MINISTRY OF EDUCATION & TRAINING
HOA SEN UNIVERSITY
FACULTY OF ECONOMICS AND COMMERCE
--
FINANCIAL MANAGEMENT
Supervior
: VŨ BÍCH NGỌC
Students
: NGUYỄN THỊ NGỌC TRÂM - 2001908
LÊ CHÍ MINH – 2001172
ĐẶNG THỤY HỒNG NGỌC – 2000976
PHAN DƯƠNG THANH BÌNH – 2000877
NGUYỄN THỊ MỸ NHÂN – 2001410
HUỲNH THỊ HOÀNG OANH - 2000448
Ho Chi Minh City, June 24, 2014
MINISTRY OF EDUCATION & TRAINING
HOA SEN UNIVERSITY
FACULTY OF ECONOMICS AND COMMERCE
--
FINANCIAL MANAGEMENT
Supervisor
: VŨ BÍCH NGỌC
Students
: NGUYỄN THỊ NGỌC TRÂM - 2001908
LÊ CHÍ MINH – 2001172
ĐẶNG THỤY HỒNG NGỌC – 2000976
PHAN DƯƠNG THANH BÌNH – 2000877
NGUYỄN THỊ MỸ NHÂN - 2001410
HUỲNH THỊ HOÀNG OANH - 2000448
Ho Chi Minh City, June 24, 2014
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
ABSTRACT
ABSTRACT | i
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
ACKNOWLEDGEMENT
To begin with our appreciation, we would like to thank Ms. Vu Bich Ngoc, who has
lectured and given our group the opportunity to analyze the financial situation of the selected
company. Throughout the experience, we have enriched our knowledge on financial
statement analysis and evaluation. As a result, experience and valuable lessons gained will
lead us to success in the future working environment.
ACKNOWLEDGEMENT | ii
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
SUPERVISOR’S REMARK
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HCMC, ....... / ........ / 2014
SUPERVISOR’S REMARK | iii
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
TABLE OF CONTENTS
ABSTRACT .................................................................................................................................... i
ACKNOWLEDGEMENT ............................................................................................................ ii
SUPERVISOR’S REMARK ....................................................................................................... iii
TABLE OF CONTENTS ............................................................................................................ iv
COMPANY PROFILES ............................................................................................................... 1
REFERENCE ................................................................................................................................ v
TABLE OF CONTENTS | iv
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
COMPANY PROFILES
Adidas Group (AG) is a German multinational corporation
Type
Aktiengesellschaft
that specializes in supplying sporting goods such as sport
Industry
Apparel & Textile Products
shoes, clothing and accessories. The Group has been known
Founder
Adolf Dassler
as the parent company of famous brands like Adidas,
Headquarters Germany
Reebok, TylorMade - Adidas Goft, Rocksport…
Area served
Worldwide
Key people
Igor Landau (Chairman)
Footwear and hardware role an important key in net sales
Herbert Hainer (CEO)
divided by category of AG with 47% and 43% respectively.
Products
Footwear, sportswear, sports
equipment, toiletries
Employees
Western Europe contributed the largest percentage (26%)
to the Group sales, followed by North American market
50,728 (2013)
(23%).
78% total volume of AG in 2013 was produced in Asia, the
remaining supplied by manufactories located in Europe,
Africa and Americas. AG’s footwear manufacturing
partners supplied approximately 257 million pairs in 2013
(2012: 244 million pairs). Products were primarily sourced
from factories in Vietnam (35%), China (31%) and
Indonesia (24%)
Net sales by product category
209,216,186
Number of shares outstanding
At year-end 2013
209,216,186
Initial Public Offering
November 17, 1995
Stock exchange
All German stock
exchanges
Stock registration number
DE000A1EWWW0
Stock symbol
ADS, ADSGn, DN
adidas AG market capitalizaion at year-end
(€ in billion)
13%
2009
Footwear
2013
Apparel
Hardware
Number of shares outstanding
2013 average
40%
47%
2010
2011
2012
2013
7.902
10.229
10.515
14.087
19.382
COMPANY PROFILES | 1
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
Shareholder structure
2%
5%
10%
14%
2013
37%
32%
Rest of Europe
North America
Other, undiscloded holdings
Germany
Rest of the world
Management
Recommendation Split
2013
Share ratios at a glance
Basic earnings per share
Cash generated from operating
activities per share
Year-end price
Year high
Year low
Dividend per share
Dividend payout
Dividend payout ratio
Dividend yield
Shareholders' equity per share
Price-earnings ratio at yearend
Average trading volume per
trading day
DAC-30 ranking at year end
by market capitalization
by turnover
€
€
€
€
€
€
€ in
millions
%
%
€
shares
2013
2012
4.01
3.78
3.03
4.5
92.64
67.33
92.64
69.12
66.28
51.42
1.5
1.35
314
282
37.4
35.7
1.6
2
26.24
25.35
23.1
17.8
842,318
900,218
16
16
17
19
1. Excluding goodwill impairment of € 52 million
2. Excluding goodwill impairment of € 265 million
3. Subject to Annual General Meeting approval
4. Based on number of shares outstanding at year-end
5. Based on number of shares traded on all German stock exchanges
6. As reported by Deutsche Borse AG
The adidas Group and the adidas AG share receive strong
Buy
Hold
Sell
Five-year share price development
analyst support in 2013. The vast majority of 45 analysts from
investment banks and brokerage firms are confident about the
medium and long-term potential of the Group
Consolidated Income Statement
Net sales
Cost of sales
Gross profit
Royalty and commission income
Other operating income
Other operating expenses
Goodwill impairment losses
Operating profit
Financial income
Financial expenses
Income before taxes
Income taxes
Net income
2013
2012
Change
14,492
7,352
14,883
7,780
-2.6%
-5.5%
7,140
104
7,103
105
0.5%
-1.0%
143
127
12.6%
6,133
6,150
-0.3%
52
265
-80.4%
1,202
920
30.7%
26
36
-27.8%
94
105
-10.5%
1,134
344
851
327
33.3%
5.2%
790
524
50.8%
COMPANY PROFILES | 2
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
Net sale decreases 2.6%
Net sales (in € miilion)
In 2013, Group revenues grew 2.6% on a currency –
neutral basis, as a result of sales increases in Retail
and Other Businesses. Currency – neutral. Wholesale
revenues remained stable compared to the prior year.
The development of Group sales is below initial
Management expectations of a mid – single – digit
Group sales increase. Currency translation effect had
a negative impact on sales in euro term. Group
revenues decreased 2.6% to € 14.492 billion in 2013
2009
from € 14.883 billion in 2012.
2011
Cost of sales decreases 5%
Cost of sales is defined as the amount the Group pays
to third parties for expenses associated with
producing and delivering their products. Ownproduction expenses are also included in the Group’s
cost of sales. However, these expenses represent only
a very small portion of total cost of sales. In 2013,
cost of sales was € 7.352 billion, representing a
decrease of 5% compared to € 7.780 billion in 2012.
This development was driven by the reduction of
input costs as a result of lower raw material prices at
the time of sourcing. In addition, currency effects
contributed to the decline in cost of sales.
Royalty and commission income declines 1%
Royalty and commission income decreased 1% to €
104 million in 2013 from € 105 million in the prior
year. On a currency – neutral basis, royalty and
commission income was also down 1% mainly as a
result of lower licensee sales at adidas.
Other operating income increases 12.6%
Other operating income includes items such as gains
from the disposal of fixed assets and released of
accruals and provisions as well as insurance
compensation. In 2013, other operating income
increased 13% to € 143 billion (2012: € r127
million). This was mainly due to the release of other
operational provisions.
10381
2010
11990
2011
13322
2012
14883
2013
14492
Gross profit (in %)
2009
45.4
2010
47.8
47.5
2012
47.7
2013
49.3
Other operating expenses decrease 0.3%
Other operating expenses, including
depreciation and amortization, consist of
items such as sales working budget, market
working budget and operating overhead
costs. In 2013, other operating expenses
remained virtually unchanged at € 6.133
billion (2012: € 6.150 billion), as a decrease
in marketing expenses was offset by higher
expenditure related to the expansion of the
Group’s own – retail activities.
Other operating expenses (in € million)
2009
4,390
2010
5,046
2011
5,567
2012
6,150
2013
6,133
Other operating expenses (in %)
2009
42.3
2010
42.1
2011
2012
2013
41.8
41.3
42.3
COMPANY PROFILES | 1
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
Goodwill impairment losses decrease 80.4%
Financial income down 28%
As a result of the annual impairment test, the adidas
Group has impaired goodwill and recorded a € 52
million pre – tax charge as at December 31, 2013
(2012: € 265 million). Within wholesale cashgenerating unit Iberia, goodwill impairment losses of
€ 23 million were recognized. Within the retail cash
– generating unit North America, goodwill
impairment losses of € 29 million were recognized.
The goodwill of these two cash – generating units is
Financial income decreased 28% to € 26
million in 2013 from € 36 million in the prior
year, mainly due to a decrease in interest
income.
completely impaired. The impairment losses were
mainly caused by adjusted growth assumptions and
an increase in the country – specific discount rates.
In 2012, the wholesale cash – generating unit North
America was impaired by € 106 million, Latin
America by € 41 million, Brazil by € 15 million and
Iberia by € 11 million. The impairment loss in 2012
was mainly the result of adjusted growth
assumptions for t he Reebok-CCM Hockey was
completely impaired and € 24 million allocated to
Rockport was partially impaired. These impairment
losses were primarily the result of the re-evaluation
of future growth prospects and, with regard to
Rockport, also due to an increase in the discount rate.
The impairment losses in both years were non-cash
in nature and do not affect the adidas Group’s
liquidity.
Financial expenses decrease 11%
Financial expenses declined 11% to € 94
million in 2013 (2012: € 105 million). The
decrease in interest expenses was the main
contributor to the decline.
Financial expense (in € million)
2009
169
2010
113
2011
115
2012
105
2013
94
Income before taxes (in € million)
2009
2010
2011
2012
2013
358
806
869
1116
1186
COMPANY PROFILES | 2
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
COMPANY PROFILES | 3
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
REFERENCE
REFERENCE | v