Reebok 2014 Annual Report Download - page 155

Group Management Report – Financial Review
151
2014
Subsequent Events and Outlook
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03.4
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adidas Group
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2014 Annual Report
Group other operating expenses as a percentage of sales around prior year level
In 2015, the Group’s other operating expenses as a percentage of sales are expected to be around
the prior year level (2014: 42.7%). Sales and marketing working budget as a percentage of sales
is projected to increase versus the prior year. Given the robust momentum at adidas and Reebok,
we will step up marketing and point-of-sale investments in 2015 to secure and drive faster growth
rates and market share gains, particularly in developed markets such as North America and
Western Europe. As part of these marketing efforts, both adidas and Reebok launched major brand
campaigns at the beginning of the year. Operating overhead expenditure as a percentage of sales is
forecasted to be around the level recorded in 2014.
We expect the number of employees within the adidas Group to increase versus the prior year level.
The adidas Group will continue to spend around 1% of Group sales on research and development
in 2015. Areas of particular focus include cushioning and energy solutions, lightweight and digital
sports technologies as well as sustainable product innovation. Additionally, investments and
research emphasis will also include areas such as new manufacturing processes and advanced
materials to drive the development of innovative products and industry-changing manufacturing
approaches.
Operating margin to be between 6.5% and 7.0%
In 2015, we expect the operating margin for the adidas Group to be at a level between 6.5% and 7.0%
(2014 excluding goodwill impairment losses: 6.6%). This development will be strongly influenced by
currency movements.
Net income from continuing operations to increase at a rate of 7% to 10%
Net income from continuing operations is projected to increase at a rate of 7% to 10%, thus
outpacing the Group’s expected top-line development (2014: net income from continuing operations
of € 642 million). Interest rate expenses in 2015 are forecasted to remain at the prior year level, as
the positive effects from lower interest rates as a result of the issuance of two Eurobonds will be
offset by higher debt levels. Net foreign exchange losses in the financial result are also expected to
be at a similar level compared to the prior year. The Group’s tax rate is expected to be at a level of
around 29.5% and thus more favourable compared to the 2014 effective tax rate excluding goodwill
impairment losses of 29.7%.
Average operating working capital as a percentage of sales to decrease
moderately
In 2015, average operating working capital as a percentage of sales is expected to decrease
moderately compared to the prior year level (2014: 22.4%). This is mainly due to working capital
improvements we expect to achieve as we move through the year.
see Research and Development, p. 73