adidas AG: Nine Months 2011 Results
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adidas AG /
adidas AG: Nine Months 2011 Results
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For immediate release Herzogenaurach, November
3, 2011
Nine Months 2011 Results:
Currency-neutral Group sales increase 14%
Net income reaches new record level of ? 652 million
Sales and earnings guidance increased for 2011
Earnings per share to increase 10% to 15% in 2012
* Gross margin flat at 48.2% in first nine months
* adidas and Reebok currency-neutral sales up 14% and 9% in first nine months
respectively
* Group sales grow in all geographies in Q3 with sales in North America and
Greater China increasing 13% currency-neutral
* Comparable Retail store sales up 14% currency-neutral in Q3
adidas Group currency-neutral sales increase 13% in third quarter
In the third quarter of 2011, Group revenues grew 13% on a currency-neutral
basis. Currency-neutral sales in the Wholesale and Retail segments increased
10% and 21%, respectively. Sales for Other Businesses grew 13% on a currency-
neutral basis. Currency-neutral revenues in Western Europe increased 10%,
supported by double-digit growth at adidas and TaylorMade-adidas Golf. In
European Emerging Markets, currency-neutral sales were up 22% as a result of
strong double-digit revenue growth at both adidas and Reebok. Group sales in
North America grew 13% on a currency-neutral basis, driven by increases at all
brands, with particular strength at adidas as well as TaylorMade-adidas Golf. In
Greater China, Group sales were up 13% on a currency-neutral basis, driven by
strong double-digit sales gains at adidas Sport Style. Currency-neutral revenues
in Other Asian Markets grew 7%, due to increases at all brands. In Latin
America, adidas Group sales were up 18% on a currency-neutral basis as a result
of strong increases at adidas. Similar to the previous quarter, currency
translation effects had a negative impact on sales in euro terms. Group revenues
grew 8% to ? 3.744 billion in the third quarter of 2011 from ? 3.468 billion in
2010.
Third quarter EPS increases 14%
The Group's gross margin decreased 0.3 percentage points to 47.1% (2010: 47.3%)
in the third quarter as a larger share of higher-margin Retail sales, a more
favourable product and regional sales mix as well as positive hedging effects
could only partly offset an increase in input costs. Group gross profit
increased 7% to ? 1.762 billion (2010: ? 1.641 billion). Other operating
expenses as a percentage of sales decreased 0.5 percentage points to 36.3%
compared to 36.8% in the prior year, primarily due to lower marketing
investments as a percentage of sales. As a result, the Group's operating margin
remained stable at 11.8% (2010: 11.8%). Operating profit increased 7% to
? 441 million compared to ? 411 million in 2010. Net financial expenses
decreased 25% to ? 23 million (2010: ? 31 million), while the Group tax rate
improved 270 basis points to 27.3% (2010: 30.0%). As a result, the Group's net
income attributable to shareholders increased 14% to ? 303 million (2010: ? 266
million). Basic and diluted earnings per share for the third quarter increased
14% to ? 1.45 (2010: ? 1.27).
"Our brands and products are resonating with consumers around the world like
never before," commented Herbert Hainer, adidas Group CEO. "Our record third
quarter results were driven by growth in all key geographies, brands and
channels. We will finish 2011 clearly exceeding our initial expectations after
already surpassing our 2008 record earnings mark after the first nine months.
Therefore I can already confirm today: 2011 will be another record year for the
adidas Group."
adidas Group currency-neutral sales up 14% in first nine months of 2011
In the first nine months 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 11% to ? 10.081 billion in the first nine months
of 2011 from ? 9.059 billion in 2010.
First nine months Group sales increase driven by double-digit growth in all
segments
The adidas Group's sales increase in the first nine months of 2011 was driven by
double-digit growth in the Wholesale and Retail segments as well as in Other
Businesses. Currency-neutral Wholesale revenues increased 12%, primarily due to
double-digit growth at adidas. Currency-neutral Retail sales increased 21% as a
result of double-digit adidas and Reebok sales growth. Revenues in Other
Businesses increased 13% on a currency-neutral basis, mainly due to double-digit
sales growth at TaylorMade-adidas Golf. Rockport and Reebok-CCM Hockey sales
also grew. Currency translation effects had a negative impact on segmental sales
in euro terms.
+-------------+-------------+---------------+-----------------+
| Nine Months | Nine Months |Change y-o-y in| Change y-o-y |
| 2011 | 2010 | euro terms |currency-neutral |
+-------------+-------------+---------------+-----------------+
|? in millions|? in millions| in % | in % |
+----------------+-------------+-------------+---------------+-----------------+
|Wholesale | 6,869 | 6,247 | 10 | 12 |
+----------------+-------------+-------------+---------------+-----------------+
|Retail | 2,015 | 1,725 | 17 | 21 |
+----------------+-------------+-------------+---------------+-----------------+
|Other Businesses| 1,197 | 1,086 | 10 | 13 |
+----------------+-------------+-------------+---------------+-----------------+
|Total(1)) | 10,081 | 9,059 | 11 | 14 |
+----------------+-------------+-------------+---------------+-----------------+
Nine months net sales development by segment
1) Rounding differences may arise in totals.
Currency-neutral sales increase in all regions
In the first nine months 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 14% on a
currency-neutral basis as a result of double-digit sales increases in both the
USA and Canada. Sales in Greater China increased 28% on a currency-neutral
basis. Currency-neutral revenues in Other Asian Markets grew 7% due to increases
in most markets, in particular South Korea. In Latin America, sales grew 14% on
a currency-neutral basis, with strong increases in most of the region's major
markets. 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 |
| 2011 | 2010 |in euro terms |currency-neutral |
+-------------+-------------+--------------+-----------------+
|? in millions|? in millions| in % | in % |
+-----------------+-------------+-------------+--------------+-----------------+
|Western Europe | 3,172 | 2,875 | 10 | 10 |
+-----------------+-------------+-------------+--------------+-----------------+
|European Emerging| 1,189 | 1,034 | 15 | 23 |
|Markets | | | | |
+-----------------+-------------+-------------+--------------+-----------------+
|North America | 2,306 | 2,140 | 8 | 14 |
+-----------------+-------------+-------------+--------------+-----------------+
|Greater China | 900 | 721 | 25 | 28 |
+-----------------+-------------+-------------+--------------+-----------------+
|Other Asian | 1,482 | 1,359 | 9 | 7 |
|Markets | | | | |
+-----------------+-------------+-------------+--------------+-----------------+
|Latin America | 1,031 | 931 | 11 | 14 |
+-----------------+-------------+-------------+--------------+-----------------+
|Total(1)) | 10,081 | 9,059 | 11 | 14 |
+-----------------+-------------+-------------+--------------+-----------------+
Nine months 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 48.2% in the first nine
months of 2011 (2010: 48.2%). The positive impact from a more favourable product
and regional sales mix as well as a larger share of higher-margin Retail sales
offset the increase in input costs. Gross profit for the adidas Group grew 11%
to ? 4.855 billion versus ? 4.368 billion in the prior year.
Group operating profit increases 12%
In the first nine months of 2011, Group operating profit increased 12% to ? 973
million versus ? 865 million in 2010. The operating margin of the adidas Group
was up 0.1 percentage points to 9.7% (2010: 9.6%). This development was
primarily due to the positive effects from lower other operating expenses as a
percentage of sales, which more than offset the decrease in other operating
income. Other operating expenses as a percentage of sales decreased 0.8
percentage points to 39.6% from 40.5% in 2010. In euro terms, other operating
expenses increased 9% to ? 3.996 billion (2010: ? 3.666 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
? 1.245 billion, which represents an increase of 8% versus the prior year level
(2010: ? 1.149 billion). Nevertheless, as a result of the strong revenue
development, sales and marketing working budget expenditure as a percentage of
sales decreased 0.3 percentage points to 12.3% (2010: 12.7%).
Financial income up 13%
Financial income increased 13% to ? 24 million in the first nine months of 2011
from ? 21 million in the prior year, due to an increase in interest income as
well as positive currency translation effects.
Financial expenses increase 11%
Financial expenses increased 11% to ? 97 million in the first nine months of
2011 (2010: ? 87 million), mainly as a result of negative exchange rate effects,
which more than offset lower interest expenses. Excluding those effects,
financial expenses decreased 7%.
Net income attributable to shareholders up 16%
Income before taxes (IBT) for the adidas Group increased 13% to ? 900 million in
the first nine months of 2011 from ? 799 million in 2010. The Group's tax rate
decreased 2.3 percentage points to 27.4% (2010: 29.7%). As a result, the Group's
net income attributable to shareholders increased to ? 652 million from
? 560 million in 2010. This represents an increase of 16% versus the prior year
level, and marks a new record for the adidas Group.
Earnings per share reach ? 3.12
In the first nine months of 2011, basic and diluted earnings per share amounted
to ? 3.12 (2010: ? 2.68), representing an increase of 16%. The weighted average
number of shares used in the calculation was 209,216,186.
Group inventories up 20%
Group inventories increased 20% to ? 2.302 billion at the end of September 2011
versus ? 1.926 billion in 2010. On a currency-neutral basis, inventories also
grew 20%, reflecting input cost increases as well as the Group's expectations
for continued growth in the coming quarters.
Accounts receivable increase 4%
At the end of September 2011, Group receivables increased 4% to ? 2.251 billion
(2010: ? 2.166 billion). On a currency-neutral basis, receivables were up 5%.
This growth is lower than the 13% currency-neutral Group sales increase in the
third quarter of 2011.
Net borrowings down ? 153 million
Net borrowings at September 30, 2011 amounted to ? 750 million, which represents
a decrease of ? 153 million, or 17%, versus ? 903 million at the end of
September 2010. The decrease was driven by the strong operating cash flow
development over the past twelve months. Currency translation had a positive
effect in an amount of ? 39 million. The Group's ratio of net borrowings over
12-month rolling EBITDA decreased to 0.6 at the end of September 2011 versus
0.7 in the prior year.
adidas Group increases full year 2011 sales and earnings guidance
After the stronger than expected performance in the first nine months,
Management has increased the full year 2011 adidas Group sales and earnings
guidance. Management now forecasts adidas Group sales to increase at a rate
approaching 12% on a currency-neutral basis in 2011 (previously: increase at
around 10%). This will be driven by the Group's high exposure to fast-growing
emerging markets, the further expansion of Retail as well as continued momentum
at all key brands. Currency-neutral Wholesale segment revenues are projected to
increase at a high-single-digit rate compared to the prior year due to strong
performance of the adidas brand in Greater China, North America and Latin
America. adidas Group currency-neutral Retail segment sales are now projected to
grow at a high-teens rate in 2011 (previously: increase at a mid-teens 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 high-single-
digit rate on a currency-neutral basis (previously: increase at a mid- to high-
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.
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 16% to a level around ? 3.15
(previously: increase at a rate approaching 15% to a level between ? 3.10 and ?
3.12; 2010: ? 2.71).
adidas Group prepared for successful 2012
Assuming no significant deterioration in the economic environment, Management
expects adidas Group sales and earnings to increase in 2012. Based on the strong
momentum of the Group's brands as well as the opportunities provided by the UEFA
EURO 2012(TM) and the London 2012 Olympic Games, sales are projected to increase
at a mid- to high-single-digit rate on a currency-neutral basis. Increases in
input and labour costs as well as currency volatility will continue to be
headwinds for the development of Group profitability as in 2011. Nevertheless,
due to operating leverage, earnings per share are forecasted to increase faster
than sales, at a rate between 10% and 15%. A detailed 2012 outlook will be given
with the presentation of the Group's 2011 full year results on March 7, 2012.
Herbert Hainer stated: "2011 has been the perfect start to our Route 2015
journey. The traction we are gaining as we implement our strategies is
especially pleasing as the external environment is not without its challenges,
be it the economic uncertainty, stalling consumer confidence or struggling
regional competitors. Although we continue to face pressures from higher input
costs as well as volatility on currency markets, we are well prepared for
continued top- and bottom-line growth. The major sporting events next year
provide excellent opportunities for us to extend our current momentum. You will
see us capitalise on these and other opportunities supported by a fresh new wave
of exciting product innovation, some of which you will already see in the fourth
quarter of 2011."
***
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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Datum: 03.11.2011 - 07:30 Uhr
Sprache: Deutsch
News-ID 83414
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contact information:
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