Currency translation effects
positively impacted sales in euro terms. Group revenues in euro terms
declined 2% to ? 5.034 billion in the first half of 2009 from ? 5.142
billion in 2008.
+-------------------------------------------------------------------+
| | 1st Half | 1st Half | Change | Change |
| | Year | Year | y-o-y | y-o-y |
| | 2009 | 2008 | in | currency- |
| | | | euro | neutral |
| | | | terms | |
|------------------------+----------+----------+--------+-----------|
| | ? in | ? in | in % | in % |
| | millions | millions | | |
|------------------------+----------+----------+--------+-----------|
| adidas | 3,667 | 3,787 | (3) | (8) |
|------------------------+----------+----------+--------+-----------|
| Reebok | 907 | 923 | (2) | (6) |
|------------------------+----------+----------+--------+-----------|
| TaylorMade-adidas Golf | 449 | 417 | 8 | (1) |
|------------------------+----------+----------+--------+-----------|
| HQ/Consolidation | 11 | 16 | (27) | (32) |
|------------------------+----------+----------+--------+-----------|
| Total | 5,034 | 5,142 | (2) | (7) |
+-------------------------------------------------------------------+
First half year net sales growth by segment
Currency-neutral sales decrease in nearly all regions
Currency-neutral adidas Group sales declined in all regions except
Latin America in the first half of 2009. Group sales in Europe
decreased 8% on a currency-neutral basis, due to declines in most
major countries impacted by the non-recurrence of strong prior year
sales related to the UEFA EURO 2008(TM). In North America, Group
sales declined 10% on a currency-neutral basis due to declines in
both the USA and Canada. This was a result of lower consumer demand
and clearance of excess inventories. Sales for the adidas Group in
Asia decreased 9% on a currency-neutral basis, as a result of
declines in Japan and China. In Latin America, sales grew 24% on a
currency-neutral basis, with double-digit increases coming from most
of the region's major markets, supported by the new Reebok companies
in Brazil/Paraguay and Argentina. In euro terms, sales in Europe
decreased 9% to ? 2.143 billion in the first half of 2009 from ?
2.352 billion in 2008. Sales in North America grew 1% to ? 1.173
billion from ? 1.160 billion in 2008. Revenues in Asia grew 3% to ?
1.245 billion in the first half of 2009 from ? 1.214 billion in 2008.
Sales in Latin America grew 16% to ? 443 million from ? 381 million
in the prior year.
+-------------------------------------------------------------------+
| | 1st Half | 1st Half | Change | Change |
| | Year | Year | y-o-y | y-o-y |
| | 2009 | 2008 | in euro | currency- |
| | | | terms | neutral |
|-------------+-------------+-------------+-----------+-------------|
| | ? in | ? in | in % | in % |
| | millions | millions | | |
|-------------+-------------+-------------+-----------+-------------|
| Europe | 2,143 | 2,352 | (9) | (8) |
|-------------+-------------+-------------+-----------+-------------|
| North | 1,173 | 1,160 | 1 | (10) |
| America | | | | |
|-------------+-------------+-------------+-----------+-------------|
| Asia | 1,245 | 1,214 | 3 | (9) |
|-------------+-------------+-------------+-----------+-------------|
| Latin | 443 | 381 | 16 | 24 |
| America | | | | |
|-------------+-------------+-------------+-----------+-------------|
| Total[1] | 5,034 | 5,142 | (2) | (7) |
+-------------------------------------------------------------------+
First half year net sales growth by region
______________________________
[1] Including HQ/Consolidation.
Gross profit declines 11%
The gross margin of the adidas Group decreased 4.6 percentage points
to 45.1% in the first half of 2009 (2008: 49.6%). This development
was mainly due to higher input costs, currency devaluation effects,
in particular related to the Russian rouble, as well as a highly
promotional retail environment. As a result, gross profit for the
adidas Group declined 11% in the first half of 2009 to ? 2.269
billion versus ? 2.552 billion in the prior year.
Operating margin declines 7.0 percentage points
The operating margin of the adidas Group decreased 7.0 percentage
points to 2.6% in the first half of 2009 (2008: 9.5%). The operating
margin decline was due to the decrease in Group gross margin as well
as higher other operating expenses as a percentage of sales. Other
operating expenses as a percentage of sales increased 2.7 percentage
points to 44.3% in the first half of 2009 from
41.7% in 2008, mainly as a result of higher expenses to support the
Group's development in emerging markets. As a result, Group operating
profit decreased 74% to ? 129 million versus ? 490 million in 2008.
Financial income down 55%
Financial income decreased 55% to ? 7 million in the first half of
2009 from ? 16 million in the prior year, mainly due to changes in
the fair value of financial instruments.
Financial expenses increase 15%
Financial expenses increased 15% to ? 99 million in the first half of
2009 from ? 87 million in the prior year. This development was
primarily due to negative exchange rate variances, which were only
partly offset by lower interest expenses.
Income before taxes decreases 91%
Income before taxes (IBT) as a percentage of sales decreased 7.4
percentage points to 0.7% in the first half of 2009 from 8.1% in
2008. This was a result of the Group's operating margin decrease and
higher net financial expenses. IBT for the adidas Group declined 91%
to ? 37 million from ? 419 million in 2008.
Net income attributable to shareholders declines 95%
The Group's net income attributable to shareholders decreased 95% to
? 13 million in the first half of 2009 from ? 286 million in 2008.
The Group's lower operating profit was the primary reason for this
development. The Group's tax rate increased 35.3 percentage points to
66.8% in the first half of 2009 (2008: 31.5%), mainly due to a less
favourable regional earnings mix.
Basic and diluted earnings per share in line with guidance
Basic earnings per share decreased 95% to ? 0.07 in the first half of
2009 versus ? 1.42 in 2008. The weighted average number of shares
used in the calculation of basic earnings per share decreased to
193,515,512 in the first half of 2009 (2008 average: 200,415,758) due
to the share buyback programme from January to October 2008. Diluted
earnings per share in the first half of 2009 decreased 93% to ? 0.10
from ? 1.35 in the prior year. The weighted average number of shares
used in the calculation of diluted earnings per share was 209,259,974
(2008 average: 216,211,434).
Currency-neutral Group inventories increase 8%
Group inventories increased 13% to ? 2.041 billion at the end of June
2009 versus ? 1.806 billion in 2008. On a currency-neutral basis,
inventories grew 8%. This development was mainly a result of
accelerated product shipments to Brazil and Argentina due to the
threat of higher import tariffs. Lower customer demand compared to
the Group's expectations when planning production for the first half
of 2009 and the consolidation of the Ashworth business since November
2008 also contributed to the increase.
Currency-neutral accounts receivable increase 4%
At the end of June 2009, Group receivables increased 5% to ? 1.729
billion (2008: ? 1.641 billion). On a currency-neutral basis,
receivables grew 4%. This increase reflects slower receipt of
payments due to the difficult economic situation in most markets.
Net borrowings up ? 472 million
Net borrowings at June 30, 2009 amounted to ? 2.732 billion, which
represents an increase of ? 472 million, or 21%, versus ? 2.260
billion at the end of June 2008. Higher working capital requirements
were the main reason for the net debt increase. In addition, since
June 30, 2008, cash in an amount of ? 136 million has been used for
the meanwhile completed share buyback programme. Currency translation
effects negatively impacted net borrowings by an amount of ? 110
million. Consequently, the Group's financial leverage increased to
85.7% at the end of June 2009 versus 82.3% in the prior year.
adidas Group sales to decrease in 2009
adidas Group sales are expected to decline at a low- to mid
single-digit rate on a currency-neutral basis in 2009. The Group
projects a low- to mid-single-digit sales decline on a
currency-neutral basis for the adidas brand in 2009. Reebok segment
sales are now expected to decline at a low- to mid-single-digit rate
compared to the prior year on a currency-neutral basis in 2009.
Currency-neutral sales at TaylorMade-adidas Golf are forecasted to
increase at a low-single-digit rate, supported by the consolidation
of Ashworth for the full twelve-month period.
Earnings per share to improve significantly in second half compared
to first half year
In 2009, the adidas Group gross margin is forecasted to decline. A
promotional environment in mature markets, as well as expected higher
sourcing costs due to increased raw material and wage costs will
contribute to this development. Currency devaluation effects, in
particular from the depreciation of the Russian rouble, are expected
to also have a significant negative impact on gross margin
development in 2009. The Group's other operating expenses as a
percentage of sales are expected to increase in 2009. Costs related
to restructuring activities as well as higher expenses for controlled
space initiatives in the adidas and Reebok segments will drive this
development, partially compensated by positive effects from
efficiency improvements throughout the organisation.
As a result of the expected Group gross margin decline and the
projected increase in other operating expenses as a percentage of
sales, the operating margin for the adidas Group is expected to
decline. The adidas Group expects earnings per share to be
significantly more positive in the second half of 2009 compared to
the development in the first half year. Profitability will improve
compared to the first half year as a result of a more moderate
increase of input costs and positive impetus ahead of the 2010 FIFA
World Cup(TM). However, earnings per share in the second half of the
year will not reach the levels achieved in the second half of the
prior year. Tight working capital management and disciplined
investment activities are expected to help optimise the Group's free
cash flow in 2009. Excess cash will largely be used to reduce net
borrowings, which are forecasted to be below the prior year level at
year-end.
Herbert Hainer stated: "Although there are still challenges ahead, I
am confident that our results will improve as we go through the
remainder of the year. We expect to generate significantly positive
earnings per share in the second half of the year, albeit below the
record levels of the prior year. And we will make further progress on
our inventories, setting our Group up for a fresh start to an
event-filled 2010."
***
Contacts:
Media Relations Investor
Relations
Jan Runau John-Paul
O'Meara
Chief Corporate Communications Officer Head of
Investor
Relations
Tel.: +49 (0) 9132 Tel.: +49
84-3830 (0) 9132
84-2751
Kirsten Keck Dennis Weber
Corporate PR Manager Investor
Relations
Manager
Tel.: +49 (0) 9132 84-6207 Tel.: +49
(0) 9132
84-4989
Katja Schreiber
Corporate PR Manager
Tel.: +49 (0) 9132 84-3810
Please visit our corporate website: www.adidas-Group.com
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