Reebok 2015 Annual Report Download - page 111

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GROUP MANAGEMENT REPORT – FINANCIAL REVIEW
Group Business Performance – Economic and Sector Development
GROUP BUSINESS
PERFORMANCE
In 2015, the adidas Group delivered a stellar financial performance. Currency-neutral Group sales
increased 10%, driven by strong growth at both adidas and Reebok. In euro terms, Group revenues
grew 16% to € 16.915 billion from € 14.534 billion in 2014. The Group’s gross margin increased
0.6 percentage points to 48.3% (2014: 47.6%), driven by the positive effects from a more favourable
pricing, channel and category mix. In 2015, the adidas Group incurred goodwill impairment losses of
€ 34 million (2014: € 78 million). These one-off expenses were non-cash in nature and did not affect
the adidas Group’s liquidity. Other operating expenses as a percentage of sales grew 0.4pp to 43.1%,
as a result of the planned increase in expenditure for point-of-sale and marketing investments,
reflecting the Group’s efforts to strengthen brand desirability. Excluding goodwill impairment losses,
the Group’s operating profit increased 14% to € 1.094 billion compared to € 961 million in 2014,
representing an operating margin of 6.5%, down 0.1 percentage points compared to the prior year
(2014: 6.6%). The Group’s net income from continuing operations excluding goodwill impairment
losses was up 12% to € 720 million (2014: € 642 million). In 2015, the adidas Group incurred losses
from discontinued operations of € 46 million (2014: losses of € 68 million). Net income attributable
to shareholders from continuing and discontinued operations excluding goodwill impairment losses
was up 18% to € 668 million (2014: € 568 million). Basic and diluted earnings per share (EPS) from
continuing and discontinued operations excluding goodwill impairment losses increased 22% to
€ 3.32 from € 2.72 in 2014.
ECONOMICAND SECTOR DEVELOPMENT
GLOBAL ECONOMY EXPANDS 2.4% IN 2015
In 2015, the global economy grew at a lower rate than initially projected, with global gross domestic
product (GDP) strengthening 2.4%. While developed economies showed signs of economic recovery, fuelled
by stronger domestic demand as well as improving labour markets and credit conditions, developing
economies recorded disappointing results, due to subdued global trade, low commodity prices, rising
borrowing costs and uncertainties regarding monetary and fiscal policies.
GDP in Western Europe grew 1.7% in 2015, supported by lower energy prices, a weakening of the euro,
robust export growth and the increasingly accommodative monetary policy followed by the ECB. Most of
the region’s economies were characterised by low inflationary pressures and rising domestic demand,
with Spain and the UK in particular recording healthy GDP growth. Despite an improvement in consumer
confidence levels, high unemployment levels in certain markets, subdued wage growth and public debt
dynamics still resulted in lacklustre GDP increases in many of the region’s countries.