Nine Months 2009 Results:
(Thomson Reuters ONE) - Significant improvement in financial position in the first ninemonths of 2009 * Currency-neutral inventories down 8% versus the prior year * Net borrowings reduced by 12% versus the prior year * Currency-neutral Group sales decline 7% in Q3 and first nine months * Full year diluted EPS to reach level of ? 1.15 to ? 1.30Third quarter adidas Group currency-neutral sales decrease 7%During the third quarter of 2009, Group sales declined 7% on acurrency-neutral basis. Revenues for the adidas segment decreased 6%on a currency-neutral basis. Growth in the Sport Style division couldnot offset declines in major sports categories in the SportPerformance division. Currency-neutral revenues in the Reebok segmentdecreased 12% versus the prior year, as a result of declines in alldivisions. Third quarter revenues for the TaylorMade-adidas Golfsegment decreased 12% on a currency-neutral basis. This was mainlydue to the challenging macroeconomic environment and thenon-recurrence of sales related to several new product launches inthe prior year period. Currency movements positively impacted Groupsales in euro terms. Group revenues decreased 6% in euro terms to ?2.888 billion in the third quarter of 2009 from ? 3.083 billion in2008.Third quarter diluted EPS ? 1.03The Group's gross margin decreased 3.7 percentage points to 45.3%(2008: 49.0%) in the third quarter as a result of higher clearancesales, higher input costs and currency devaluation effects, inparticular related to the Russian rouble. Group gross profitdecreased 14% to ? 1.307 billion (2008: ? 1.511 billion). As a resultof the lower gross margin as well as higher other operating expensesas a percentage of sales, the Group's operating margin decreased 3.7percentage points to 11.6% in the third quarter of 2009 versus 15.3%in the prior year. Operating profit decreased 29% to ? 336 millionversus ? 473 million in 2008. In the third quarter of 2009, theGroup's net income attributable to shareholders decreased 30% to? 213 million (2008: ? 302 million) mainly due to the Group's loweroperating profit. Diluted earnings per share for the third quarterdeclined 29% to ? 1.03."This year, our industry and our Group have faced unprecedentedchallenges. However, we have tackled the challenges head-on,"commented Herbert Hainer, adidas Group CEO. "We have successfullyadapted to our difficult surroundings. And our drive for operationalexcellence has meant we have strongly improved our financial positiongenerating almost ? 740 million in net cash from operations over thelast six months."adidas Group currency-neutral sales decline 7% in first nine monthsIn the first nine months of 2009, Group revenues decreased 7% on acurrency-neutral basis, as a result of lower sales in all businesssegments. The adidas segment decreased 7%, the Reebok segment 9% andthe TaylorMade-adidas Golf segment 5%. Currency translation effectspositively impacted sales in euro terms. Group revenues in euro termsdeclined 4% to ? 7.923 billion in the first nine months of 2009 from? 8.225 billion in 2008.+-------------------------------------------------------------------+| | Nine | Nine | Change | Change || | Months | Months | y-o-y | y-o-y || | 2009 | 2008 | in euro | currency- || | | | terms | neutral ||-----------------------+----------+----------+---------+-----------|| | ? in | ? in | in % | in % || | millions | millions | | ||-----------------------+----------+----------+---------+-----------|| adidas | 5,779 | 6,004 | (4) | (7) ||-----------------------+----------+----------+---------+-----------|| Reebok | 1,497 | 1,587 | (6) | (9) ||-----------------------+----------+----------+---------+-----------|| TaylorMade-adidas | 633 | 614 | 3 | (5) || Golf | | | | ||-----------------------+----------+----------+---------+-----------|| HQ/Consolidation | 13 | 20 | (32) | (36) ||-----------------------+----------+----------+---------+-----------|| Total | 7,923 | 8,225 | (4) | (7) |+-------------------------------------------------------------------+Nine months net sales growth by segmentCurrency-neutral sales decrease in nearly all regionsCurrency-neutral adidas Group sales declined in all regions exceptLatin America in the first nine months of 2009. Group sales in Europedecreased 8% on a currency-neutral basis, due to declines in mostmajor markets impacted by the non-recurrence of strong prior yearsales related to the UEFA EURO 2008(TM). In North America, Groupsales decreased 11% on a currency-neutral basis due to declines inboth the USA and Canada. Sales for the adidas Group in Asia decreased9% on a currency-neutral basis, mainly as a result of declines inJapan and China. In Latin America, sales grew 19% on acurrency-neutral basis, with double-digit increases in most of theregion's major markets, supported by the new Reebok companies inBrazil/Paraguay and Argentina.In euro terms, sales in Europe decreased 9% to ? 3.442 billion in thefirst nine months of 2009 from ? 3.776 billion in 2008. Sales inNorth America declined 3% to ? 1.822 billion from ? 1.871 billion in2008. Revenues in Asia grew 1% to ? 1.894 billion in the first ninemonths of 2009 from ? 1.875 billion in 2008. Sales in Latin Americagrew 10% to ? 713 million from ? 647 million in the prior year.+-------------------------------------------------------------------+| | Nine Months | Nine Months | Change | Change || | 2009 | 2008 | y-o-y | y-o-y || | | | in euro | currency- || | | | terms | neutral ||-------------+-------------+-------------+-----------+-------------|| | ? in | ? in | in % | in % || | millions | millions | | ||-------------+-------------+-------------+-----------+-------------|| Europe | 3,442 | 3,776 | (9) | (8) ||-------------+-------------+-------------+-----------+-------------|| North | 1,822 | 1,871 | (3) | (11) || America | | | | ||-------------+-------------+-------------+-----------+-------------|| Asia | 1,894 | 1,875 | 1 | (9) ||-------------+-------------+-------------+-----------+-------------|| Latin | 713 | 647 | 10 | 19 || America | | | | ||-------------+-------------+-------------+-----------+-------------|| Total[1] | 7,923 | 8,225 | (4) | (7) |+-------------------------------------------------------------------+Nine months net sales growth by region______________________________[1] Including HQ/Consolidation.Gross margin negatively impacted by higher clearance salesThe gross margin of the adidas Group decreased 4.3 percentage pointsto 45.1% in the first nine months of 2009 (2008: 49.4%). Thisdevelopment was mainly due to higher clearance sales, higher inputcosts and currency devaluation effects, in particular related to theRussian rouble. As a result, gross profit for the adidas Groupdeclined 12% in the first nine months of 2009 to ? 3.576 billionversus ? 4.062 billion in the prior year.Operating margin declines 5.8 percentage pointsThe operating margin of the adidas Group decreased 5.8 percentagepoints to 5.9% in the first nine months of 2009 (2008: 11.7%). Thedecline was due to the decrease in Group gross margin as well ashigher other operating expenses as a percentage of sales. Otheroperating expenses as a percentage of sales increased 1.8 percentagepoints to 41.0% in the first nine months of 2009 from 39.1% in 2008,mainly as a result of higher expenses to support the Group'sdevelopment in emerging markets. As a result, Group operating profitdecreased 52% to ? 465 million versus ? 963 million in 2008.Financial income down 37%Financial income decreased 37% to ? 15 million in the first ninemonths of 2009 from ? 23 million in the prior year, mainly due tochanges in the fair value of financial instruments.Financial expenses increase 1%Financial expenses increased 1% to ? 137 million in the first ninemonths of 2009 (2008: ? 136 million). Negative exchange ratevariances were partly offset by a decline in interest expenses.Income before taxes decreases 60%Income before taxes (IBT) as a percentage of sales decreased 6.0percentage points to 4.3% in the first nine months of 2009 from 10.3%in 2008. This was mainly a result of the Group's operating margindecrease. IBT for the adidas Group declined 60% to ? 343 million from? 850 million in 2008.Net income attributable to shareholders declines 62%The Group's net income attributable to shareholders decreased 62% to? 226 million in the first nine months of 2009 from ? 588 million in2008. The Group's lower operating profit was the primary reason forthis development. The Group's tax rate increased 3.7 percentagepoints to 34.2% in the first nine months of 2009 (2008: 30.5%),mainly due to a less favourable regional earnings mix.Basic and diluted earnings per share decrease 61% and 59%respectivelyBasic earnings per share decreased 61% to ? 1.17 in the first ninemonths of 2009 versus ? 2.96 in 2008. The weighted average number ofshares used in the calculation of basic earnings per share decreasedto 193,515,512 in the first nine months of 2009 (2008 average:198,868,061) due to the share buyback programme from January toOctober 2008. Diluted earnings per share in the first nine months of2009 decreased 59% to ? 1.13 from ? 2.78 in the prior year. Theweighted average number of shares used in the calculation of dilutedearnings per share was 209,247,568 (2008 average: 214,671,394). Thedilutive effect largely results from approximately sixteen millionadditional potential shares that could be created in relation to theGroup's convertible bond.Currency-neutral Group inventories down 8%Group inventories decreased 9% to ? 1.652 billion at the end ofSeptember 2009 versus ? 1.812 billion in 2008. On a currency-neutralbasis, inventories were down 8%. This development was mainly due toreduced production volumes as well as clearance of excess inventoriesat all brands, partly offset by higher inventories in Latin America.Currency-neutral accounts receivable decrease 7%At the end of September 2009, Group receivables decreased 9% to? 1.866 billion (2008: ? 2.055 billion). On a currency-neutral basis,receivables were down 7%. This decrease reflects the decline in salesas well as strict discipline in the Group's trade terms managementdespite the difficult economic situation in most markets.Net borrowings reduced by ? 299 millionNet borrowings at September 30, 2009 amounted to ? 2.294 billion,which represents a decrease of ? 299 million, or 12%, versus ? 2.593billion at the end of September 2008. Lower working capitalrequirements were the main reason for the net debt decline. Thispositive effect more than offset cash outflows in an amount of ? 32million in relation to the meanwhile completed share buybackprogramme as well as negative currency translation effects in anamount of ? 5 million. Consequently, the Group's financial leveragedecreased to 70.2% at the end of September 2009 versus 78.5% in theprior year.adidas Group sales to decrease in 2009adidas Group sales are expected to decline at a low- tomid-single-digit rate on a currency-neutral basis in 2009. Salesdevelopment will be negatively impacted by weaker consumer demand dueto low levels of consumer confidence and rising unemployment in manymajor markets. The Group projects a low- to mid-single-digit salesdecline on a currency-neutral basis for the adidas brand in 2009.Reebok segment sales are also expected to decline at a low- tomid-single-digit rate compared to the prior year on acurrency-neutral basis in 2009. Currency-neutral sales atTaylorMade-adidas Golf are now projected to decline at a low- tomid-single-digit rate, despite the consolidation of Ashworth for thefull twelve-month period.adidas Group earnings per share to decrease in 2009In 2009, the adidas Group gross margin is forecasted to decline to alevel between 45.0% and 45.5%. Higher sourcing costs due to increasedraw material and labour costs, in particular in the first half of theyear, as well as currency devaluation effects, primarily from thedepreciation of the Russian rouble, will contribute to thisdevelopment. A promotional environment in mature markets is expectedto also have a negative impact on gross margin development in 2009.The Group's other operating expenses as a percentage of sales areexpected to increase in 2009. Higher expenses for controlled spaceinitiatives in the adidas and Reebok segments as well as costsrelated to reorganisation activities will drive this development,partially compensated by positive effects from efficiencyimprovements throughout the organisation. As a result of the expectedGroup gross margin decline and the projected increase in otheroperating expenses as a percentage of sales, the operating margin forthe adidas Group is expected to decline to a level around 5.0%. Netincome attributable to shareholders and earnings per share areprojected to decline in 2009. Due to a more moderate increase ofinput costs and positive impetus ahead of the 2010 FIFA WorldCup(TM), Group profitability will be significantly better in thesecond half compared to the first half of the year. Full year dilutedearnings per share are expected to reach a level between ? 1.15 and ?1.30.Working capital management to improve balance sheetTight working capital management and disciplined investmentactivities are expected to help optimise the Group's free cash flowin 2009. Group inventories are expected to be significantly below theprior year level at the end of 2009 as a result of the clearance ofexcess inventories and a significant reduction of sourcing volumes inthe second half of 2009. Excess cash will largely be used to reducenet borrowings, which are forecasted to be below the prior yearlevel.Herbert Hainer stated: "Consumer and retailer sentiment still hoversbetween fear and optimism. However, we are well prepared to face anychallenges thrown our way and I am cautiously optimistic. With a firmgrip on inventories, a better financial position and a leanerorganisation, we turn into the 2010 event year with innovativeproducts, exciting concepts and clear focus on the tasks at hand." ***Contacts:Media Relations Investor RelationsJan Runau John-Paul O'MearaChief Corporate Communications Officer Head of Investor RelationsTel.: +49 (0) 9132 Tel.: +4984-3830 (0) 9132 84-2751Katja Schreiber Dennis WeberCorporate PR Manager Investor Relations ManagerTel.: +49 (0) 9132 84-3810 Tel.: +49 (0) 9132 84-4989Please visit our corporate website: www.adidas-Group.comhttp://hugin.info/139192/R/1352448/327200.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 04.11.2009 - 07:31 Uhr
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