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Adidas announced a reassuring outlook including the impact related to the Russia/CIS risk despite the consensus-missing Q4 21 performance. The challenging trading environment in Greater China, the lingering COVID-19-related restrictions and industry-wide supply-chain disruptions have weighed on the group’s year-end performance. However, the group is confident that the strong full-price sales, the progressively eased supply-chain disruptions and the gradually normalised trading environment in C
Companies: adidas AG
AlphaValue
Adidas upgraded its FY21 guidance (again) on the back of the strong accelerations in Europe and North America in Q2 21. On the back of good top-line momentum, the ongoing supply chain challenges and normalised marketing spending will put pressure on the margin progression. The sales contraction of 16% in Greater China was worse than weexpected, however, the trading environment has started to improve, and the group continues to expect strong growth in the country for FY21.
Adidas slightly upgraded its guidance for FY21 after a better-than-expected first quarter. The group has experienced healthy growth across all markets despite the prolonged lockdowns in some markets, highlighting the strong 156% sales growth in Greater China. The strong growth in China and the group’s very encouraging guidance for Q2 21 have confirmed our view on the “boycott on Xinjiang cotton matter”. We believe that smaller, easily replaceable brands will be affected more than well-position
The group has published better-than-expected figures for Q3 20. The encouraging improvement in Russia/CIS, Europe, and North America has been slightly offset by the sales contraction in the franchise in China. The relatively less exposure to North America and the footwear business make the group still lag behind its industry peer. The updated conditional outlook for FY 20 was broadly in line with current consensus and below our estimates, showing an uncertain year-end trading environment.
Companies: ADS ADS ADSN ADSEUR ADS1 1ADS ADS ADDDF ADS ADIDAS
The group has reported better-than-expected sales and gross margin in Q2 20. The higher exposure to Asia, notably to China, and accelerated growth in e-commerce has not only limited the top-line contraction but also led the group to give an encouraging expectation for Q3 20. However, the piling up of inventory has weighed on the margin, which may result in heavy price-discounting in the after-season, thus putting pressure on the margin for the rest of the year.
… but this excludes the COVID-19 impact. This virus has reduced Chinese revenue by 80% from 25 January to the end of February and management expects this to have a €0.4-0.5bn negative impact on EBIT in APAC/Greater China in Q1. Up to now, the company does not see any (severe) sourcing problems, but this might eventually impact revenue in other parts of the world.
The last time the company‘s quarterly EBIT number fell was in 2014. Ever since, Adidas has achieved phenomenal profit growth. This has clearly not been the case in the most recent quarter.
The group’s Q3 and H1 bottom lines benefited from gains from discontinued operations (€70m and €72m, respectively) and from much-lower-than-expected tax rates, down by 3.2pp to 25.6% and by 2.7pp to 25.5%. Consequently, net earnings were higher than anticipated. The outlook is somewhat uncertain and depends on potentially more US import duties for Chinese goods.
After 16% in 2017 and 8% in 2018, currency adjusted revenue growth moderated to 4% in Q1 19. Sales of the Adidas brand were up by 5% but Reebok sales fell by 6%. Nevertheless, the profit margin improvement was stronger than expected.
Adidas increased its turnover by 3.3% to €21.9bn (+8% currency-adjusted) while EBIT was up by 14% to €2.37bn and net earnings by 55% to €1.70bn. These numbers are very much in line with consensus expectations while our profit projections were slightly higher. Management proposes a dividend of €3.35 compared to our projected €3.30 vs. the previous year’s €2.60.
The group’s turnover increased by 3.2% to €16.7bn through to September and, as the gross margin continued improving, EBIT was up by 16% to €2.24bn and net earnings by 40% to €1.59bn. We had expected the following respective numbers: €16.6bn, €2.21bn, and €1.51bn, i.e. the company delivered slightly more.
The current contract expired in 2022 and the two have now extended it to 2026. According to media speculations, Adidas is willing to continue to pay €50m annually to the German Football Association, an amount that is similar to what it pays to the French Association. According to these sources, Nike is paying €40m to the English, €35m to the Spanish, and €34m to the Brazilian Association. DFB has come under pressure after the disastrous performance of the German team at the Russian World Champi
The group’s revenue numbers (+4.4% to €5.26bn in Q2 and +3.1% to €10.8bn in H1) fell short of our expectations, but all profit numbers were higher. H1 EBIT was up by 17% to €1.34bn and net income from continuing operations by 19% to €960m. Management continues expecting full-year revenue to increase by some 10% before FX changes and the gross margin to improve by 0.3pp to 50.7%. The latter is, in our opinion, too cautious as the margin was up by 2.2pp in the last quarter and by 1.8pp in H1.
At a glance, the 8pp gap between currency-adjusted revenue growth of 10% and the reported growth rate of 2% looks like a threat. However, Adidas and its peers are sourcing almost all of their products in Asia and purchase prices are typically denominated in US dollars. As a large share of their revenue is generated in countries with strong currencies (e.g. Western Europe, almost 30%), the gross margin has increased considerably.
Adidas delivered good 2017 numbers all the way down to pre-tax earnings and it announced a share buy-back programme going all the way through to May 2021. Net earnings were negatively impacted by the US income tax reform and a higher than expected loss from the disposal of TaylorMade and CCM Hockey. Consequently, management’s dividend proposal of €2.60 is lower than our anticipated €2.75.
Research Tree provides access to ongoing research coverage, media content and regulatory news on adidas AG. We currently have 1 research reports from 4 professional analysts.
Ceres Power Holdings’ innovative technology uses electrolysis to produce green hydrogen and solid oxide fuel cells to generate power. In a year where it moved to the Main Market of the London Stock Exchange, it recorded revenue growth of 13% and gross margin expansion to 61% (the highest in the sector, according to management), but is yet to record an operating profit (FY23 operating loss of £59.4m versus £54.0m in FY22). Ceres continued its strategy to drive innovation and technology across sol
Companies: Ceres Power Holdings plc
Edison
Banquet Buffet*** Abingdon Health 9.25p £11.3m (ABDX.L) The lateral flow contract development and manufacturing organisation announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 117% to £2.4m (H1 2023: £1.1m). The Adjusted EBITDA loss decreased 47% to £1.2m (H1 2023: £2.2m). Furthermore, reduction in operating loss of 50% to £1.2m (H1 2023: £2.4m). The Board therefore expects that H2 2024 revenue will be significantly improved compared with H1 2024
Companies: CPX SLP FA/ FIPP ECR ETP ORCA
Hybridan
AFC has unveiled a groundbreaking modular ammonia cracker system demonstrating viable and scaleable production of hydrogen in the UK using this method. The cracker system is designed to deliver 140 tonnes of fuel cell grade hydrogen each year. Hydrogen from the plant will initially be targeted for sale into AFC’s UK H-Power Generator deployments, including those with Speedy Hydrogen Solutions. Along with the recent purchase of the mobile storage and distribution assets of Octopus Hydrogen, AFC c
Companies: AFC Energy plc
Zeus Capital
Sanderson Design Group (SDG) continues to deliver on its key strategic initiatives and growth drivers despite a challenging global backdrop. The group’s FY23 performance showed flat revenue, with adjusted underlying PBT rising £0.1m to £12.6m. Net cash dropped back to £15.4m, with the total dividend maintained at 3.5p. The star performers were Licensing (reported revenue +25%), the Morris & Co brand (+16%) and the US market (+20%). Our forecast revisions assume more modest sales progression, wit
Companies: Sanderson Design Group PLC
Progressive Equity Research
Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.
Companies: Solid State plc
17th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi
Companies: ARS TIDE SCE SNX ECK CNS TST SPEC SSTY
AFC has made strong progress with products and its manufacturing strategy. Despite heavy investment, the cash position, at £27.4m, was slightly better than our estimate for £26.9m, demonstrating good discipline. The monthly cash burn rate (at c. £1.3m) is tracking in-line with our expectations. Generally, we maintain our estimates for significantly increased sales in FY24e and FY25e, with the cash position unchanged. Recent news on commercial progress has been positive. The 30kW H-Power Generato
Gooch has issued a positive update for H1. Trading has started to recover with stocking levels normalising at industrial and medical devices customers. The outlook is positive with growth returning, and management has confirmed our full year estimates (adjusted for the disposal of EM4). The order book and order flow appear healthy, and net debt is comfortable. Gooch clearly still has plenty to do to lift operating margins from a lacklustre 8.1%, but the transformation plan appears to be back on
Companies: Gooch & Housego PLC
We note the regulatory announcement this morning from Surface Transforms and withdraw our estimates and valuation, pending conversations with management.
Companies: Surface Transforms PLC
Sanderson Design Group (SDG) has reported an 8% increase in interim adjusted PBT, to £6.8m. This was achieved despite a weak backdrop in the home UK market and a 2% decrease in overall group revenue. Increased profitability was driven by strong performances in two of its key and higher-margin strategic growth pillars – Licensing and North America – which grew by 82% and 10%, respectively, on a reported basis. New product launches, including Disney Home x Sanderson, have seen sampling running at
Surface Transforms has issued new revenue guidance for FY24, with the company now expecting revenues in the range £17.5-22m. We are withdrawing our previous forecasts for FY24 and withdrawing our price target while we review the impact of the new guidance.
Cavendish
Revolution Beauty is a multi-brand, multi-category, multi-channel, mass beauty innovator with proven global scale. Since launch in 2014, the Group has grown rapidly (FY14 – FY19 CAGR of 99%) generating revenue of £137.5m in the 12m to 31 December 2020. Revolution has an established retail footprint of c.11,000 doors across leading retail chains in the UK, USA and internationally, driving global brand recognition. This is complemented by a fast-growing digital business (+81% in 2020) including it
Companies: Revolution Beauty Group plc
Sanderson Design Group has delivered its full-year trading update to 31 January 2024. Group revenue has eased back 3.1% to £108.5m on a reported basis, following the 2% decline in H1. The strongest performances were delivered by the strategic growth cornerstones of Licensing and North America, offset by challenging market conditions in the UK, Europe and the Rest of the World. A strong balance sheet saw year-end cash rise to £16.2m, compared with £15.4m at year-end FY23. Having traded in line wi
Companies: CML FDEV NRR SSPG RMV AO/ ZIN
Shore Capital
SCE is raising £16m through a placing (and up to a further £3m through open offer) to fund substantial expansion and additional working capital. This will enable the Group to grow to £75m revenue capacity in the near term, commence the build and equipping of a new factory and then (with internally generated free cash flow) scale to £150m revenue capacity and beyond. With a contracted order book of £190m and a prospective pipeline of £400m, this is clearly the time to seize the opportunity. The e
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