ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
MINISTRY OF EDUCATION & TRAINING
HOA SEN UNIVERSITY
FACULTY OF ECONOMICS AND COMMERCE
--
FINANCIAL MANAGEMENT
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
Supervior :
V BCH NGC
Students :
NGUYN TH NGC TRM - 2001908
L CH MINH 2001172
NG THUY HNG NGOC 2000976
PHAN DNG THANH BNH 2000877
NGUYN TH M NHN 2001410
HUNH TH HONG OANH - 2000448
Ho Chi Minh City, June 24, 2014
MINISTRY OF EDUCATION & TRAINING
HOA SEN UNIVERSITY
FACULTY OF ECONOMICS AND COMMERCE
--
FINANCIAL MANAGEMENT
ADIDAS GROUP CAPITAL STRUCTURE ANALYSIS
Supervisor :
V BCH NGC
Students :
NGUYN TH NGC TRM - 2001908
L CH MINH 2001172
NG THUY HNG NGOC 2000976
PHAN DNG THANH BNH 2000877
NGUYN TH M NHN - 2001410
HUNH TH HONG OANH - 2000448
Ho Chi Minh City, June 24, 2014
ABSTRACT
ACKNOWLEDGEMENT
To begin with our appreciation, we would like to thank Ms. Vu Bich Ngoc, who has lectured and given our group the opportunity to analyze the financial situation of the selected company. Throughout the experience, we have enriched our knowledge on financial statement analysis and evaluation. As a result, experience and valuable lessons gained will lead us to success in the future working environment.
SUPERVISORS REMARK
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HCMC, // 2014
TABLE OF CONTENTSABSTRACTiACKNOWLEDGEMENTiiSUPERVISORS REMARKiiiTABLE OF CONTENTSivCOMPANY PROFILES1REFERENCEv
Type
Aktiengesellschaft
Industry
Apparel & Textile Products
Founder
Adolf Dassler
Headquarters
Germany
Area served
Worldwide
Key people
Igor Landau (Chairman)
Herbert Hainer (CEO)
Products
Footwear, sportswear, sports equipment, toiletries
Employees
50,728 (2013)
COMPANY PROFILES
2013
Adidas Group (AG) is a German multinational corporation that specializes in supplying sporting goods such as sport shoes, clothing and accessories. The Group has been known as the parent company of famous brands like Adidas, Reebok, TylorMade - Adidas Goft, Rocksport
Footwear and hardware role an important key in net sales divided by category of AG with 47% and 43% respectively.
Western Europe contributed the largest percentage (26%) to the Group sales, followed by North American market (23%).
78% total volume of AG in 2013 was produced in Asia, the remaining supplied by manufactories located in Europe, Africa and Americas. AGs footwear manufacturing partners supplied approximately 257 million pairs in 2013 (2012: 244 million pairs). Products were primarily sourced from factories in Vietnam (35%), China (31%) and Indonesia (24%)
Number of shares outstanding 2013 average
209,216,186
Number of shares outstanding At year-end 2013
209,216,186
Initial Public Offering
November 17, 1995
Stock exchange
All German stock exchanges
Stock registration number
DE000A1EWWW0
Stock symbol
ADS, ADSGn, DN
COMPANY PROFILES|1
2013
Share ratios at a glance
2013
2012
Basic earnings per share
4.01
3.78
Cash generated from operating activities per share
3.03
4.5
Year-end price
92.64
67.33
Year high
92.64
69.12
Year low
66.28
51.42
Dividend per share
1.5
1.35
Dividend payout
in millions
314
282
Dividend payout ratio
%
37.4
35.7
Dividend yield
%
1.6
2
Shareholders' equity per share
26.24
25.35
Price-earnings ratio at year-end
23.1
17.8
Average trading volume per trading day
shares
842,318
900,218
DAC-30 ranking at year end
by market capitalization
16
16
by turnover
17
19
1. Excluding goodwill impairment of 52 million
2. Excluding goodwill impairment of 265 million
3. Subject to Annual General Meeting approval
4. Based on number of shares outstanding at year-end
5. Based on number of shares traded on all German stock exchanges
6. As reported by Deutsche Borse AG
2013
Five-year share price development
The adidas Group and the adidas AG share receive strong analyst support in 2013. The vast majority of 45 analysts from investment banks and brokerage firms are confident about the medium and long-term potential of the Group
Consolidated Income Statement
2013
2012
Change
Net sales
14,492
14,883
-2.6%
Cost of sales
7,352
7,780
-5.5%
Gross profit
7,140
7,103
0.5%
Royalty and commission income
104
105
-1.0%
Other operating income
143
127
12.6%
Other operating expenses
6,133
6,150
-0.3%
Goodwill impairment losses
52
265
-80.4%
Operating profit
1,202
920
30.7%
Financial income
26
36
-27.8%
Financial expenses
94
105
-10.5%
Income before taxes
1,134
851
33.3%
Income taxes
344
327
5.2%
Net income
790
524
50.8%
Net sale decreases 2.6%
In 2013, Group revenues grew 2.6% on a currency neutral basis, as a result of sales increases in Retail and Other Businesses. Currency neutral. Wholesale revenues remained stable compared to the prior year. The development of Group sales is below initial Management expectations of a mid single digit Group sales increase. Currency translation effect had a negative impact on sales in euro term. Group revenues decreased 2.6% to 14.492 billion in 2013 from 14.883 billion in 2012.
Cost of sales decreases 5%
Cost of sales is defined as the amount the Group pays to third parties for expenses associated with producing and delivering their products. Own-production expenses are also included in the Groups cost of sales. However, these expenses represent only a very small portion of total cost of sales. In 2013, cost of sales was 7.352 billion, representing a decrease of 5% compared to 7.780 billion in 2012. This development was driven by the reduction of input costs as a result of lower raw material prices at the time of sourcing. In addition, currency effects contributed to the decline in cost of sales.
Royalty and commission income declines 1%
Royalty and commission income decreased 1% to 104 million in 2013 from 105 million in the prior year. On a currency neutral basis, royalty and commission income was also down 1% mainly as a result of lower licensee sales at adidas.
Other operating income increases 12.6%
Other operating income includes items such as gains from the disposal of fixed assets and released of accruals and provisions as well as insurance compensation. In 2013, other operating income increased 13% to 143 billion (2012: r127 million). This was mainly due to the release of other operational provisions.
Other operating expenses decrease 0.3%
Other operating expenses, including depreciation and amortization, consist of items such as sales working budget, market working budget and operating overhead costs. In 2013, other operating expenses remained virtually unchanged at 6.133 billion (2012: 6.150 billion), as a decrease in marketing expenses was offset by higher expenditure related to the expansion of the Groups own retail activities.
Goodwill impairment losses decrease 80.4%
As a result of the annual impairment test, the adidas Group has impaired goodwill and recorded a 52 million pre tax charge as at December 31, 2013 (2012: 265 million). Within wholesale cash-generating unit Iberia, goodwill impairment losses of 23 million were recognized. Within the retail cash generating unit North America, goodwill impairment losses of 29 million were recognized. The goodwill of these two cash generating units is completely impaired. The impairment losses were mainly caused by adjusted growth assumptions and an increase in the country specific discount rates.
In 2012, the wholesale cash generating unit North America was impaired by 106 million, Latin America by 41 million, Brazil by 15 million and Iberia by 11 million. The impairment loss in 2012 was mainly the result of adjusted growth assumptions for t he Reebok-CCM Hockey was completely impaired and 24 million allocated to Rockport was partially impaired. These impairment losses were primarily the result of the re-evaluation of future growth prospects and, with regard to Rockport, also due to an increase in the discount rate. The impairment losses in both years were non-cash in nature and do not affect the adidas Groups liquidity.
Financial income down 28%
Financial income decreased 28% to 26 million in 2013 from 36 million in the prior year, mainly due to a decrease in interest income.
Financial expenses decrease 11%
Financial expenses declined 11% to 94 million in 2013 (2012: 105 million). The decrease in interest expenses was the main contributor to the decline.
REFERENCE
Net sales by prod
