Group Business Performance
In 2006, the adidas Group again delivered strong financial performance with sales growth significantly outpacing Management’s initial expectations. Gross and operating margin as well as net income attributable to shareholders developed in line with Management’s expectations. Currency-neutral sales increased 53%, driven by the first-time consolidation of the Reebok business as well as strong development of the adidas and TaylorMade-adidas Golf segments. Sales for the adidas Group excluding Reebok grew 14% on a currency-neutral basis. In euro terms, adidas Group revenues grew 52% to € 10.084 billion in 2006 from € 6.636 billion in 2005. Sales for the adidas Group excluding Reebok grew 14% to € 7.548 billion in 2006. The Group’s gross margin declined 3.6 percentage points to 44.6% of sales in 2006 (2005: 48.2%), primarily as a result of the first-time consolidation of the Reebok business. The Group’s gross profit, however, increased 41% to reach € 4.495 billion in 2006 versus € 3.197 billion in 2005. The Group’s operating margin declined 1.9 percentage points to 8.7% from 10.7% in 2005, mainly impacted by the first-time consolidation of the Reebok business. The Group’s operating profit, however, increased 25% to € 881 million in 2006 versus € 707 million in 2005. Net income from continuing operations of the adidas Group grew 14% to € 496 million in 2006 from € 434 million in 2005. The Group’s net income attributable to shareholders increased 26% to € 483 million from € 383 million in 2005. Basic earnings per share from continuing and discontinued operations increased 16% to € 2.37 in 2006 versus € 2.05 in 2005.
Economic and Sector Development
Rate of Global Economic Expansion Slows
In 2006, the global economy grew around 4%, although growth decelerated
in the course of the year as a result of rising commodity prices and
tightening monetary policies in several industrialized countries. In
line with a marked increase in consumer confidence, growth of the
European economy strengthened considerably in the course of 2006 to
reach approximately 2.5% for the full year. The region’s emerging
markets again outperformed the Western economies with growth rates
above 5%. In the USA, economic growth again exceeded 3% in 2006, but
slowed over the course of the year as a result of weakness in
residential investment and industrial production which more than offset
solid export growth. The Asian economies continued their stable
economic upswing from previous years, again making Asia the most
dynamic economic region in the world. For the region as a whole, GDP
again grew almost 8%. In Japan, the economy expanded by around 2%,
while growth in China exceeded 10%. The region’s other emerging markets
developed positively as a result of flourishing export activity. The
Latin American economies continued to benefit from the global surge in
commodity prices and the healthy world economy which supported export
activity, reaching GDP growth of around 4.5% in 2006.
Regional GDP Development1)
