Herzogenaurach, January 27, 2005
Sales up 7% on a currency-neutral basis
Based on preliminary figures, adidas-Salomon sales in 2004 reached € 6.478 billion, a 7% improvement in currency-neutral terms. In euros, sales increased 3% (2003: € 6.267 billion). Currency-neutral sales increased for all brands and in all regions.
Gross margin at record level
Group gross margin increased 2.3 percentage points to 47.2% in 2004 from 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.
Operating margin grows 1.1 pp to 9.0%
Operating expenses in 2004 grew 7% to € 2.478 billion (2003: € 2.324 billion). Group operating profit increased 18% to € 580 million versus € 490 million in 2003 and operating margin grew 1.1 percentage points to 9.0% in 2004 from 7.8% in 2003. As a result, income before taxes grew 19% to € 520 million, compared to € 438 million in the prior year. This performance was driven by higher sales and strong gross margin improvement.
Net income grows 21%
Net income for the Group in 2004 increased by 21% to a record € 314 million from € 260 million in 2003, representing basic earnings per share of € 6.88 (2003: € 5.72). The earnings growth is twice as high as the initial guidance at the beginning of the fiscal year.
adidas-Salomon CEO Herbert Hainer commented, "Our excellent 2004 performance underlines our Group's ability to deliver significant operating margin improvements. Our record earnings were driven by currency-neutral sales increases at all our brands and in all our regions as well as strong gross margin expansion. 2005 will be another exciting and successful year for adidas-Salomon. We plan to grow Group sales at mid- to high-single digit rates on a currency-neutral basis and deliver net income growth of between 10 and 15%."
Final full-year results will be released on March 9, 2005.