First Half 2011 Results:
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adidas AG /
First Half 2011 Results:
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For immediate release Herzogenaurach, August
4, 2011
First Half 2011 Results:
Group sales increase 14% on a currency-neutral basis
Net income attributable to shareholders up 19% to record ? 349 million
adidas Group to achieve record sales and earnings in 2011
* Both adidas and Reebok sales up 14% currency-neutral year-to-date
* Comparable Retail store sales grow 15% currency-neutral in the first half of
2011
* Gross margin improves 20 basis points to 49.2% in the second quarter despite
rising input costs
* Operating margin increases 0.3pp to 8.4% in the first half of 2011
* Net borrowings down 21% to ? 863 million at end of June 2011
adidas Group currency-neutral sales increase 10% in the second quarter of 2011
In the second quarter of 2011, Group revenues grew 10% on a currency-neutral
basis. Currency-neutral revenues in Western Europe increased 5%, supported by
double-digit growth at TaylorMade-adidas Golf and sales increases at adidas. In
European Emerging Markets, currency-neutral sales were up 21% as a result of
strong increases at both adidas and Reebok. Group sales in North America grew
5% on a currency-neutral basis, supported by double-digit increases at adidas as
well as TaylorMade-adidas Golf. In Greater China, Group sales were up 41% on a
currency-neutral basis, supported by strong growth in all major categories.
Currency-neutral revenues in Other Asian Markets and Latin America grew 6% and
8%, respectively. In contrast to previous quarters, currency translation effects
had a negative impact on sales in euro terms. Group revenues grew 5% to
? 3.064 billion in the second quarter of 2011 from ? 2.917 billion in 2010.
Second quarter gross margin increases 20 basis points
The Group's gross margin increased 0.2 percentage points to 49.2% (2010: 48.9%)
in the second quarter as a larger share of higher-margin Retail sales as well as
a more favourable product and regional sales mix more than offset an increase in
input costs. Group gross profit increased 6% to ? 1.506 billion (2010:
? 1.427 billion). Other operating expenses as a percentage of sales decreased
60 basis points to 43.3% compared to 43.9% the prior year, primarily due to
lower marketing expenses. As a result of the higher gross margin and lower other
operating expenses as a percentage of sales, the Group's operating margin
increased 0.5 percentage points to 7.1% versus 6.7% in 2010. Operating profit
increased 12% to ? 219 million compared to ? 195 million in 2010. The Group's
net income attributable to shareholders amounted to ? 140 million (2010: ? 126
million). Diluted earnings per share for the second quarter increased 11% to
? 0.67 (2010: ? 0.60).
"After outlining our strategic vision for the company through to 2015 late last
year, we have wasted no time and come out of the starting blocks in typical
adidas Group fashion - fast and focused," commented Herbert Hainer, adidas Group
CEO. "No matter which way we break down our results - by segment, by region or
by brand - all facets of our business are excelling."
adidas Group currency-neutral sales increase 14% in the first half of 2011
In the first half of 2011, Group revenues increased 14% on a currency-neutral
basis. Currency translation effects had a negative impact on sales in euro
terms. Group revenues grew 13% to ? 6.337 billion in the first half of 2011 from
? 5.590 billion in 2010.
First half adidas Group sales increase driven by double-digit growth in all
segments
Currency-neutral Wholesale revenues increased 13% in the first half of 2011,
driven by double-digit sales growth at both adidas and Reebok. Currency-neutral
Retail sales increased 21% versus the prior year as a result of double-digit
adidas and Reebok sales growth. Comparable store sales grew 15% on a currency-
neutral basis. Revenues in Other Businesses increased 13% on a currency-neutral
basis, mainly due to double-digit sales growth at TaylorMade-adidas Golf.
Currency translation effects had a negative impact on segmental sales in euro
terms.
+---------------+---------------+-------------+---------------+
|First Half Year|First Half Year|Change y-o-y | Change y-o-y |
| 2011 | 2010 |in euro terms| currency- |
| | | | neutral |
-----------------+---------------+---------------+-------------+---------------+
| ? in millions | ? in millions | in % | in % |
+----------------+---------------+---------------+-------------+---------------+
|Wholesale | 4,292 | 3,826 | 12 | 13 |
+----------------+---------------+---------------+-------------+---------------+
|Retail | 1,258 | 1,061 | 19 | 21 |
+----------------+---------------+---------------+-------------+---------------+
|Other Businesses| 787 | 703 | 12 | 13 |
+----------------+---------------+---------------+-------------+---------------+
|Total(1)) | 6,337 | 5,590 | 13 | 14 |
+----------------+---------------+---------------+-------------+---------------+
First half net sales development by segment
1) Rounding differences may arise in totals.
Currency-neutral sales increase in all regions
In the first half of 2011, currency-neutral adidas Group sales grew in all
regions. Revenues in Western Europe increased 10% on a currency-neutral basis,
primarily as a result of strong sales growth in Germany, France, Italy and
Spain. In European Emerging Markets, Group sales increased 23% on a currency-
neutral basis due to growth in most of the region's markets, in particular
Russia. Sales for the adidas Group in North America grew 15% on a currency-
neutral basis due to double-digit sales increases in both the USA and Canada.
Sales in Greater China increased 38% on a currency-neutral basis. Currency-
neutral revenues in Other Asian Markets grew 6% due to increases in most
markets, in particular South Korea. In Latin America, sales grew 11% on a
currency-neutral basis, with double-digit increases in most of the region's
major markets. Currency translation effects had a mixed impact on regional sales
in euro terms.
+---------------+---------------+-------------+---------------+
|First Half Year|First Half Year|Change y-o-y | Change y-o-y |
| 2011 | 2010 |in euro terms| currency- |
| | | | neutral |
-----------------+---------------+---------------+-------------+---------------+
| ? in millions | ? in millions | in % | in % |
+----------------+---------------+---------------+-------------+---------------+
|Western Europe | 1,961 | 1,772 | 11 | 10 |
+----------------+---------------+---------------+-------------+---------------+
|European | 751 | 633 | 19 | 23 |
|Emerging Markets| | | | |
+----------------+---------------+---------------+-------------+---------------+
|North America | 1,452 | 1,312 | 11 | 15 |
+----------------+---------------+---------------+-------------+---------------+
|Greater China | 552 | 403 | 37 | 38 |
+----------------+---------------+---------------+-------------+---------------+
|Other Asian | 956 | 868 | 10 | 6 |
|Markets | | | | |
+----------------+---------------+---------------+-------------+---------------+
|Latin America | 666 | 601 | 11 | 11 |
+----------------+---------------+---------------+-------------+---------------+
|Total(1)) | 6,337 | 5,590 | 13 | 14 |
+----------------+---------------+---------------+-------------+---------------+
First half net sales development by region
1) Rounding differences may arise in totals.
Group gross margin remains stable
The gross margin of the adidas Group remained stable at 48.8% in the first half
of 2011 (2010: 48.8%). The positive impact from a larger share of higher-margin
Retail sales as well as a more favourable product and regional sales mix offset
an increase in input costs. Gross profit for the adidas Group grew 13% in the
first half of 2011 to ? 3.093 billion versus ? 2.727 billion in the prior year.
Operating margin increases 0.3 percentage points
In the first half of 2011, Group operating profit increased 17% to ? 532 million
versus ? 454 million in 2010. As a percentage of sales, the operating margin of
the adidas Group was up 0.3 percentage points to 8.4% (2010: 8.1%). This
development was primarily due to the positive effects from lower other operating
expenses as a percentage of sales, which more than offset the non-recurrence of
prior year positive effects related to the settlement of a lawsuit and the
divestiture of a trademark. Other operating expenses as a percentage of sales
decreased 1.1 percentage points to 41.6% in the first half of 2011 from 42.8% in
2010. In euro terms, other operating expenses increased 10% to ? 2.637 billion
in the first half of 2011 (2010: ? 2.390 billion), as a result of higher
marketing expenditure as well as the expansion of the Group's own-retail
activities. Thereof, sales and marketing working budget expenditure amounted to
? 832 million, which represents an increase of 10% versus the prior year level
(2010: ? 756 million). Nevertheless, as a result of the strong revenue
development, sales and marketing working budget expenditure as a percentage of
sales decreased 0.4 percentage points to 13.1% (2010: 13.5%).
Financial income down 43%
Financial income decreased 43% to ? 13 million in the first half of 2011 from ?
23 million in the prior year, mainly due to the non-recurrence of positive
exchange rate effects in the prior year.
Financial expenses up 8%
Financial expenses increased 8% to ? 63 million in the first half of 2011 (2010:
? 58 million), mainly as a result of negative exchange rate effects, which more
than offset the positive effect of lower interest expenses. Excluding those
effects, financial expenses decreased 11%.
Net income attributable to shareholders up 19%
Income before taxes (IBT) for the adidas Group increased 15% to ? 482 million
from ? 419 million in 2010. The Group's tax rate decreased 2.0 percentage points
to 27.5% in the first half of 2011 (2010: 29.5%).
As a result, the Group's net income attributable to shareholders increased to ?
349 million in the first half of 2011 from ? 295 million in 2010. This
represents an increase of 19% versus the prior year level.
Earnings per share reach ? 1.67
In the first half of 2011, basic and diluted earnings per share amounted to
? 1.67 (2010: ? 1.41), representing an increase of 19%. The weighted average
number of shares used in the calculation was 209,216,186.
Group inventories up 16%
Group inventories increased 16% to ? 2.376 billion at the end of June 2011
versus ? 2.049 billion in 2010. On a currency-neutral basis, inventories grew
26%, driven by a normalisation of inventory levels compared to the prior year as
well as continued growth expectations in the coming quarters.
Accounts receivable increase 1%
At the end of June 2011, Group receivables increased 1% to ? 2.023 billion
(2010: ? 1.999 billion) as a result of the Group's sales growth. On a currency-
neutral basis, receivables were up 9%.
Net borrowings down ? 227 million
Net borrowings at June 30, 2011 amounted to ? 863 million, which represents a
decrease of ? 227 million, or 21%, versus ? 1.090 billion at the end of June
2010. The decrease was driven by the strong operating cash flow development over
the past 12 months. Currency translation had a positive effect in an amount of ?
25 million. The Group's ratio of net borrowings over 12-month rolling EBITDA
decreased to 0.7 at the end of June 2011 versus 1.0 in the prior year.
adidas Group increases full year 2011 sales and earnings guidance
After the stronger than expected first half year performance, Management has
decided to increase the full year 2011 adidas Group sales and earnings guidance.
Management now forecasts adidas Group sales to increase at around 10% on a
currency-neutral basis in 2011 (previously: increase at high-single-digit rate).
High exposure to fast-growing emerging markets, the further expansion of Retail
as well as continued momentum at all key brands will more than offset the non-
recurrence of sales related to the 2010 FIFA World Cup(TM). Currency-neutral
Wholesale segment revenues are now projected to increase at a high-single-digit
rate (previously: mid- to high-single-digit rate) compared to the prior year due
to strong performance of the adidas brand in Greater China and North America and
a less severe decline in Japan than originally expected in the aftermath of the
disaster earlier this year. adidas Group currency-neutral Retail segment sales
are projected to grow at a mid-teens rate in 2011 (previously: low-double-digit
rate). Comparable store sales are expected to contribute to the revenue growth
at a higher rate than the expansion of the Group's own-retail store base.
Segmental revenues of Other Businesses are now projected to increase at a mid-
to high-single-digit rate on a currency-neutral basis (previously: mid-single-
digit rate).
In 2011, the adidas Group's gross margin is forecasted to reach a level between
47.5% and 48.0% (2010: 47.8%). Group gross margin will benefit from positive
regional mix effects. In addition, improvements in the Retail segment as well as
at the Reebok brand will positively influence the development of the Group's
gross margin. However, these positive effects will be offset by several factors.
In particular, sourcing costs will increase significantly compared to the prior
year as a result of rising raw material costs and capacity constraints. In
addition, as a consequence of the tragic events in Japan during the first
quarter of 2011, Group gross margin will be negatively impacted by sales
declines in this market.
The adidas Group's other operating expenses as a percentage of sales are
expected to decrease modestly in 2011 (2010: 42.1%). Sales and marketing working
budget expenses as a percentage of sales are also projected to decline modestly
compared to the prior year. Marketing investments to support Reebok's growth
strategy in the men's training and women's fitness categories, as well as
investments to support growth in the Group's key attack markets - North America,
Greater China and Russia/CIS - will be offset by the non-recurrence of expenses
in relation to adidas' presence at the 2010 FIFA World Cup(TM).
In 2011, the operating margin for the adidas Group is expected
to increase to a level between 7.5% and 8.0% (2010: 7.5%). In addition,
Management expects lower interest expenses in 2011 due to a
lower average level of net borrowings. As a result of these developments and in
light of the Group's increased sales expectations, earnings per share are now
projected to increase at a rate approaching 15% to a level between ? 3.10 and ?
3.12 (previously: increase at around 10% to 15% to a level between ? 2.98 and ?
3.12; 2010: ? 2.71).
Herbert Hainer stated: "No matter which retailer I speak to, or which market
share statistic I read, our product sell-throughs are stronger than they have
ever been. Despite severe external pressures from currency volatility and rising
commodity prices, we were able to defend our profitability as a result of our
unparalleled strength in innovation and design as well as supply chain
excellence. After the strong first half performance, we are on our way to record
sales and earnings in 2011. This is all the more notable as various currencies
have been weakening versus the euro, which negatively impacts our financial
results in the short term."
***
Contacts:
Media Relations Investor Relations
Jan Runau John-Paul O'Meara
Chief Corporate Communication Officer Vice President
Investor Relations
Tel.: +49 (0) 9132 84-3830 Tel.: +49 (0)
9132 84-2751
Katja Schreiber Christian Stoehr
Senior Corporate PR Manager Investor Relations
Manager
Tel.: +49 (0) 9132 84-3810 Tel.: +49 (0)
9132 84-4989
Johannes Fink
Investor Relations Manager
Tel.: +49 (0) 9132 84-3461
Please visit our corporate website: www.adidas-Group.com
--- End of Message ---
adidas AG
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Attachment: Press release adidas Group H1 2011:
http://hugin.info/139192/R/1536115/468613.pdf
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[HUG#1536115]
Unternehmensinformation / Kurzprofil:
Datum: 04.08.2011 - 07:30 Uhr
Sprache: Deutsch
News-ID 56963
Anzahl Zeichen: 19997
contact information:
Town:
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Kategorie:
Business News
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