Reebok 2013 Annual Report Download - page 35

adidas Group
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2013 Annual Report
To Our Shareholders
31
2013
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01.4
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Letter from the CEO
In a marathon, every inch of every mile counts. In this spirit, I am pleased to report that our Group
finished 2013 strongly. Towards year-end, we regained the kind of growth momentum more typical of our
high-performance standards. We delivered an exceptional fourth quarter result, with robust currency-neutral
sales growth of 12% and operating profit excluding goodwill impairment losses increasing almost fourfold
compared to the prior year. That’s a new fourth quarter record for our Group. This is a clear testament to
the persistence and energy we have exercised in making the most out of a challenging year in several areas
for the adidas Group. And this strong finish puts the Group in a great position as we begin an exciting 2014
for our brands and for our Group.
Before I come to that, looking back over the past twelve months, my review of the year shows a mixed but
overall positive picture.
The key developments of the year from a financial perspective were as follows:
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Sales were up 3% on a currency-neutral basis or declined 3% in absolute euros to € 14.5 billion.
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Gross margin increased 1.5 percentage points to a new record level of 49.3%.
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Operating margin excluding goodwill impairment losses increased 70 basis points to 8.7%.
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Net income attributable to shareholders excluding goodwill impairment losses increased 6% to
€ 839 million.
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Operating working capital as a percentage of sales increased 90 basis points to 20.9%.
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Equity ratio expanded 2 percentage points to 47.3%.
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Net cash at year-end amounted to € 295 million.
On the one hand, my senior management team and I were disappointed that we had to negatively adjust
our initial guidance for the year in September. With a Group of our size, every year has its challenges, that’s
business life and we plan for that. Over the course of the year, however, considerable negative currency
developments versus the euro, distribution constraints in Russia/CIS as well as a stalling global golf
market put additional pressure on our financial results. I discussed the latter two of these three issues in
detail in my letter on the first nine months results. And while they impacted us significantly in terms of our
profitability and top-line achievements, in the end, the devaluation of major currencies versus the euro was
simply the factor that was too significant in magnitude to cover operationally. And there were many, such
as the Russian rouble, Japanese yen, Argentine peso, Brazilian real, Turkish lira, Australian dollar and
Canadian dollar. Accumulated for the twelve months, currencies alone wiped out more than € 750 million
from our top-line result. Unfortunately, these uncontrollable and unavoidable negative effects will continue
in 2014, and I will come back to that later, given its significance to our financial statements.