PRESS RELEASE: adidas AG: First Quarter 2013 Results

adidas AG / adidas AG: First Quarter 2013 Results . Processed and transmitted by Thomson Reuters ONE. The issuer is solely responsible for the content of this announcement.

For immediate release Herzogenaurach, May 3, 2013

First Quarter 2013 Results:

Group sales stable on a currency-neutral basis

Gross margin grows 2.4 percentage points to record level of 50.1%

Net income attributable to shareholders up 6% to EUR 308 million

adidas Group confirms full year guidance

-- TaylorMade-adidas Golf sales increase 13% currency-neutral

-- Group operating margin up 1.1 percentage points

-- Net borrowings down 72% to EUR 180 million at quarter-end

-- Inventories decrease 2% on currency-neutral basis

adidas Group currency-neutral sales remain stable in the first quarter of 2013

In the first quarter of 2013, Group revenues were stable on a currency-neutral basis as a result of sales increases in Retail and Other Businesses. Currency translation effects had a negative impact on sales in euro terms. Group revenues decreased 2% to EUR 3.751 billion in the first quarter of 2013 from EUR 3.824 billion in 2012.

Group sales supported by growth in Retail and Other Businesses

In the first quarter of 2013, currency-neutral Wholesale revenues decreased 3% due to double-digit sales declines at Reebok. Currency-neutral Retail sales increased 6% versus the prior year, driven by sales growth at both adidas and Reebok. Revenues in Other Businesses were up 9% on a currency-neutral basis, driven by double-digit sales increases at TaylorMade-adidas Golf.

Currency translation effects had a negative impact on segmental sales in euro terms. Wholesale revenues decreased 5% to EUR 2.481 billion in the first quarter of 2013 from EUR 2.614 billion in 2012. Retail sales grew 4% to EUR 722 million versus EUR 693 million in the prior year. Sales in Other Businesses rose 6% to EUR 548 million (2012: EUR 517 million).

"Our Group has delivered a solid performance in the first quarter of 2013," commented Herbert Hainer, adidas Group CEO. "We delivered stable revenues, despite running against high prior year comparisons due to the sell-in of event-related products for the London Olympics and the European Football Championships as well as facing a continuation of macroeconomic challenges in Europe. And, we delivered strong margin progress which is our top priority for the year. Our relentless focus on quality sales growth resulted in our highest-ever quarterly gross margin, above 50% for only the second time in our history."

Change y-o-y First quarter First quarter in euro Change y-o-y 2013 2012 terms currency-neutral EUR in EUR in millions millions in % in % Wholesale 2,481 2,614 (5) (3) Retail 722 693 4 6 Other Businesses 548 517 6 9 Total(1) 3,751 3,824 (2) 0

First quarter net sales development by segment

1) Rounding differences may arise in totals.

Currency-neutral sales increase in most regions

In the first quarter of 2013, currency-neutral adidas Group sales grew in all regions except Western Europe and Other Asian Markets. Revenues in Western Europe decreased 6% on a currency-neutral basis, as growth in France and Poland was more than offset by sales declines in Spain, Italy and the UK. In European Emerging Markets, Group sales increased 3% on a currency-neutral basis due to sales growth in the Middle East, South Africa and Russia/CIS. Sales for the adidas Group in North America grew 3% on a currency-neutral basis, driven by 5% growth at adidas and 19% growth at TaylorMade-adidas Golf. Sales in Greater China increased 6% on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets declined 4%, as double-digit increases in South Korea were more than offset by sales declines in Japan. In Latin America, sales grew 12% on a currency-neutral basis, with double-digit increases in most of the region's major markets. Currency translation effects had a mixed impact on regional sales in euro terms.

Change y-o-y First quarter First quarter in euro Change y-o-y 2013 2012 terms currency-neutral EUR in EUR in millions millions in % in % Western Europe 1,096 1,174 (7) (6) European Emerging Markets 433 430 1 3 North America 890 869 2 3 Greater China 409 385 6 6 Other Asian Markets 533 594 (10) (4) Latin America 390 372 4 12 Total(1) 3,751 3,824 (2) 0

First quarter net sales development by region

1) Rounding differences may arise in totals.

Group gross margin increases 2.4 percentage points

The gross margin of the adidas Group increased 2.4 percentage points to 50.1% in the first quarter of 2013 (2012: 47.7%). The positive impact from a more favourable pricing, product and regional sales mix as well as a larger share of higher-margin Retail sales contributed to this development. Gross profit for the adidas Group grew 3% in the first quarter of 2013 to EUR 1.881 billion versus EUR 1.826 billion in the prior year.

Operating margin improves 1.1 percentage points

Group operating profit increased 8% to EUR 442 million in the first quarter of 2013 versus EUR 409 million in 2012. As a result, the operating margin of the adidas Group improved 1.1 percentage points to 11.8% (2012: 10.7%). This was primarily due to the positive effects from the increase in gross margin, which more than offset higher other operating expenses as a percentage of sales. Other operating expenses as a percentage of sales rose 1.2 percentage points to 39.5% in the first quarter of 2013 from 38.4% in 2012. In euro terms, other operating expenses increased 1% to EUR 1.482 billion (2012: EUR 1.467 billion), as a result of higher marketing expenditure as well as the expansion of the Group's own-retail activities. Thereof, sales and marketing working budget expenditures amounted to EUR 437 million, which represents an increase of 3% versus the prior year level (2012: EUR 426 million).

Financial income down 47%

Financial income decreased 47% to EUR 4 million in the first quarter of 2013 from EUR 8 million in the prior year, mainly due to a decrease in interest income.

Financial expenses decrease 30%

Financial expenses decreased 30% to EUR 19 million in the first quarter of 2013 (2012: EUR 28 million). The decrease in interest expenses mainly contributed to the decline.

Income before taxes as a percentage of sales increases 1.2 percentage points

Income before taxes (IBT) for the adidas Group increased 10% to EUR 427 million from EUR 389 million in 2012. IBT as a percentage of sales improved 1.2 percentage points to 11.4% in the first quarter of 2013 from 10.2% in 2012. This was a result of the Group's operating margin increase and lower net financial expenses.

Net income attributable to shareholders up 6%

The Group's net income attributable to shareholders increased to EUR 308 million in the first quarter of 2013 from EUR 289 million in 2012. This represents an increase of 6% versus the prior year level. The Group's tax rate increased 2.0 percentage points to 27.5% in the first quarter of 2013 (2012: 25.5%), mainly due to a less favourable earnings mix.

Basic and diluted earnings per share reach EUR 1.47

In the first quarter of 2013, basic and diluted earnings per share amounted to EUR 1.47 (2012: EUR 1.38), representing an increase of 6%. The weighted average number of shares used in the calculation of both basic and diluted earnings per share was 209,216,186 (2012 average: 209,216,186) as there were no potential dilutive shares in the quarter.

Group inventories decline 2% currency-neutral

Group inventories decreased 2% to EUR 2.346 billion at the end of March 2013 versus EUR 2.395 billion in 2012. On a currency-neutral basis, inventories were also down 2%, reflecting the Group's ongoing strong focus on inventory management.

Accounts receivable increase 3% currency-neutral

At the end of March 2013, Group receivables increased 3% to EUR 2.328 billion (2012: EUR 2.253 billion). On a currency-neutral basis, receivables were also up 3%. The reduction in allowances for doubtful debts contributed to this development.

Net borrowings decrease EUR 460 million

Net borrowings at March 31, 2013 amounted to EUR 180 million, which represents a decrease of EUR 460 million, or 72%, versus EUR 640 million at the end of March 2012. The decrease was driven by the strong operating cash flow development over the past 12 months. Currency translation had a positive effect of EUR 37 million. The Group's ratio of net borrowings over 12-month rolling EBITDA decreased to 0.1 at the end of March 2013 versus 0.5 in the prior year.

adidas Group confirms guidance for the full year 2013

adidas Group sales are forecasted to increase at a mid-single-digit rate on a currency-neutral basis in 2013. Currency translation is expected to negatively impact top-line development in reported terms. Despite a high (MORE TO FOLLOW) Dow Jones Newswires

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degree of uncertainty regarding the global economic outlook and consumer spending, Group sales development will be favourably impacted by the Group's high exposure to fast-growing emerging markets as well as the further expansion of Retail. In addition, the Group's strength in innovation will lead to major product launches throughout 2013, which will more than offset the non-recurrence of sales related to the UEFA EURO 2012 and the London 2012 Olympic Games. In terms of phasing, sales growth is projected to be weighted towards the second half of the year.

In 2013, the adidas Group gross margin is forecasted to increase to a level between 48.0% and 48.5% (2012: 47.7%). Improvements are expected in all segments. Group gross margin will benefit from positive regional and channel mix effects, as growth rates in high-margin emerging markets and Retail are projected to be above growth rates in more mature markets and Wholesale. In addition, improvements in the Retail segment as well as at the Reebok brand will positively influence Group gross margin development. However, these positive effects will be partly offset by less favourable hedging terms compared to the prior year as well as increasing labour costs, which are expected to negatively impact cost of sales.

In 2013, the Group's other operating expenses as a percentage of sales are expected to decrease modestly (2012: 41.3%). Sales and marketing working budget expenses as a percentage of sales are projected to be at a similar level compared to the prior year. Marketing investments to support new product launches at all brands, as well as the expansion of Reebok's activities in the fitness category, will be offset by the non-recurrence of expenses in relation to the UEFA EURO 2012 as well as the London 2012 Olympic Games. Operating overhead expenditure as a percentage of sales is forecasted to decline modestly in 2013. Higher administrative and personnel expenses in the Retail segment due to the planned expansion of the Group's store base will be offset by leverage in the Group's non-allocated central costs.

In 2013, the Group expects the operating margin for the adidas Group to increase to a level approaching 9.0% (2012 excluding goodwill impairment losses: 8.0%). Improvements in the Group's gross margin as well as lower other operating expenses as a percentage of sales are expected to be the primary drivers of the improvement. The Group tax rate is expected to be at a level between 28.0% and 28.5% and thus more favourable compared to the prior year tax rate of 29.3% excluding goodwill impairment losses. As a result of these developments, earnings per share are expected to increase at a rate of 12% to 16% to a level between EUR 4.25 and EUR 4.40 (2012 excluding goodwill impairment losses: EUR 3.78). This represents net income attributable to shareholders of EUR 890 million to EUR 920 million.

Herbert Hainer stated: "The strong first quarter results confirm our expectations to deliver another year of double-digit earnings growth and strong cash flow generation. Given the strong reception to our latest product innovations and our full pipeline for the second half of 2013, I am confident our earnings momentum will accelerate in line with our expectations as we move through the year."

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Contacts:

Media Relations Investor Relations Jan Runau John-Paul O'Meara Chief Corporate Communication Officer Vice President Investor Relations Tel.: +49 (0) 9132 84-3830 Tel.: +49 (0) 9132 84-2751 Lars Mangels Christian Stoehr Corporate Communication Manager Senior Investor Relations Manager Tel.: +49 (0) 9132 84-2680 Tel.: +49 (0) 9132 84-4989

Please visit our corporate website: www.adidas-Group.com

Attachment: Press release First Quarter 2013 Results http://hugin.info/139192/R/1698999/560311.pdf

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adidas AG

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