Fourth quarter Group revenues grew 14% on a currency-neutral basis. This development was driven by strong sales increases at both adidas and TaylorMade-adidas Golf. Reebok sales, however, declined. On a regional basis, sales grew by double-digit rates in all regions except North America, where sales increased at a low-single-digit rate. Currency movements negatively impacted revenues in euro terms. Group sales in euro terms increased 8% to 2.42 billion ($3.50 bn) in the fourth quarter of 2007 from 2.25 billion ($2.90 bn) for the year-ago period.
Fourth quarter net income attributable to shareholders up 63%
Fourth quarter gross margin increased 3.2 percentage points to 46.6% from 43.4% last year as a result of underlying improvements in all segments. Cost synergies resulting from the combination of adidas and Reebok sourcing activities and, to a lesser extent, the non-recurrence of negative impacts from purchase price allocation in the Reebok segment also positively impacted gross margin development. Group gross profit increased 15% to 1.13 billion ($1.63 bn) from 976 million ($1.26 bn) last year. Operating expenses as a percentage of sales increased mainly due to higher marketing expenses in the adidas segment. As a result of the strong gross margin increase, which more than offset the increase in operating expenses, the Groups operating margin increased 0.2 percentage points to 2.5% in the fourth quarter of 2007 versus 2.3% in the prior year. Operating profit grew 18% to 61 million ($88.4 mm) versus 52 million ($67.1 mm) in 2006. The Groups net income attributable to shareholders increased 63% to 21 million ($30.4 mm) from last years 13 million ($16.8 mm) due to higher operating profit and lower net financial expenses. Net financial expenses decreased following the strong reduction of net borrowings. These positive effects more than offset a higher tax rate.
adidas Group currency-neutral sales grow 7% in 2007
In 2007, Group revenues increased 7% on a currency-neutral basis, mainly as a result of sales growth in the adidas segment. Currency movements negatively impacted Group sales in euro terms. Group revenues grew 2% to 10.30 billion ($14.12 bn) in 2007 from 10.08 billion ($12.67 bn) in 2006.
“Our Group made big strides in 2007,” commented adidas AG Chairman and CEO Herbert Hainer. “Our focus on performance and executional excellence was a big contributor to our success. I am extremely proud that all our hard work has helped the Group achieve new record sales and net income levels – and all this despite conditions that got tougher in some important markets as the year went on.”
adidas segment drives top-line growth
The adidas segment set the pace for the Groups sales growth in 2007. Currency-neutral adidas segment revenues increased 12% during the period, representing the brands third consecutive year of double-digit growth. Currency-neutral sales in the Reebok segment were stable as a result of the consolidation of twelve months of Reeboks revenues in 2007 versus only eleven months in the prior year. On a like-for-like basis, Reebok segment sales declined by 5% in 2007. At TaylorMade-adidas Golf, currency-neutral revenues increased 1%, negatively impacted by the divestiture of the Greg Norman Collection wholesale business. On a like-for-like basis, TaylorMade-adidas Golf sales increased 9%. Sales in the HQ/Consolidation segment decreased by 60% on a currency-neutral basis, mainly due to the expiration of the Salomon footwear sourcing cooperation agreement. Currency translation effects negatively impacted sales in all segments in euro terms. adidas sales increased 7% to 7.113 billion ($9.75 bn) in 2007 from 6.626 billion ($8.32 bn) in 2006. Sales at Reebok decreased 6% to 2.333 billion ($3.20 bn) versus 2.473 billion ($3.11 bn) in the prior year. TaylorMade-adidas Golf sales declined 6% to 804 million ($1.10 bn) in 2007 from 856 million ($1.08 bn) in 2006. HQ/Consolidation sales decreased 62% to 48 million ($65.8 mm) from 129 million ($162.1 mm) in the prior year.
2007 | 2006 | Change y-o-y in euro terms | Change y-o-y currency-neutral | |
| in millions | in millions | in % | in % |
adidas | 7,113 | 6,626 | 7 | 12 |
Reebok[1] | 2,333 | 2,473 | (6) | 0 |
TaylorMade-adidas Golf[2] | 804 | 856 | (6) | 1 |
HQ/Consolidation | 48 | 129 | (62) | (60) |
Total | 10,299 | 10,084 | 2 | 7 |
[1] Reebok 2006 results only included eleven months of the twelve-month period.
[2] TaylorMade-adidas Golf results included Greg Norman apparel business from February 1, 2006 to November 30, 2006.
adidas Group sales grew in all regions except North America in 2007. Group sales in Europe grew 7% on a currency-neutral basis as a result of strong growth in the regions emerging markets. In North America, Group sales declined 2% on a currency-neutral basis due to lower Reebok sales in the USA. Sales for the adidas Group in Asia increased 18% on a currency-neutral basis, driven in particular by strong growth in China. In Latin America, sales grew 38% on a currency-neutral basis, with increases coming from all of the regions major markets. Currency translation effects negatively impacted sales in euro terms in all regions. In euro terms, sales in Europe increased 5% to 4.37 billion ($5.99 bn) in 2007 from 4.16 billion ($5.23 bn) in 2006. Sales in North America decreased 9% to 2.93 billion ($4.02 bn) in 2007 from 3.23 billion ($4.06 bn) in the prior year. Revenues in Asia grew 12% to 2.25 billion ($3.09 bn) in 2007 from 2.02 billion ($2.54 bn) in 2006. Sales in Latin America grew 32% to 657 million ($900.6 mm) in 2007 from 499 million ($626.9 mm) in the prior year.
2007 | 2006[1] | Change y-o-y in euro terms | Change y-o-y currency-neutral | |
| in millions | in millions | in % | in % |
Europe | 4,369 | 4,162 | 5 | 7 |
North America | 2,929 | 3,234 | (9) | (2) |
Asia | 2,254 | 2,020 | 12 | 18 |
Latin America | 657 | 499 |
