ANTA Sports Announces 2010 Interim Results Keep Moving to ... · commercials (“TVC”) featuring...

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1 For immediate release ANTA Sports Announces 2010 Interim Results Keep Moving to Deliver Remarkable Results *** Continuous Growth with Strong Financial and Operating results Assembled Strongest Sporting Sponsorship and Endorsement Resources (16 August 2010, Hong Kong) ANTA Sports Products Limited (“ANTA Sports” or the “Company”, stock code: 2020) is pleased to announce the interim results of the Company and its subsidiaries (the “Group”) for the six months ended 30 June 2010 (the “period”). Results Highlights Six months ended 30 June 2010 2009 Change RMB million RMB million Turnover 3,453.1 2,817.0 +22.6% Gross profit 1,509.8 1,169.1 +29.1% Profit from operations 894.8 682.9 +31.0% Profit attributable to equity shareholders 760.2 608.3 +25.0% Free cash inflow 735.5 537.3 +36.9% RMB cents RMB cents Basic earnings per share 30.50 24.43 +24.8% HK cents HK cents Interim dividend per share 20.0 12.0 +66.7% Gross profit margin 43.7% 41.5% +2.2% pts Operating profit margin 25.9% 24.2% +1.7% pts Margin of profit attributable to equity shareholders 22.0% 21.6% +0.4% pts

Transcript of ANTA Sports Announces 2010 Interim Results Keep Moving to ... · commercials (“TVC”) featuring...

Page 1: ANTA Sports Announces 2010 Interim Results Keep Moving to ... · commercials (“TVC”) featuring A-Jelly running shoes to boost popularity of relevant sports and sales of featured

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For immediate release

ANTA Sports Announces 2010 Interim Results

Keep Moving to Deliver Remarkable Results

***

Continuous Growth with Strong Financial and Operating results

Assembled Strongest Sporting Sponsorship and Endorsement Resources

(16 August 2010, Hong Kong) ANTA Sports Products Limited (“ANTA Sports” or the

“Company”, stock code: 2020) is pleased to announce the interim results of the Company and

its subsidiaries (the “Group”) for the six months ended 30 June 2010 (the “period”).

Results Highlights

Six months ended 30 June

2010 2009 Change

RMB million RMB million

Turnover 3,453.1 2,817.0 +22.6%

Gross profit 1,509.8 1,169.1 +29.1%

Profit from operations 894.8 682.9 +31.0%

Profit attributable to equity

shareholders

760.2 608.3 +25.0%

Free cash inflow 735.5 537.3 +36.9%

RMB cents RMB cents

Basic earnings per share 30.50 24.43 +24.8%

HK cents HK cents

Interim dividend per share 20.0 12.0 +66.7%

Gross profit margin 43.7% 41.5% +2.2% pts

Operating profit margin 25.9% 24.2% +1.7% pts

Margin of profit attributable to

equity shareholders 22.0% 21.6% +0.4% pts

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Financial Summary & Operational Performance

� Robust Financial Performance

� Turnover increased by 22.6% to RMB3,453.1 million (2009 1H: 2,817.0 million),

attributable to the increase in average selling prices (“ASP”) and sales volume,

enhanced product offerings and the expansion of distribution network

� The Group’s gross profit margin increased 2.2 percentage points to 43.7% (2009

1H: 41.5%) as a result of strong brand equity, diversified product portfolio and

effective cost control

� In view of outstanding performance during the period, the Board of the Company

proposed an interim dividend of HK20 cents per share (2009 1H: HK12 cents),

making a payout ratio of 57.2 % of the 2010 1H profit attributable to equity

shareholders to sustain a better return to shareholders

� Solid working capital management and strong cash flow

� Average inventory turnover days: 38 days (2009 1H: 43 days)

� Average trade receivables turnover days: 17 days (2009 1H: 15 days)

� Average trade payable turnover days: 37 days (2009 1H: 32 days)

� Free cash inflow increased by 36.9% to RMB735.5 million (2009 1H: 537.3

million) as a result of remarkable working capital management and outstanding

operating performance

� Significant ASP and volume growth

� Footwear: ASP (wholesale) increased by 2.0% to RMB96.9 (2009 1H: RMB95.0);

volume increased by 9.3% to 18.0 million pairs (2009 1H: 16.4 million pairs)

� Apparel: ASP (wholesale) increased by 7.1% to RMB49.6 (2009 1H: RMB 46.3);

volume increased by 26.4% to 32.5 million pieces (2009 1H: 25.7 million pieces)

� Distribution network expansion and sales floor area optimisation

� Number of ANTA stores across China increased to 7,052 compared to 6,591 at

the end of 2009, representing a net increase of 461 stores

� Total sales floor area increased by 9.9% to 776,000 sq. m. compared to 706,000

sq. m. at the end of 2009

� Average sales floor area per store increased by 2.8% to 110 sq. m. compared to

107 sq. m. at the end of 2009

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Business Review

Strong brand equity and effective brand management strategy

During the period, the Group has further integrated our exclusive endorsement and

sponsorship resources, interactive promotion campaigns and outstanding store image as well

as quality products to bolster brand value and sustain business growth. The Group has

entered into exclusive sponsorships with elite athletes, influential sports associations and

top-tier leagues to enhance our professional brand image and customer loyalty. The strategic

partnerships with the Chinese Olympic Committee (the “COC”) and Chinese Sports Delegation

(the “CSD”) are good examples of how the strategy has advanced our brand differentiation,

particularly in associating ANTA as “the representative of China’s sports industry”.

The outstanding performance of the CSD in the Vancouver 2010 Winter Olympics, in

particular our endorsed athletes, offered excellent exposure for ANTA’s sportswear at victory

ceremonies and celebration events held in the “Home of China”. The positive market

feedback to the “Support China Altogether” advertising and marketing campaign for the

event has consolidated ANTA’s symbolic role for China’s sports industry. Moreover, the

alliance with the COC and its online media partner, Sina, in forming the “ANTA • China Sports”

channel provides an excellent opportunity for ANTA to maximise our marketing effectiveness

and brand equity through a better cultivation of the COC’s sponsorship rights.

The Group has strategically focused marketing resources on 3 core product segments:

basketball, tennis and running, employing effective marketing strategies such as athletes’

endorsement and sponsorship of influential sports leagues, to enhance the brand association

with the key sports. During the period, we have rolled out eye-catching events, including the

“I Love CBA” marketing campaign, Luis Scola’s China tour as well as the television

commercials (“TVC”) featuring A-Jelly running shoes to boost popularity of relevant sports

and sales of featured performance-based sportswear products.

ANTA Sports is renowned for integrating sports sponsorship resources and events with

different promotion channels to maximise exposure to target audience. In addition to the use

of creative TVC and advertisements, the Group also leverages the rising popularity of Internet

marketing and brand website to establish closer links with consumers. Furthermore, the

Group has strengthened our in-store marketing events and activities capabilities to reinforce

the interactions with consumers and our leading position in various local markets.

Strategically expanded distribution network and refined network management system

The Group has expanded the nationwide distribution network to over 7,000 ANTA stores with

a strategic focus on second and third tier cities to tap the tremendous market potential. We

managed the nationwide distribution network through over 50 regional distributors.

Meanwhile, Sports Lifestyle series stores and ANTA Kids stores have been expanding to

extend our reach to diversified segments. Furthermore, the Group has launched the official

online flagship store at taobao.com to capture the potential growth of e-shopping.

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During the period, the Group has continued to refine our distribution network management

system and work closely with our distributors to monitor and enhance store efficiency and

profitability. We have also organised various interactive activities at key ANTA stores and

provide standardised point-of-purchase advertising (“POP”) materials to ensure that our

branding activities can be effectively translated into prominent retail performance. Through

continuous efforts, ANTA Sports is the top seller of travel and sports shoes in terms of market

share for the ninth year in China.

30 Jun 2010 31 Dec 2009 Net increase

ANTA stores

Eastern region 2,598 2,451 +147

Southern region 2,128 1,991 +137

Northern region 2,326 2,149 +177

Total number of ANTA stores 7,052 6,591 +461

Sports Lifestyle series stores 495 343 +152

Kids series stores 300 228 +72

R&D innovation and creative product design

The Group identifies innovation and technology as our key to differentiate from others.

During the period, we have continued to strengthen our internal R&D team and collaboration

with external professionals to enhance our competitive edge in R&D. We have further

improved our A-Jelly technology and other existing technologies to offer more value-added

sportswear products. In support of a low carbon life concept, the Group has made use of

organic, chemical-free cotton as raw materials for our apparel products and enhanced the

“ergonomic 3-dimensional cutting technology” to improve the body hugging feature on our

apparel products. In addition, the Group continues to expand our product portfolio. During

the period, we have introduced more than 1,700 new styles to footwear products, 2,000 to

apparel and 1,000 to accessories, to meet the different tastes of customers.

Prospects

The Chinese government is expected to continue to drive economic growth by spurring

domestic consumption. Wage rises and a better welfare system will also help boost the

purchasing power and brand awareness of Chinese consumers. Moreover, urbanisation is

likely to bring in tremendous business opportunities, particularly in second and third tier cities.

These have given rise to optimism for the Group in our outlook for China’s domestic market

and the sportswear industry in particular.

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The CSD’s favourable response on the sportswear for the Vancouver 2010 Winter Olympic

Games has stood us in good stead for providing even better gear in the Guangzhou 2010

Asian Games and the London 2012 Olympic Games. In November, the Asian Games will be

held in Guangzhou. It is expected that the outstanding performances of Chinese athletes will

provide significant exposure opportunities for ANTA’s sportswear in victory ceremonies. The

Group will roll out corresponding TVC and POP series and strengthen the “COC licensed

product corner” in key ANTA stores across the country to boost the awareness of the Games

as well as sales. In addition, the Group will launch various interactive events to enable the

public to experience the Games more fully.

Basketball is a popular sport in China. That is why the Group has made the sport one of our

key development priorities. On 1 August, the Group has added to the endorsement list a

renowned NBA superstar, Kevin Garnett, who was named the NBA Champion, NBA Most

Valuable Player and NBA Defensive Player of the Year. After joining ANTA Sports as an

endorsed basketball player, he embarked on a China tour visiting major cities of the country.

We will launch a new “KG” basketball sportswear series together with a marketing blitz of TVC

and POP. In the coming NBA season, Kevin Garnett will be competing in basketball shoes

tailor-made by ANTA Sports, which will help enhance our brand reputation and creditability.

The Group is the sponsor of national top-tier leagues, CBA and CUBA as well as popular TV

program, “HOOPARK”. With Kevin Garnett joining Luis Scola and other CBA endorsers, the

Group has assembled the strongest portfolio of top-tier basketball sponsorship and

endorsement resources in China to support our sustainability in long run.

It is expected that the Chinese government’s further push on domestic consumption and

urbanisation will drive the expansion of population in lower tier cities. Our distribution

network is well established in second and third tier cities. The Group will continue to

cooperate with our regional distributors to explore new markets with high growth potential

for penetration and expansion. By the end of 2010, the Group plans to expand our retail

network to 7,400 ANTA stores, 600 Sports Lifestyle series stores and 350 Kid series stores. We

will provide more effective retail management and ordering training to further improve store

efficiency and retail performance so as to enhance the profitability and competitiveness of

our distributors and franchisees. Moreover, we will expand the Fila business in the PRC to

reach the high-end market through new product launches, network expansion and marketing

campaigns. By the end of 2010, around 200 FILA stores will be in operation in China’s first and

second tier cities. We believe that the Fila business in the PRC will become another growth

driver for the Group.

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Mr. Ding Shizhong, Chairman and CEO of ANTA Sports said, “Looking ahead, the long term

development of China’s sportswear industry is likely to benefit from the Chinese

government’s economic stimulus package and its sports industry invigoration plan. In view of

strong demand continues to drive the growth of the mass sportswear market, we will further

enhance our brand and product differentiation by leveraging our sponsorship resources,

initiating marketing campaigns and offering better quality and value-added products. With

our strong fundamentals, clear expansion strategy and effective execution capability, the

Group’s competitive advantages and leading position in the mass market will be further

strengthened and ultimately gain a bigger market share and continue to create higher value

and return for our shareholders.”

~ End ~

About ANTA Sports Products Limited

As one of the leading branded sportswear enterprises in China, ANTA Sports Products Limited

primarily designs, develops, manufactures and markets sportswear, including sports footwear,

apparel and accessories. The Group has established an extensive distribution network and

nation-wide retail outlets throughout China under the management of the distributors. The

Group places great emphasis on branding by integrating the resources from sponsorship of

sports leagues, placement of advertisements, online interaction with consumers and

endorsement of elite athletes with featured products in order to enhance brand and product

differentiation. For the past nine years, ANTA’s footwear has been enjoying a leading position

in the composite index on market shares in China.

For further information, please contact:

ANTA Sports Products Limited

Investor Relations Department

Tel: (852) 2116-1660

Fax: (852) 2116-1590

E-mail: [email protected] / [email protected]

Hill & Knowlton Asia Limited

Gary Li

Tel: (852) 2894 6239 / 9652 9002

E-mail: [email protected]

Carol Mak

Tel: (852) 2894 6283 / 6126 5261

E-mail: [email protected]

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