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  • 7.5 %
    Share capital 31/12/2016
  • 2,356 EUR M
    Market value of investment 31/12/2016
  • 7.5 %
    Voting rights 31/12/2016
  • 1
    Representatives in statutory bodies 31/12/2016
Investment Year 2015 Investment history

adidas is a global leader specialised in the design, development, production and distribution of sporting goods (footwear, clothing and equipment). The group’s business is built around four main brands: adidas, Reebok, Taylor Made and CCM. Distribution is done through its own stores retail network, eCommerce and independent distributors

Investment case

adidas is a strong brand: #1 in Europe and #2 worldwide in the design and distribution of sporting goods. There is strong potential for growth in sales supported by (i) advertising and promotional expenditure, (ii) the company’s ability to introduce innovative products and (iii) the omni-channel (including digital) approach. adidas has the possibility to improve its EBIT margin from currently c. 7.7% to historical levels (c. 10% in 2008) via:

  • Optimising the structure of central costs, mainly through economies of scale
  • Increased profitability in the USA and Russia
  • A restructuring of the brand Reebok

Performance in 2016

In 2016, group income rose by 14% compared with the previous year (+ 18% in organic terms). The brands adidas and Reebok achieved sustained growth in all geographic regions.
The brand adidas performed very well (+ 22% in organic terms), and Reebok continued to grow (+ 6% in organic terms), in particular attributable to the brand’s repositioning in the fitness segment. The golf division is decreasing (- 1% in organic terms), having been impacted by the slowdown of its brands Adams golf and Ashworth. Organic turnover for CCM is down by 13%, mainly due to a market decline.
EBIT stood at EUR 1.5 billion at the end of 2016, compared with EUR 1.1 billion in 2015, with a margin of 7.7% up by 130 basis points. After payment of EUR 322 million in dividends, EUR 229 million for share buyback and the exercise of EUR 226 million in convertible shares, net debt stood at EUR 103 million at the end of 2016 (versus EUR 460 million in 2015), which is 0.1x the EBITDA.

Outlook

The adidas group should continue to see double-digit growth in sales supported by (i) increased expenditure on sporting products, (ii) the consumer trend for wearing sports clothing in everyday life (“athleisure”) and (iii) the growing awareness in all regions of the world of health issues and the benefits of practising sports. Geographically speaking, Western Europe, North America and China are set to record the highest growth rates.
The brand adidas, which accounts for 85% of the group, is set to continue its strong growth. The group plans to sell its two brands TaylorMade and CCM.
In 2017, the objective of the adidas group is to increase its EBIT margin to 8.3 - 8.5% (versus 7.7% in 2016). The group is also forecasting an increase of 18 - 20% in adjusted net income to EUR 1,200 – 1,225 million for 2017.

Governance

Board of Directors (1/16*)
Member
* Number of GBL's representatives in statutory bodies in relation to the total number of members