adidas AG : Nine Months 2014 Results
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adidas AG : Nine Months 2014 Results
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FOR IMMEDIATE RELEASE
Herzogenaurach, November 6, 2014
Nine Months 2014 Results:
Group sales increase 9% on a currency-neutral basis in Q3
adidas and Reebok sales up 12% and 7% in Q3
Negative currency effects and weakness in golf continue to weigh on Group
earnings
* Group sales increase 6% currency-neutral in first nine months
* Strong momentum in Latin America, European Emerging Markets and Greater
China, with currency-neutral revenues up 22%, 20% and 10%, respectively
* Operating margin decreases 2.2pp to 8.3%
* Basic and diluted earnings per share decrease 21% to ? 3.01
* Inventories increase 7% currency-neutral
* Management confirms full year guidance
adidas Group currency-neutral sales increase 9% in the third quarter of 2014
During the third quarter of 2014, the adidas Group continued to deliver robust
top-line results. Group revenues increased 9% on a currency-neutral basis,
driven by a double-digit sales increase in Retail and a high-single-digit
revenue growth in Wholesale. All regions, except North America, contributed to
the currency-neutral revenue growth. Western Europe increased 10%, mainly as a
result of strong sales increases in Germany, France, Spain and the UK. In
European Emerging Markets, currency-neutral revenues were up 19%, driven by
double-digit growth in Russia/CIS. Group sales in North America decreased 1% on
a currency-neutral basis, as mid-single-digit sales growth at adidas was more
than offset by declines at TaylorMade-adidas Golf and Reebok. In Greater China,
Group sales were up 13% on a currency-neutral basis, due to continued momentum
across all channels. Currency-neutral revenues in Other Asian Markets grew 6%
driven by double-digit sales increases in South Korea and India. In Latin
America, currency-neutral sales grew 16%, with double-digit increases in most
markets, in particular Argentina, Brazil and Mexico.
From a brand perspective, the strong top-line momentum at both adidas and Reebok
continued during the quarter. Third quarter sales at adidas increased 12% on a
currency-neutral basis, driven by double-digit sales growth in the Sport
Performance football and running categories, as well as at adidas Originals &
Sport Style. Sales at Reebok grew 7% on a currency-neutral basis, driven by
sales momentum in the fitness training, walking and fitness running categories.
Revenues in the TaylorMade-adidas Golf segment declined 36% on a currency-
neutral basis, as a result of the continued weakness in the golf market as well
as TaylorMade-adidas Golf's ongoing efforts to clean retail inventories and the
timing of new product introductions compared to the prior year period. Revenues
at Reebok-CCM Hockey increased 15% on a currency-neutral basis mainly due to
growth in key categories such as skates and protective equipment as well as in
hockey apparel. Rockport sales increased 5% currency-neutral. Currency
translation effects had a negative impact on sales in euro terms. Group revenues
increased 6% to ? 4.118 billion in the third quarter of 2014 from ? 3.879
billion in 2013.
Third quarter gross margin declines 1.9 percentage points
The Group's gross margin decreased 1.9 percentage points to 47.4% (2013: 49.3%)
in the third quarter, mainly due to higher input costs as well as negative
currency effects. In addition, increased clearance activities, in particular in
Russia/CIS, contributed to the gross margin decline. Group gross profit
increased 2% to ? 1.952 billion (2013: ? 1.913 billion). Other operating
expenses as a percentage of sales decreased 0.9 percentage points to 38.7%
compared to 39.6% the prior year. In euro terms, other operating expenses
increased 4% to
? 1.594 billion, mainly as a result of higher marketing working budget
expenditure. In addition, higher expenditure related to the expansion of the
Group's own-retail activities contributed to the increase in other operating
expenses. The Group's operating profit declined 13% to ? 405 million (2013: ?
463 million) in the third quarter. The operating margin decreased
2.1 percentage points to 9.8% from 11.9% in 2013. Basic and diluted earnings per
share for the third quarter decreased 11% to ? 1.35 (2013: ? 1.51).
"Our Group delivered a solid third quarter with accelerated growth rates in many
of our key markets and categories. At the same time, we have been aggressively
addressing our key challenges: restructuring and stabilising TaylorMade-adidas
Golf, adjusting our business in Russia/CIS and intensifying our efforts to
revive momentum and growth in the US," commented Herbert Hainer, adidas Group
CEO.
adidas Group currency-neutral sales increase 6% in the first nine months of 2014
In the first nine months of 2014, Group revenues increased 6% on a currency-
neutral basis, driven by sales increases in Wholesale and Retail. Currency
translation effects had a negative impact on sales in euro terms. Group revenues
grew 1% to ? 11.116 billion in the first nine months of 2014 from ? 11.013
billion in 2013.
Nine months Group sales increase driven by growth in Wholesale and Retail
In the first nine months of 2014, currency-neutral Wholesale revenues increased
6%, due to sales growth at both adidas and Reebok. Currency-neutral Retail sales
were up 21% versus the prior year as a result of double-digit sales increases at
adidas and Reebok. Revenues in Other Businesses were down 17% on a currency-
neutral basis, due to double-digit sales declines at TaylorMade-adidas Golf.
Currency translation effects had a negative impact on segmental sales in euro
terms.
By brand, revenues at adidas grew 11% on a currency-neutral basis, driven by
double-digit sales growth in the Sport Performance football and running
categories, as well as at adidas NEO. Sales at Reebok grew 6% on a currency-
neutral basis, driven by double-digit increases in the fitness training, walking
and studio categories as well as at Classics. Revenues in the TaylorMade-adidas
Golf segment declined 29% on a currency-neutral basis.
+-------------+-------------+---------------+-----------------+
| Nine Months | Nine Months |Change y-o-y in| Change y-o-y |
| 2014 | 2013 | euro terms |currency-neutral |
+-------------+-------------+---------------+-----------------+
|? in millions|? in millions| in % | in % |
+----------------+-------------+-------------+---------------+-----------------+
|Wholesale | 7,159 | 7,048 | 2 | 6 |
+----------------+-------------+-------------+---------------+-----------------+
|Retail | 2,799 | 2,512 | 11 | 21 |
+----------------+-------------+-------------+---------------+-----------------+
|Other Businesses| 1,158 | 1,453 | (20) | (17) |
+----------------+-------------+-------------+---------------+-----------------+
|Total(1)) | 11,116 | 11,013 | 1 | 6 |
+----------------+-------------+-------------+---------------+-----------------+
Nine months net sales development by segment
1) Rounding differences may arise in totals.
Currency-neutral sales grow in nearly all regions
In the first nine months of 2014, currency-neutral adidas Group sales grew in
all regions except North America. Revenues in Western Europe increased 7% on a
currency-neutral basis, driven by sales increases in Germany, France, Spain, the
UK and Poland. In European Emerging Markets, Group sales were up 20% on a
currency-neutral basis, with double-digit sales increases in all of the region's
major markets. Currency-neutral sales for the adidas Group in North America
decreased 7%, mainly due to sales declines in the USA. Sales in Greater China
increased 10% on a currency-neutral basis. Currency-neutral revenues in Other
Asian Markets grew 2%, driven by sales increases in South Korea and India. In
Latin America, sales grew 22% on a currency-neutral basis, with double-digit
increases in most markets, in particular Argentina, Brazil, Mexico and Colombia.
Currency translation effects had a mixed impact on regional sales in euro terms.
+-------------+-------------+--------------+-----------------+
| Nine Months | Nine Months | Change y-o-y | Change y-o-y |
| 2014 | 2013 |in euro terms |currency-neutral |
+-------------+-------------+--------------+-----------------+
|? in millions|? in millions| in % | in % |
+-----------------+-------------+-------------+--------------+-----------------+
|Western Europe | 3,282 | 3,053 | 8 | 7 |
+-----------------+-------------+-------------+--------------+-----------------+
|European Emerging| 1,510 | 1,432 | 5 | 20 |
|Markets | | | | |
+-----------------+-------------+-------------+--------------+-----------------+
|North America | 2,272 | 2,534 | (10) | (7) |
+-----------------+-------------+-------------+--------------+-----------------+
|Greater China | 1,323 | 1,244 | 6 | 10 |
+-----------------+-------------+-------------+--------------+-----------------+
|Other Asian | 1,520 | 1,566 | (3) | 2 |
|Markets | | | | |
+-----------------+-------------+-------------+--------------+-----------------+
|Latin America | 1,209 | 1,184 | 2 | 22 |
+-----------------+-------------+-------------+--------------+-----------------+
|Total(1)) | 11,116 | 11,013 | 1 | 6 |
+-----------------+-------------+-------------+--------------+-----------------+
Nine months net sales development by region
1) Rounding differences may arise in totals.
Group gross margin declines 1.3 percentage points
The gross margin of the adidas Group decreased 1.3 percentage points to 48.5% in
the first nine months of 2014 (2013: 49.8%). This development was mainly due to
negative currency effects as well as higher input costs. In addition, increased
clearance activities, in particular in Russia/CIS, as well as lower margins at
TaylorMade-adidas Golf contributed to the gross margin decline. Gross profit for
the adidas Group decreased 2% in the first nine months of 2014 to ? 5.392
billion versus ? 5.488 billion in the prior year.
Operating margin decreases to 8.3%
Group operating profit declined 20% to ? 927 million in the first nine months of
2014 versus
? 1.157 billion in 2013. The operating margin of the adidas Group decreased 2.2
percentage points to 8.3% (2013: 10.5%). This development was primarily due to
the negative effects from the lower gross margin as well as higher other
operating expenses as a percentage of sales. In euro terms, other operating
expenses increased 3% to ? 4.647 billion (2013: ? 4.515 billion), as a result of
higher expenditure related to the expansion of the Group's own-retail activities
as well as an increase in sales and marketing working budget expenditure. Sales
and marketing working budget expenditure increased 8% to ? 1.441 billion (2013:
? 1.336 billion), driven by increased marketing expenditure at brand adidas
related to the 2014 FIFA World Cup(TM).
Financial income down 5%
Financial income declined 5% to ? 14 million in the first nine months of 2014
from ? 15 million in the prior year, due to a decrease in interest income.
Financial expenses down 25%
Financial expenses decreased 25% to ? 50 million in the first nine months of
2014 (2013: ? 67 million). This development was the result of a decrease in both
negative exchange rate effects as well as interest expenses.
Income before taxes declines 19%
In the first nine months of 2014, income before taxes (IBT) for the adidas Group
decreased 19% to ? 892 million from ? 1.105 billion in 2013. IBT as a percentage
of sales declined 2.0 percentage points to 8.0% in the first nine months of
2014 (2013: 10.0%), as a result of the Group's lower operating margin.
Net income attributable to shareholders down 21%
The Group's net income attributable to shareholders decreased to ? 630 million
in the first nine months of 2014 from ? 796 million in 2013. This represents a
decline of 21% versus the prior year level. The Group's tax rate increased 1.1
percentage points to 28.8% in the first nine months of 2014 (2013: 27.7%),
mainly due to a less favourable earnings mix.
Basic and diluted earnings per share decrease to ? 3.01
In the first nine months of 2014, basic and diluted earnings per share decreased
21% to ? 3.01 versus ? 3.81 in the prior year. The weighted average number of
shares used in the calculation of both basic and diluted earnings per share was
209,216,186 (2013 average: 209,216,186) as there were no potential dilutive
shares at the end of the first nine months.
Group inventories increase 7% currency-neutral
Group inventories increased 5% to ? 2.647 billion at the end of September 2014
versus ? 2.513 billion in 2013. On a currency-neutral basis, inventories were up
7%, as a result of the Group's expectations for growth in the coming quarters as
well as higher inventories at TaylorMade-adidas Golf.
Accounts receivable up 7% currency-neutral
Group receivables increased 8% to ? 2.322 billion at the end of September 2014
(2013: ? 2.156 billion). On a currency-neutral basis, receivables were up 7%.
Net borrowings increase to ? 543 million
Net borrowings at September 30, 2014 amounted to ? 543 million, compared to net
borrowings of ? 180 million in 2013, representing an increase of ? 363 million.
This increase is mainly a result of higher capital expenditure during the first
nine months of 2014. Currency translation had a positive effect of ? 12 million
on net borrowings. The Group's ratio of net borrowings over EBITDA amounted to
0.4 at the end of September 2014 (2013: 0.1).
adidas Group confirms guidance for the full year 2014
Management expects adidas Group sales to increase at a mid- to high-single-digit
rate on a currency-neutral basis in 2014. In particular the adidas brand will
benefit from the 2014 FIFA World Cup(TM), where Management expects record sales
of ? 2 billion in the football category. Group sales development will also be
favourably impacted by the Group's high exposure to fast-growing emerging
markets as well as the further expansion of Retail. Currency translation is
expected to negatively impact the Group's top-line development in reported
terms.
In 2014, the adidas Group gross margin is forecasted to decrease to a level
between 48.0% and 48.5% (previously: between 48.5% and 49.0%) compared to 49.3%
in 2013. Management expects the operating margin for the adidas Group to be at a
level between 6.5% and 7.0% compared to 8.7% in 2013 excluding goodwill
impairment losses. Net income attributable to shareholders is expected to be at
a level of around ? 650 million compared to the 2013 net income attributable to
shareholders, excluding goodwill impairment losses, of ? 839 million. This
represents basic earnings per share of around ? 3.10.
Herbert Hainer stated: "In any sport, to reach your goals, tactics and desire
are critical to compete and win. We are here to do both. In 2015, Group sales
are forecasted to increase at a mid-single-digit rate. Net income will grow at a
higher rate than Group sales. At the same time, we will use 2015 to prepare the
ground for our next strategic plan, where we will take the powerful capabilities
we have built over Route 2015 and apply them with more vigour and intent to
unlock the potential of our brands. We will present our vision for the future in
March 2015."
***
Contacts:
Media Relations Investor Relations
Jan Runau John-Paul O'Meara
Chief Corporate Communication Officer SVP Strategy/Investor Relations
Tel.: +49 (0) 9132 84-3830 Tel.: +49 (0) 9132 84-2751
Katja Schreiber Christian Stoehr
Senior Director Corporate Communication Director Investor Relations
Tel.: +49 (0) 9132 84-3810 Tel.: +49 (0) 9132 84-4989
Yifeng Wang
Assistant Manager Investor Relations
Tel.: +49 (0) 9132 84-3057
Please visit our corporate website: www.adidas-Group.com
adidas Group Q3 2014 Results.pdf:
http://hugin.info/139192/R/1869174/657142.pdf
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[HUG#1869174]
Unternehmensinformation / Kurzprofil:
Datum: 06.11.2014 - 07:30 Uhr
Sprache: Deutsch
News-ID 350171
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contact information:
Town:
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Kategorie:
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