Call Start: 9:00 January 1, 0000 10:11 AM ET adidas AG ADR (OTCQX:ADDYY) Q1 2020 Earnings Conference Call April 27, 2020 9:00 AM ET Company Participants Sebastian Steffen - Vice President of Investor Relations Kasper Rorsted - Chief Executive Officer Harm Ohlmeyer - Chief Financial Officer Conference Call Participants Graham Renwick - Berenberg Geoff Lowery - Redburn Piral Dadhania - RBC Elena Mariani - Morgan Stanley Jürgen Kolb - Kepler Cheuvreux Warwick Okines - Exane BNP Paribas Omar Saad - Evercore ISI ...

adidas Q1 2020s Herzogenaurach, April 27, 2020 AGENDA | --- | --- | --- | --- | --- | |-------|-------|--------------|--------------------|-------| | | | | | | | 01 | | INTRODUCTION | | | | 02 | | | BUSINESS UPDATE | | | | | | | | | 03 | | | FINANCIAL UPDATE | | | 04 | | | OPERATIONAL UPDATE | | | 05 | | OUTLOOK | | | 2 a 2 /华 10 INTRODUCTION ik UNPRECEDENTED TIMES AROUND THE GLOBE, IN SPORTS AND FOR ADIDAS 4 ~ Almost all countries around the world impacted by the coronavirus outbreak Global and local sport ...

Financial Data and Key Metrics Changes - The company achieved a topline growth of 6% for the full year, in line with the guidance of 5% to 8% [19] - Gross margin remained stable at 52%, with an operating margin of 11.3% [19][40] - Net income grew by 12%, exceeding the guidance of 8% to 12% [19] Business Line Data and Key Metrics Changes - The North American business grew by 7%, reaching €4.8 billion, while Greater China saw a 15% increase, totaling €2.7 billion [20] - The eCommerce segment experienced a remarkable growth of 34%, approaching €3 billion [20] - Reebok reported a 12% revenue growth in North America, contributing to its overall performance [12] Market Data and Key Metrics Changes - All markets recorded sales growth for the first time since 2016, with double-digit increases in Asia Pacific and emerging markets [27] - Europe returned to growth with a 3% increase, while North America faced challenges due to supply chain issues [31] - Emerging markets grew by 13%, despite geopolitical tensions [32] Company Strategy and Development Direction - The company is focused on driving topline and market share growth while expanding operating margins [8] - Sustainability remains a key priority, with initiatives aimed at ending plastic waste and increasing the use of recycled materials [55][56] - The company plans to leverage major sporting events in 2020 to enhance product activation and consumer engagement [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth despite supply chain challenges and the impact of the coronavirus [26][82] - The company anticipates a slight decline in gross margin in 2020 but expects to maintain an industry-leading level [42] - The long-term growth story in China remains intact, with expectations of returning to a sustainable growth path post-crisis [82] Other Important Information - The company returned approximately €1.5 billion to shareholders through dividends and share buybacks in 2019 [49] - The equity ratio decreased to 36% due to the implementation of IFRS 16, but the balance sheet remains strong [48] - The company has a robust marketing strategy, maintaining high relative spending in the industry [106] Q&A Session Summary Question: Confidence in clearing inventory in China - Management is confident in clearing inventory through factory outlets, even if it means discounting [96] Question: Management incentives amid coronavirus impact - The Supervisory Board has added market share targets for the China business to management incentives, ensuring appropriate motivation [97] Question: Approach to managing marketing budget - The company plans to maintain its marketing budget but will adjust spending based on market conditions, ensuring investments make sense [106]

| --- | --- | |-------|--------| | | | | | adidas | FINANCIAL SUPPLEMENT FOR FULL YEAR 2019 TABLE OF CONTE NT Consolidated Statement of Financial Position 03 Consolidated Income Statement 05 Consolidated Statement of Comprehensive Income 06 Consolidated Statement of Changes in Equity 07 Consolidated Statement of Cash Flows 08 To enhance readability, registered trademarks as well as references to rounding differences are omitted in this publication. 02 ADIDAS FINANCIAL SUPPLEMENT FOR FULL YEAR 2019 CONSOLIDA ...