Adidas 2003 Annual Report Download - page 77
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OPERATING PROFIT UP 3% /// Operating profit for the Group
increased 3% to € 490 million in 2003 from € 477 million in
2002. As a result, the operating margin increased 0.5 percent-
age points to 7.8% in 2003 from 7.3% in 2002. This improve-
ment was in line with Management guidance and a result of
the Group’s record-level gross margin. From a brand perspec-
tive, adidas operating profit grew 6% to € 365 million in 2003
from € 343 million in 2002 as currency-neutral sales growth
and gross margin expansion more than offset negative
currency translation effects. The Salomon operating profit
declined by 10% to € 35 million in 2003 from € 39 million in
2002. A significant reduction of operating expenses could not
compensate for negative currency effects on sales and gross
margin. At TaylorMade-adidas Golf, operating profit declined
9% to € 67 million in 2003 from € 74 million in 2002, with
strict cost control unable to fully offset lower gross margin.
In addition to the performance of each segment, the Group’s
operating profit comparison was positively impacted by the
results of our central hedging activities.
EUROPE MAIN CONTRIBUTOR TO GROUP OPERATING PROFIT
GROWTH /// In 2003, the Group’s positive operating profit
development was underpinned by improvement in all regions
except North America. In Europe, operating profit grew 13%
to € 534 million in 2003 from € 471 million in 2002. This was
mainly generated by operating profit improvements at adidas.
In North America, the significant gross margin decline at
adidas could not be offset by lower operating expenses. This
led to a reduction of the operating profit by 43% to € 92 mil-
lion in 2003 from € 162 million in 2002. In Asia, operating
profit grew 1% to € 191 million in 2003 from € 189 million
in 2002. The lower gross margin in 2003 was more than
compensated by an operating expense reduction. In Latin
America, operating profit grew 6% to € 25 million in 2003
from € 24 million in 2002.
73
NUMBER OF EMPLOYEES1)
1999 12,829
2000 13,362
2001 13,941
2002 14,716
2003 15,686
1)At year-end
OPERATING PROFIT € in millions
1999 482
2000 437
2001 475
2002 477
2003 490
OPERATING PROFIT BY QUARTER € in millions
Q1 2003 116
Q1 2002 98
Q2 2003 62
Q2 2002 69
Q3 2003 270
Q3 2002 243
Q4 2003 42
Q4 2002 66
EMPLOYEES BY FUNCTION1) in %
2003 2002
1)At year-end
Own retail 19
Sales 19
Logistics 18
Marketing 12
Central
functions & administration 12
Production 11
Research & development 6
IT 3
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