Adidas 2003 Annual Report Download - page 94

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Salomon /// SALOMON SALES INCREASED 2% ON A
CURRENCY-NEUTRAL BASIS IN 2003 AS A RESULT OF
HIGHER SALES OF MAVIC CYCLING COMPONENTS, OUTDOOR
FOOTWEAR AND SALOMON APPAREL. IN EUROS, HOWEVER,
REVENUES DECLINED 4% TO € 658 MILLION VERSUS
€ 684 MILLION IN THE PRIOR YEAR. SALOMON GROSS
MARGIN DECREASED 0.7 PERCENTAGE POINTS TO 40.1%
OF SALES IN 2003 FROM 40.8% IN 2002. THIS DECLINE WAS
MAINLY ATTRIBUTABLE TO NEGATIVE CURRENCY EFFECTS.
OPERATING PROFIT DECLINED 10% TO € 35 MILLION IN
2003 VERSUS € 39 MILLION IN 2002 DESPITE OPERATING
EXPENSE REDUCTIONS. FOR 2004, ALTHOUGH BOTH GROSS
MARGIN AND OPERATING PROFIT ARE LIKELY TO REMAIN
UNDER PRESSURE DUE TO CURRENCY EFFECTS,
CURRENCY-NEUTRAL SALES ARE EXPECTED TO GROW.
SALOMON CURRENCY-NEUTRAL SALES UP 2% /// Salomon
sales increased 2% currency-neutral, reflecting growth in
Mavic cycling components, outdoor footwear and Salomon
apparel. This improvement was partly offset by declines in
winter sports hardware sales due to poor winter conditions in
North America and Japan in 2002/03. In euro terms, sales
were down 4% to € 658 million in 2003 from € 684 million in
2002.
REVENUE GROWTH LARGELY DRIVEN BY INCREASED SALES
OF SUMMER SPORTS PRODUCTS /// Winter sports product
sales, about 67% (2002: 69%) or € 440 million of Salomon’s
total sales in 2003 were stable in currency-neutral terms or
down 6% in euros (2002: € 470 million). Summer sports
products comprised 33% of revenues or € 218 million in this
segment in 2003 (2002: 31% or € 214 million). Sales of these
products grew 6% in currency-neutral terms or 2% in euros in
2003. The main drivers of this improvement were Mavic
cycling components, outdoor footwear and Salomon apparel.
EUROPE DRIVES CURRENCY-NEUTRAL SALES GROWTH ///
From a regional perspective, Europe drove currency-neutral
growth for Salomon in 2003. Currency-neutral sales in the
region grew 7% driven by improvements in all major countries
such as France, Italy, Switzerland, Sweden and Germany. In
North America and Asia, currency-neutral sales declined
5and 9% respectively, mainly as a result of lower sales in the
USA and Japan. In Latin America, currency-neutral revenues
of Salomon grew 33%, albeit from a very small base, due to
growing market share in Argentina and Brazil. Currency
effects negatively impacted revenues in all regions. In euro
terms, sales grew 6% in Europe to € 418 million in 2003 from
€395 million in 2002. In North America, revenues declined
18% in euro terms to € 164 million versus € 199 million in
the prior year. Asian sales also declined 18% in euros to
€69million in 2003 from € 84 million in 2002. And in Latin
America, sales increased 12% in euro terms to € 4 million
versus € 3 million in the prior year.
90 REPORTING GROUP MANAGEMENT REPORT /// SALOMON
SALOMON AT A GLANCE € in millions
2003 2002 Change
Net sales 658 684 (4%)
Gross margin 40.1% 40.8% (0.7pp)
Operating profit 35 39 (10%)
SALOMON NET SALES BY QUARTER € in millions
Q1 2003 124
Q1 2002 123
Q2 2003 67
Q2 2002 71
Q3 2003 199
Q3 2002 230
Q4 2003 268
Q4 2002 260