Sales up 5% on a currency-neutral basis
Based on preliminary figures, adidas-Salomon sales in 2003 reached € 6.27 billion, a 5% improvement in currency-neutral terms. In euros, sales were down 4% (2002: € 6.52 billion). Currency-neutral sales increased for all brands and regions, except North America.
Gross margin at record level
Group gross margin increased 1.6 percentage points from 43.2% in 2002 to 44.9% in 2003. This is the highest level ever and reflects the impact of increased adidas own-retail activities, an improving product mix as well as a stronger euro.
Income before taxes up 12% on lower operating and financial expenses
Operating expenses in 2003 were reduced by 1% to € 2.32 billion (2002: € 2.34 billion). Group operating profit increased 3% to € 490 million versus € 477 million in 2002 and operating margin grew 0.5 percentage points from 7.3% in 2002 to 7.8% in 2003. As a result, income before taxes grew 12% to € 438 million, compared to € 390 million in the prior year. This performance was enhanced by a significant reduction in financial expenses supported by both lower average debt levels and lower interest rates.
Net income grows 14%
Net income for the Group in 2003 increased by 14% from € 229 million in 2002 to a record € 260 million. Basic earnings per share of € 5.72 was at the upper end of the Group's targeted earnings range (2002: € 5.04). Gross margin expansion and lower operating expenses were drivers of this improvement.
CEO Herbert Hainer commented, "Our excellent 2003 performance reflects our Group's ongoing ability to deliver targeted results even in the face of challenging market conditions. Despite weakness in America and major pressure on Group sales as a result of currency developments, we achieved record earnings." Herbert Hainer continued, "2004 will be an exciting year with adidas-Salomon's brands and products center-stage at the highest-profile global sporting events. This year, we will stabilize our business in North America, grow Group sales by 3 to 5% on a currency-neutral basis and deliver net income growth of at least 10%."
Final full-year results will be released on March 10, 2004.