MASTER
BEAUTY & PERFORMANCE BE DESIRED.
A D IDAS G ROU P A N N UA L R EPORT 2015
2015
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TO BE A STYLE ICON or TO BE A HIGH SCORER THAT WAS THE QUESTION... Until now. Here at Adidas Group we do not believe that you should chose between being a style trendsetter off the court or a record breaker on the court. You are BOTH. Fashion and Athletics have been thought of in two seperate lanes by or competitors but we believe our customers are one in the same. From shooting a three pointer on the court in your jersey to walking out of the locker room in your hoodie, the brands of Adidas Group make you the one to be desired. This is where style meets performance.
ABOUT
ADIDAS GROUP The brands of the Adidas Group complement each other in a unique way to help athletes perform better, play better, feel better. Our products break records, set trends, make history. Every day. All over the world. Welcome to the adidas Group. It is not only about faster shoes and fashion statements. Just as a shoe is more than padding and foam, there is more to us than just the product. Everything we do is bound by one simple thought: we strive to help you perform at your best. Your success is our ambition. Your defeat spurs us on to be better.
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ABOUT ADIDAS GROUP
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CONTENTS
7
FINANCIAL HIGHLIGHTS
8
LETTER FROM CEO
12
YEAR AT A GLANCE
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BRANDS
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ADIDAS REEBOK TAYLORMADE PARTNERSHIPS
30
FINANCIAL
33
FINANCIAL HIGHLIGHTS 2015
2014
Change
14,534
14,203
2.3%
1,283
1,496
-14.3%
Operating Profit
961
1,233
22.1%
Net Income attributable to shareholders
568
839
32.2%
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
3.9%
5.9%
2.0pp
22.4%
21.3%
1.0pp
0.1
0.2
n.a.
Financial Leverage
3.3%
5.4%
8.7pp
Return on Equity
8.7%
14.3%
5.6pp
OPERATING HIGHLIGHTS (in millions) Net Sales EBITDA
KEY RATIOS
Average operating working capital in % Equity Ratio Net Borrowings/EBITDA
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DESIREABLE
QUALITY G
ENDURING
ADIDAS
E BRANDS=
GROWTH=
G SUCCESS=
S GROUP
A LETTER FROM
HERBERT HAINER ADIDAS GROUP, CEO.
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We are competitive. You have to be
No matter whether you are an athlete,
and provide responsive services. Only
if you want to be successful in the
a fashionista, a (potential) employee
then will we be rewarded with top
long run – in any game. It is fair to say
or any other stakeholder, we strive to
results and a leading position in our
that we are playing in the sporting
create value for you.
industry. We know very well, that – at
goods industry’s Champions League.
the end of the day – these top results
High league, high stakes. At the
When it comes down to it, we strive
are also tied to the substantial value we
adidas Group, all of us put our entire
to be the global leader in the sporting
want to provide our shareholders with.
dedication and brainpower into our
goods industry because we want to
mission of making the adidas
help athletes achieve their personal
Group the global leader in the sporting
best. We want to ensure we have the
goods industry. Why? Because we
most desirable brands and satisfied
want to create as much value for all
consumers and, for this, we need to
our stakeholders as possible.
develop premium products Herbert Hainer
YEAR AT A GLANCE
14,534 NET SALES
Employing more than 53,731 people in over 160 countries, we produce more than 660 million product units every year and generate sales of â‚Ź 14.5 billion (all figures relate to 2014). These numbers alone can easily suggest that our Group is quite a complex organisation. True. But we keep things simple, lean and fast. And we will use this approach now to tell you what our company is all about. Ready ... set, go .
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Creating long-term value for our shareholders through strong and consistent operating cash flow generation drives our overall decision-making process. Therefore, we are focused on rigorously managing those factors under our control, making strategic choices that will drive sustainable revenue and earnings growth, and ultimately
2.72
BASIC EARNINGS PER SHARE OF COMMON STOCK
operating cash flow. Across our operations, we pursue in particular the avenues for growth which we expect to be most value-enhancing, with particular emphasis on improving brand strength and Group profitability. In addition, rigorously managing working capital and optimising our capital structure remain key priorities for us. Furthermore, we are committed to increasing returns to shareholders with above-industryaverage share price performance and dividends.
YEAR AT A GLANCE CONTINUED In 2015, despite a high
most notably the US dollar
timing and magnitude of
degree of economic
and the Chinese renminbi,
tightening by the US Federal
uncertainty in Russia/CIS
currency translation is
Reserve are also projected
and the Middle East, we
expected to have a positive
to weigh on the global
expect global economic
impact on our top-line
outlook. At 1.8%, developed
growth to increase. This
development in reported
economies are expected
will be supported by a more
terms. Group gross margin
to grow slightly faster than
favourable labour market
is forecasted to be at a level
last year, supported by
development as well as low
between 48.0% and 48.5%
improving labour markets,
financing and energy costs,
and the Group’s operating
growing consumer spending,
which are forecasted to
margin excluding goodwill
low inflation rates and lower
positively impact consumer
impairment is expected to be
oil prices. At 3.9%, growth
spending, providing a
at a level between 6.5% and
in developing countries
12,417 TOTAL ASSETS
positive backdrop for the
7.0%. As a result, we project
continued growth, building
net income from continuing
and expansion of the
operations excluding
sporting goods industry.
goodwill impairment
should benefit from the accelerated recovery in high-income markets, the continued support from accommodative monetary policy stances as well as lower inflationary pressures.
to increase at a rate INNOVATION
of around 10%.
Through our extensive pipeline of new and
Global GDP is projected to
innovative products and
increase by 2.4% in 2015.
the positive effects from
Growth is forecasted to be
increased brand-building
stronger in 2015 relative
activities, tight control of
to 2014 in developed
inventory levels and strict
economies, but weaker in
cost management, we
emerging markets,
project top- and bottom-
reflecting more subdued
line improvements in our
prospects for large emerging
Group’s financial results
market economies
in 2015. We now forecast
and oil exporters.
adidas Group sales to increase at a high-single-digit
THE FUTURE
rate on a currency-neutral
Concerns about future
basis, driven by the strong
demand as a result of
momentum at both adidas
the expected slowdown
and Reebok. Given the
of the Chinese economy
continuous strength of major
as well as ongoing
currencies versus the euro,
uncertainties over the
5,624
SHAREHOLDER’S EQUITY
17
45.3%
OPERATING PROFIT
OUR BR
RANDS
Adidas Sport Performance is mainly targeting competitive sports. The division’s focus is primarily on innovation and technology. Target consumers range from sports participants at the highest level to those inspired by sport. Everything at adidas reflects the spirit of our founder Adi Dassler. His main objective back in those days already was to make athletes better, with innovation at the heart of all adidas Sport Performance products. To underline our credibility as the multi-sport specialist and leverage
brand strength, there is hardly any category that we don’t produce products for. adidas is everywhere where the best meet the best, such as the FIFA World Cup™ or the Olympic Games, but also everywhere else around the globe where sports are simply played, watched, enjoyed and celebrated.
However, we are not just designing products for all kinds of sports. We are designing products for athletes. Athletes always strive for their personal best. Athletes find inspiration in sports no matter what they do. We help them to achieve their peak performance by making them faster, stronger, smarter and cooler.
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WE ARE THE BADGE OF SPORT
989 34.8%
FINANCIAL HIGHLIGHTS
ADIDAS
EBIDTA
1,033 EQUITY RATIO
OPERATING PROFIT Teens and ‘digital natives’ live for the now. They are ready to go, discover their own way and style and NEO is all about their lives. The adidas NEO label is the sports fashion lifestyle label enabling teens to live their style.
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Employing more than 53,731 people in over 160 countries, we produce more than 660 million product units every year and generate sales of ₏ 14.5 billion (all figures relate to 2014). These numbers alone can easily suggest that our Group is quite a complex organisation. True. But we keep things simple, lean and fast. And we will use this approach now to tell you what our company is all about. Ready ... set, go. NEO is all about being open and engaged with teenage consumers, letting them enjoy experiences that only NEO can provide – this could be styling an outfit for Selena Gomez or being a part of the NEO collection created especially for the New York Fashion Week.
Reebok is an American-inspired sports brand with the clear objective to become the leading fitness brand in the world. Not an easy mission. However, if there is a brand that can make it happen, it is Reebok, the brand that was fundamentally part of a fitness movement that would change the way we look at spandex and headbands. Sure, this is not the 1980s anymore, the world has changed. But so has Reebok. And today, not many have the experience and knowledge to understand the important and evolving role of fitness in society. Fitness is more than a chore. It is a lifestyle choice. It is core to people discovering each and every day how much more they are capable of. This is why Reebok set itself the mission to empower you to be “fit for life”. Reebok helps you to stay excited about your fitness activities. The “House of Fitness” addresses the diversity that fitness brings, from activity to lifestyle: Fitness Training, Studio, Classics, Fitness Running and Walking. No matter what type of fitness activity you are into, Reebok will support you. With knowledge and experience that is second to none.
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PERFORMANCE THAT MAKES YOU FIT FOR LIFE
The Reebok brand, which Adidas
a fitness brand. With newly aquired
bought for â‚Ź3 billion in 2006, posted
CrossFit, Reebox has seen a tremdous
another quarter of sales growth, up
growth as compared to previou syears
a currency-neutral 9% on the year.
before the brand was purchased my
Although struggling to monetize the
adidas. Reebok with this partnership
Reebok acquisition at first, Adidas
continues to be an industry leader in
has repositioned the former National
fashion and training.
Football League and NBA sponsor as
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FINANCIAL HIGHLIGHTS
REEBOK
47.6%
29.7% GROSS MARGIN
EFFECTIVE TAX RATE
2,970
WORKING CAPITAL
12,417
TOTAL ASSETS
FINANCIAL HIGHLIGHTS
TAYLORMADE
TaylorMade pioneered the metalwood
The game-enhancing performance and
in 1979 with a driver so dramatically
fashion-forward style of adidas Golf
superior to wooden woods in terms
footwear and apparel appeal widely to
of distance, accuracy, and forgiveness
tour pros and recreational golfers alike.
that metal rapidly overtook wood as
Across the globe, the world-renowned
the driver material of choice among
3-Stripes are worn by an ever-growing
both tour professionals and amateurs.
legion of athletes, making adidas Golf
Since then, the determination to create
the fastest-growing golf footwear and
innovative golf club designs has led us
apparel brand in the world.
to create numerous metal woods, irons,
Ashworth is an authentic golf apparel
wedges, putters, and balls throughout
brand recognized across the world for
the past three decades that appeal to
quality, comfort, and distinctive design
the specific needs of all types of golfers,
that moves effortlessly from the course
from tour pros to skilled amateurs to
to the clubhouse and all points beyond.
handicap golfers.
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TaylorMade-adidas Golf covers four
The four sub-brands that make up
well-defined golf brands under one
TMaG provide a wide variety of
roof: TaylorMade, adidas Golf, Adams
products for an ever wider variety
Golf and Ashworth. Each brand aims
of players. Find out which brand is
to provide you with advanced products
right for you. Young guns and lower-
at a faster pace than any other brand.
handicap golfers who are in search
So when Justin Rose tees off or Martin
of cutting-edge metalwoods or irons
Kaymer putts an eagle, you can be sure
already know who the
they do it with TMaG products.
market leader is - TaylorMade.
1,762
WORKING CAPITAL
21.5% EFFECTIVE TAX RATE
42.5% GROSS MARGIN
Active-wear brands have been spotted
features a slew of sweaters, jogging
on fashion industry radar during recent
suit separates, sports bras and
seasons and celebs are looking to make
accessories such as a beanie and jersey
a profit out of the trend. Selena Gomez’s
tote. Incorporating dark navy with light
latest Adidas Neo collection for fall has
pink colors give the active wear line a
launched, and it’s looking like a good
sporty yet trendy vibe, appropriate for
one. The Selena Gomez Adidas Neo
going hard at the gym or
collection is sure to be a hit, having
on-the-go comfort.
SELENA GOMEZ
strategically launched in the midst of back-to-school shopping. The line
2015
PARTNERSHIPS NATIONAL HOCKEY LEAGUE
A seven-year partnership in which
outfitter of both authentic and replica
adidas will become the authentic
jerseys for the eight-team tournament
outfitter of on-ice uniforms as well as
next September. The 2016 World Cup of
an official supplier of licensed apparel
Hockey will be played at the Air Canada
and headwear for the League starting
Centre in Toronto from Sept. 17 to
with the 2017-18 season was announced
Oct. 1, 2016 and be comprised of eight
this year. Adidas Group-owned CCM
teams – Team Canada, Team Czech
will remain an official on-ice equipment
Republic, Team Finland, Team Russia,
supplier, delivering world-class product
Team Sweden, Team USA, Team Europe
for NHL players, including sticks, skates,
and Team North America.
helmets, gloves and goaltending gear.
More than 150 NHL players will
The National Hockey League Players’
compete in a best-on-best international
Association (NHLPA), NHL and adidas
hockey championship.
today also announced a partnership for the 2016 World Cup of Hockey in which adidas becomes the exclusive
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This year we made great advancements
using technology not implemented into
is targeting our younger consumers as
other sneakers made my the group.
well as our hip hop loving consumers.
In September of 2015, Kanye West
We partnered with none other than
was honored and given an award for
Kanye West to create his line of
sneaker of the year out selling all other
sneakers called YEEZY. In their first few
sneaker partnerships with celebrities
months of launching, these sneakers
versus our competitors.
have boosted group sales by a 20% causing production to increase. These sneakers are the leader in their category
YEEZY
CONSOLIDATED FINANCIAL STATEMENT
2015
33
2015
2014
Change
14,534
14,203
2.3%
1,283
1,496
-14.3%
Operating Profit
961
1,233
22.1%
Net Income attributable to shareholders
568
839
32.2%
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
3.9%
5.9%
2.0pp
22.4%
21.3%
1.0pp
0.1
0.2
n.a.
Financial Leverage
3.3%
5.4%
8.7pp
Return on Equity
8.7%
14.3%
5.6pp
Cash and cash equivalents Short-term
1,683
1,587
6.0
5
41
(87.6)
1,946
1,809
7.6
398
183
117.9
2,526
2,634
(4.1)
92
86
7.3
425
506
(15.9)
272
11
2,289.5
Net Sales EBITDA
KEY RATIOS
Average operating working capital in % Equity Ratio Net Borrowings/EBITDA
financial assets Accounts receivable Other current financial assets Inventories Income tax receivables Other current assets Assets classifed as held for sale
29.4 Percent profit growth since 2014 76.3 Percent profit growth since 2013 83.2 Percent profit growth since 2012