ADIDAS GROUP ANNUAL REPORT 2014
2
GLOBAL LEADER IN THE sporting goods industry
we strive to be the
with brands built
PASSION
ON A FOR SPORTS AND A SPORTING LIFESTYLE 3
FINANTIAL HIGHLIGHTS 01 / Financial Highlights 2014
2013
Change
Operating Highlights (€ in millions)
Net sales
14,534
14,203 2.3%
EBITDA
1,283
1,496 (14.3%)
Operating profit
961
1.233 (22.1%)
Net income attributable to shareholders
568
839 (32.2%)
Key Ratios Gross margin
47.6%
49.3% (1.7pp)
Operating expenses in % of net sales
42.7%
42.3% 0.3pp
Operating margin
6.6%
8.7% (2.1pp)
Effective tax rate
29.7%
29.2% 0.5pp
Net income attributable to shareholders in % of net sales
3.9%
5.9% (2.0pp)
Average operating working capital in % of net sales
22.4%
21.3% 1.0pp
Equity ratio
45.3%
47.3% (2.0pp)
Net borrowings/EBITDA
0.1
(0.2) n.a.
Financial leverage
3.3%
(5.4%) 8.7pp
Return on equity
8.7%
14.3% (5.6pp)
Total assets
12,417
14,203 2.3%
Inventories
2,567
1,496 (14.3%)
Recievables and other assets
2,861
1.233 (22.1%)
Working capital
2,970
Net cash/net borrowings
(185)
295 n.a.
Shareholders’ equity
5,674
5,489 2.5%
Capital Expenditure
554
479 15.5%
Net cash generated from operating activities
701
634 10.5%
Basic earnings
2.72
4.01 (32.1%)
Diluted earnings
2.72
4.01 (32.1%)
Net cash generated from operating activities
3.36
3.03 10.7%
Dividend
(1.505)
1.50 -
Share price at year-end
57.62
92.64 (37.8%)
Number of employees
53.731
49.808 7.9%
Number of shares outstanding
204,327,044
209,216,186
(2.3%)
Average number of shares
208,776,457
209,216,186
(0.2%)
Balance Sheet and Cash Flow Data (€ in millions)
839 (32.2%)
Per Share of Common Stock (€)
Other (at year-end)
4
TARGETS RESULTS OUTLOOK 2014 2014 2015 02 / Financial Highlights
Currency-neutral sales development:
Currency-neutral sales development:
Currency-neutral sales development:
adidas Group
adidas Group
adidas Group
increase at a
increase of
increase at a
high-single-digit rate
6%
mid-single-digit rate
Group sales of
€ 14.534 billion Gross margin
Gross margin
Gross margin
49.5%-49.8%
47.6%
47.5%-48.5%
Operating margin
Operating margin
Operating margin
8.5%-9.0%
6.6%
6.5%-7.0%
Average operating working capital (in % of sales)
Average operating working capital (in % of sales)
Average operating working capital (in % of sales)
moderate decline expected
22.4%
moderate decline
Capital expediture
Capital expediture
Capital expediture
€500 million-€550 million
€554
around €600 million
Gross borrowings
Gross borrowings
Gross borrowings
further reduction
€1.873 billion
moderate decline
Net borrowings/EBDITA ratio
Net borrowings/EBDITA ratio
Net borrowings/EBDITA ratio
to be maintained below 2
0.1
to be maintained below 2
Net income attributable to shareholders
Net income attributable to shareholders
Net income from continuing operations
decreases 32% to
increase at a rate of
€568 million
7%-10%
€830 million-€930 million
Earnings per share decrease 32% to
€2.72 Shareholder value
adidas AG share price decreases
Shareholder value
further increase
38%
increase
Dividend per share
€1.50 5
Letter from our CEO
Dear Dear Stockholders, Stockholders, 2014 was, without any question, a year of
In addition to these positive developments,
ups and downs for our Group. On the one
the overall performance of the adidas
hand, we look back on great moments such
brand underlines the strong improvement
as the FIFA World Cup where we once again
in our competitive position over the course
demonstrated what we are capable of when
of the year. adidas sales for the full year
we focus and act with determination. We
increased 11%, with double-digit growth
grew our currency-neutral football sales by
rates throughout the year, with the exception
more than 20% to â‚Ź 2.1 billion, exceeding
of the first quarter. This shows that our sales
even our own high expectations. But football
dynamics are right, and the momentum of our
was by no means the only highlight of the
core brands is fully intact.
past year. We also recorded numerous other successes:
To close, allow me to say that we have everything it takes to be successful going forward: our brands are enjoying great
/ Our revolutionary Boost technology not
momentum, our product pipeline is full, and
only gave significant impetus to runners on
our campaigns will make our brands even
the streets but also to adidas Running, with
more desirable. We know what our priorities
sales growth in this category totalling 15%.
are, we have drawn up our plan accordingly
All our regions contributed to the increase,
and we will now work in a consistent, resolute
with Western Europe a stand-out performer,
and bold way to implement it. At the same
recording growth of 22%.
time, we will remain vigilant, in order to be able to react quickly and resolutely to any
/ Our lifestyle business returned to
changes in the market environment. The
strength in 2014, increasing 12%. At adidas
roadmap for the future is clear. We will
Originals, we posted improvements from
significantly improve our business and grow
one quarter to the next, which culminated in
our top and bottom line in 2015. But that’s
strong double-digit sales growth in the fourth
only just the beginning. At the end of March
quarter. This increase reflects the success
we will present our long-term strategy for
of the ZX Flux and the Stan Smith product
the period up to 2020. Of course I cannot
franchise as well as our first product launches
report on the contents of this strategy today.
as part of our partnerships with Rita Ora and
But I can already assure you of one thing:
Pharrell Williams, to name just a few. Also
the adidas Group is and will remain a growth
our NEO business continues to experience
company, founded on strong brands. And with
dynamic growth, with sales up 27%.
this, we will continue to make a difference going forward. Yours sincerely,
HERBERT HAINER
ADIDAS GROUP CEO
6
ADI DASSLER
THREE STRIPES three stripes WERE ORIGINALLY INSTAlLED ON THE shoes THE three THREE STRIPES stripes WERE ORIGINALLY INSTAlLED ON THE shoes THE
SHOE shoe SHOE TRADEMARK shoe TRADEMARK
to give that part of the MORE SUPPORT to giveOUR that part of the BUT IT BECAME MORE SUPPORT BUT IT BECAME OUR
7
8
Our Brands The guiding principle of the adidas Sport Performance Division is to equip all athletes to achieve their “impossible.” adidas Sport Performance brings its passion for great products to athletes in all sports and mainly focuses on four key categories globally: football, running, training, and basketball. The Sport Style Division is the home of Originals, defined as authentic sportswear, the Fashion Group, which is the future of sportswear, and Style Essentials, the fresh sport-inspired label made accessible for style-adopting youth. Together they offer consumers products from street fashion to high fashion, all uniquely inspired and linked to sport. At Reebok, we love fitness. It’s what wakes us up in the morning, what we think about all day and what drives us toward tomorrow. We want to invite people to see fitness the way we do, to be passionate about it the way we are. 9
/w
Headquarters The world is our playing field. Such dimensions ask for perfectly aligned playmakers. At the adidas Group, the lead is taken by our headquarters in Herzogenaurach (Germany) and additional key locations which are listed below.
/adidas Group headquarters adidas AG Adi-Dassler-Strasse 1 91074 Herzogenaurach Germany
/adidas North America adidas America, Inc. adidas Village 5055 N Greeley Avenue Portland, OR 97217 USA
/adidas Latin America adidas Latin America, S.A. Business Park Ave. Principal y Ave. La Rotonda Torre Sur – 4th floor Costa del Este Panamå 10
ADIDAS WORLD WIDE 11
2014 IN NUMBERS 53,731 50% 50% 30 GERMANY 79 126 660 145 5 5 Employees Worldwide
FEMALES
AVERAGE AGE
X GEN
Y N GE
% 70
PRODUCTS LAUNCHED
14 0 2
SALES
12
78
%
MALES
AVERAGE AGE
AVERAGE COUNTRY
NATIONALITIES
INVESTMENTS (IN MILLIONS)
PRODUCTS SOLD (IN MILLIONS)
SALES (IN bILLIONS)
BRANDS
Board members
26%
B A BY B O
OMERS 7%
APPAREL SOLD (IN MILLIONS)
SHOES SOLD (IN MILLIONS)
greatest year in sales
sales channels
99 b
258
€ 3. 8 42
309 2014 7
HARDWARE SOLD (IN MILLIONS)
headquarters worldwide
€
6b .31 €1
b 6 .9 37
FINANCIALS
€ 14.883 billion € 11.990 billion
2010
€ 14.492 billion
€ 14.534 billion
€ 13.332 billion
2011
2012
2013
2014 13
2014 WORLD CUP New record sales in football – Record sales of Germany jerseys with more than 2 million jerseys sold The adidas Group announced a partnership with Parley for the Oceans, an initiative dedicated to raising awareness about the beauty and fragility of the oceans and to collaborating on projects that can end their destruction. Together, the adidas Group and Parley for the Oceans will implement a long-term partnership programme that builds on three pillars: Communication and Education, Research and Innovation as well as Direct Actions against Ocean Plastic Pollution. The partnership is an example of the adidas Group’s open-source innovation approach, to engage with partners, crowd-source ideas and co-create the future of the industry. Among others, this collaboration will accelerate the creation of innovative products and integration of materials made of Ocean Plastic waste into the product offer of the adidas brand as of 2016.
L e t ’ s b e h o n e s t, t h e r e are quite some wannabe icons out there. Is Brazuca, official match ball of the 2014 FIFA W o r l d C u p, a n i c o n ? T h i s is a proper check. What makes an icon? What does it take to become an icon? To be better than everyone else and rightfully deserve the spotlight, the paparazzi and the gossip. A lot of people around this globe including actors, musicians, designers and athletes constantly ask themselves this very question, in the search for that secret recipe, which sometimes also holds true for products. On December 3, the official match ball of the 2014 FIFA World Cup™ was presented to footballers, VIPs, fans and journalists in Rio de Janeiro, Brazil. It was a big show. Why? Because nothing excites, moves and unites the world more than the World Cup. And the official match ball has been and will always be the main actor, the most talked-about object of this fantastic event, the icon if you will. In 2014, this will be ‘Brazuca’. So the big question that needs to be answered is – does Brazuca have what it takes to be an icon?
BRAZUCA an icon is born
FINANCIAL CALENDAR 2015 2015
MAR /
05 26 05 07 08 06 05 Investor Day Press release, management presentations and webcast
Full Year 2014 Results Press release, conference call and webcast Publication of 2014 Annual Report
MAy /
First Quarter 2015 Results Press release, conference call and webcast Publication of First Quarter 2015 Report
MAR /
Dividend Payment (Subject to Annual General Meeting approval)
MAy /
First Half 2015 Results Press release, conference call and webcast Publication of First Half 2015 Report
16
ANNUAL GENERAL MEETING FUERTH (BAVARIA), GERMANY Webcast
9 Months 2015 Results Press release, conference call and webcast Publication of Nine Months 2015 Report
THE NEW ERA The most commonly used sustainable materials are recycled polyester, recycled rubber, organic cotton, “Better Cotton�, Polylactic Acid (PLA), Tencel (a fibre made from wood pulp), and nonmulesed wool for apparel and leather. We source various recycled materials such as inlay soles, textiles, metals, plastics, packaging and rubber. The companies we work with that make injected plastic plates for football boots are now recycling 99% of that waste back into production. And they have also been able to increase the percentage of rubber and EVA that can be reground and reused in shoes.
17
2015
adidas Group announces new partnership with Parley for the Oceans The adidas Group announced a partnership with Parley for the Oceans, an initiative dedicated to raising awareness about the beauty and fragility of the oceans and to collaborating on projects that can end their destruction. Together, the adidas Group and Parley for the Oceans will implement a longterm partnership programme that builds on three pillars: Communication and Education, Research and Innovation as well as Direct Actions against Ocean Plastic Pollution. The partnership is an example of the adidas Group’s open-source innovation approach, to engage with partners, crowd-source ideas and co-create the future of the industry. Among others, this collaboration will accelerate the creation of innovative products and integration of materials made of Ocean Plastic waste into the product offer of the adidas brand as of 2016.
18
adidas AG Adi-Dassler-Str. 1 91074 Herzogenaurach Germany TEL: + 49 (0) 91 32 84 - 0 FAX: + 49 (0) 91 32 84 - 22 41 WWW.ADIDAS-GROUP.COM Investor Relations TEL: + 49 (0) 91 32 84 - 32 96 FAX: + 49 (0) 91 32 84 - 31 27 EMAIL: investor.relations@adidas-Group.com WWW.ADIDAS-GROUP.COM/INVESTORS
adidas Group is a member of DIRK (German Investor Relations Association). This report is also available in German. For further adidas Group publications, please see our corporate website or download our Investor Relations and Media App from the App Store. To improve readability, registered trademarks are omitted in this Annual Report.
Concept and Design Strichpunkt, Stuttgart / Berlin Printed by Eberl Print, Immenstadt
19