Reebok 2009 Annual Report Download - page 25

TO OUR SHAREHOLDERS Interview with the CEO 21
HERBERT HAINER
In the fourth quarter, we definitely saw a stabilisation in
most of our key markets around the world. In Western
Europe and European Emerging Markets, which grew 3%
and 8% currency-neutral, respectively, we saw the first
benefits of the FIFA World Cup™. This will be a supporting
factor in both regions throughout 2010. In Greater China, we
continued to work hard in the fourth quarter to ensure our
distribution channels are clean, resulting in sales being down
22% currency-neutral. While we will be exerting a similar
discipline in the first half of 2010, we are definitely seeing
trends improving and I fully expect a resumption of growth
in the second half. In Other Asian Markets, which grew 2%,
strong growth in emerging markets such as India continued.
However, the Japanese consumer environment is still weak,
a trend we expect to impact our business in 2010. In Latin
America, trading remains robust, with growth of 20% as our
market share continues to advance. Finally, in North America,
sales declined 7% in the fourth quarter. However, here I am
seeing an emerging trend. And that’s Reebok. For the first
time since the acquisition, Reebok grew in the quarter, up
4% on the back of outstanding sell-throughs in the toning
category. While North America will still be one of our most
challenging markets in 2010, I believe Reebok is poised to
switch gear with further new initiatives built on the great
platform we have started in 2009.
HERBERT HAINER
First and foremost, the best form of capital management is to
deliver continuous strong cash flows from operations. That being
said, we believe in managing our balance sheet actively and
continue to look for ways to improve our capital structure while
at the same time remaining flexible. For example, during the
year, we took the opportunity of healthy demand for corporate
issuances and good financing conditions to further improve
our term structure in favour of longer maturities. In June, we
completed a € 200 million German Schuldscheindarlehen.
And in July, we launched our first ever Eurobond in an amount
of € 500 million. Finally in October, we announced the early
redemption of our € 400 million convertible bond, which was
subsequently converted in full by bondholders into adidas AG
shares. With unutilised credit lines amounting to € 4.1 billion,
there is little question about the resources we have at our
disposal to take our business forward. Given that our net
borrowings are now below € 1 billion, we have decided to update
our policies for debt and dividends. For the short term, we are
still very much focused on conserving cash as the economic
environment remains quite fragile. In general, it is our aim to
keep the ratio of net borrowings over EBITDA below 2 times.
In addition, we have decided to increase our dividend payout
ratio corridor from 15% to 25% to a new target range of 20% to
40% of consolidated net income. As a result, for 2009, we will
propose a dividend payout of 30% of net income attributable to
shareholders, doubling the payout ratio from the prior year.
QUESTION
Can you talk about the most recent
developments in your key markets
during the last quarter and are any
trends emerging?
QUESTION
Capital management is still a big topic
in the financial community. What are
your policies in this regard?