Given the strong top-line target and projected net synergies for 2008, how did you arRive at your guidance
of at least 15 % net income growth, which appears conservative?
Our top priority is ensuring long-term sustainable growth and profitability increases for the Group. Maintaining a strong gross
margin is crucial, and although we see great potential in the Reebok segment and throughout our supply chain for further
improvement, rising input costs towards the end of the year will counteract some of the progress we expect. We also need
to keep investing in our brands to capitalize on both short-term opportunities and to realize our long-term strategic goals.
In 2008, we will also have costs related to the year’s major sporting events and other important brand initiatives such as
expanding our controlled space activities. In addition, our share buyback program will moderate our progress on financial
expense
reduction. Underlying improvements at all of our brands and increased net synergies relating to the Reebok
integration,
however, will more than offset these negative effects. As a result, I am proud that we will be able to deliver
earnings improvement
of at least 15 % – marking our eighth consecutive year of double-digit earnings growth.
Increasing shareholder value and returns is one of the adidas Group’s guiding principles. What are your
plans in this respect, given your recently announced share buyback program?
The best way to deliver value to our shareholders is through strong financial performance and disciplined balance sheet
management. Since completing the Reebok acquisition in the first quarter of 2006, we have reduced our net borrowings
by around € 1.2 billion. With financial leverage of 58.4 % at the end of 2007, we now have flexibility to deliver more aggressive
shareholder returns. As a result, we announced a share buyback program of up to € 420 million in January. This tool will
provide our shareholders with an even higher participation in our future financial performance through enhanced earnings
per share growth. And combining this with our total dividend increase of 19 %, we will return more to shareholders in
2008 than ever before. These initiatives clearly highlight our confidence in the health of our business, our future business
prospects
and the strong cash flows we expect to generate going forward.
Herbert, thank you for this interview.
