2001 earnings per share target confirmed
Net sales growth continues +++ Gross margin strength maintained +++ Operating profit and margin improve
Group sales continue to grow
Herzogenaurach, 03/05/2001 - adidas-Salomon net sales in the first quarter of 2001 increased by 3 percent to € 1.6 billion, continuing the positive sales performance of the prior year.
Sales grow for adidas, Salomon and TaylorMade-adidas Golf
As in the preceding quarters, TaylorMade-adidas Golf and Salomon delivered above-average growth of 23 and 7 percent respectively, reaching € 154 million and € 105 million. At adidas, sales increased 1 percent to € 1.3 billion, with improvements recorded in all regions except North America.
Regional strength in Latin America, Asia and Europe continues
In terms of regional performance in the first three months of 2001, Latin America continued to deliver the highest growth rates. Net sales increased 22 percent to € 41 million, with the largest growth coming from Colombia where sales more than doubled versus the same period last year. In Asia, sales grew 16 percent to € 213 million with high growth in Japan, Korea and China. In Europe, sales grew 5 percent to reach € 852 million. This was at the top end of expectations and was driven by improvements in nearly all major markets. In North America, net sales decreased 6 percent to € 445 million in the first quarter due to the decline in adidas sales. This is in line with adidas-Salomon’s expectations, as communicated last year.
Gross margin strength maintained
The gross margin in the first quarter remained strong at 41.7 percent despite the impact of the strong US Dollar. This represents only a slight decline of 0.3 percentage points over the previous year as increased selling prices and an improved product mix could largely offset negative currency effects.
Operating expense control leads to improved operating profit and margin
SG&A expenses as a percent of net sales declined 0.9 percentage points in the first three months of the year to 32.4 percent. Stricter cost control and a reduction in the marketing working budget at brand adidas drove this decline. As a result, operating profit for the Group increased 9 percent year-over-year to reach € 124 million.
Negative financial result causes decrease in IBT and net income
Higher financial expenses, in particular those associated with interest and currency valuation effects, led to a 9 percent decrease in income before taxes to € 92 million.
The tax rate rose slightly, while minority interests remained unchanged from the previous year’s levels. Net income for the quarter declined 12 percent to € 46 million. This meant that earnings per share were recorded at € 1.02.
Positive order situation continues
The order backlogs for the adidas brand again continued to show growth. At the end of March, orders increased 1 percent above the previous year’s level. On a currency-neutral basis, this figure is also positive for the first time in 10 quarters. Regionally, backlogs grew by 12 percent in Asia and 4 percent in Europe. North America, in contrast, recorded a decrease of 7 percent despite the improving Apparel backlog, which was positive for the first time in more than two years.
Order development for Salomon and TaylorMade-adidas Golf was also positive.
The results recorded for the first quarter of 2001 are in line with internal plans and support the adidas-Salomon outlook for the full year. adidas-Salomon continues to expect that consolidated sales in 2001 will increase 3 to 5 percent. Improvements are expected in all regions except North America. The gross margin will remain within the Group’s target corridor of 41 to 43 percent. adidas-Salomon also expects to deliver continued progress with respect to operating expense reductions throughout the year. As a result of these developments, which are in line with the medium-term goals announced in January 2000, adidas-Salomon reconfirms its 15 percent earnings growth target for 2001.
Herbert Hainer, adidas-Salomon CEO, stated: “We are right on track with our results for the first quarter. We expect further improvements throughout the year, especially in the second half, when initial results of our new strategies will become visible. We are confident that we will achieve our growth targets for the year.”