Management Assessment of Performance, Risks and Opportunities, and Outlook

Assessment of performance versus targets

We communicate our financial targets on an annual basis. We also provide updates throughout the year as appropriate. 2024 was a successful year for adidas and we performed significantly better than initially expected, while the overall business environment was still characterized by geopolitical tensions and macroeconomic challenges in several regions. Our strong top-line development reflected an acceleration of brand momentum that broadened across markets, categories, and channels. Less discounting and a higher share of full-price sales benefited our profitability levels, partially offset by continued investments into marketing and sales. We were able to upgrade our guidance three times in the course of the year, reflecting the faster-than-expected progress both financially and operationally. Ultimately, our 2024 financial results exceeded our latest guidance from October on both the top and bottom line. SEE INCOME STATEMENT

In 2024, revenues increased 12% on a currency-neutral basis. This was significantly better than our initial expectation (January 2024: increase at a mid-single-digit rate) and also ahead of our latest guidance (October 2024: increase at a rate of around 10%). Excluding Yeezy sales in both years, currency-neutral revenues of the underlying adidas business increased 13% in 2024. The sale of the remaining Yeezy inventory, which we successfully concluded during the fourth quarter of 2024, generated revenues of around € 650 million in the year (2023: around € 750 million).

Our currency-neutral top-line development reflected strong double-digit growth in Europe, Emerging Markets and Latin America. Japan/South Korea and Greater China also increased at a double-digit rate. North America recorded a low-single-digit decline as we continued our conservative sell-in approach to the wholesale channel in response to still elevated inventory levels in this market, particularly in the first half of the year, as well as due to lower Yeezy sales. With those anticipated headwinds moderating sequentially, North America accelerated to double-digit revenue growth in the fourth quarter of 2024.

Our operating profit reached € 1,337 million in 2024, ahead of our latest guidance of around € 1.2 billion provided in October and significantly better than our expectation at the beginning of the year (January 2024: around € 500 million). The sale of the remaining Yeezy inventory in the course of 2024 contributed around € 200 million to operating profit (2023: around € 300 million). SEE INCOME STATEMENT

Average operating working capital as a percentage of sales ended the year 2024 at 19.7%, better than the latest guidance of between 21% and 22% in July and representing a significant year-over-year decrease of 5.9 percentage points. Capital expenditure increased 7% to € 540 million in 2024, slightly below our guidance of a level of around € 600 million. SEE STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CASH FLOWS

Beyond our financial performance, we also actively monitor other KPIs. These other KPIs include, among others, the share of women in management positions as well as the carbon intensity per product. With 41% female representation in management positions in 2024, we remain committed to achieving a level of 50% by 2033. CO₂e emissions per product decreased by 2.5% in 2024, in line with our ambition to reduce carbon intensity by 9% between 2022 and 2025. SEE SUSTAINABILITY STATEMENT SEE ESRS S1 SEE ESRS E1

Assessment of overall risks and opportunities

Our Risk Management team aggregates all risks and opportunities identified through the half-yearly risk and opportunity assessment process to determine the company’s risk and opportunity portfolio (i.e., the company’s aggregated risk position). Results from this process are analyzed and reported to the Executive Board accordingly. The Executive Board discusses and assesses risks and opportunities on a regular basis and takes into account the relationship between the risk and opportunity portfolio (i.e., the company’s aggregated risk position) and risk appetite as well as risk capacity in its decision-making. Compared to the prior year, our assessment of certain risks and opportunities has changed in terms of likelihood of occurrence and/or potential financial impact. Our risk and opportunity aggregation using a Monte Carlo simulation determined that the company’s aggregated risk position does not exceed the company’s risk capacity threshold with a likelihood of at least 99%. Therefore, we do not foresee any material jeopardy to the viability of the company as a going concern. SEE RISK AND OPPORTUNITY REPORT

Assessment of financial outlook

The global sporting goods industry is expected to continue its positive development in 2025 despite several challenges and risks. Still elevated inflation and interest rates are likely to limit discretionary spending power. At the same time, geopolitical conflicts and political developments could lead to higher tariffs or otherwise disrupt global trade.

Despite these challenges, we aim to gain further market share, leveraging our significantly better, broader, and deeper product range with an increased focus on local consumer preferences, in combination with much improved retailer relationships and impactful marketing initiatives. As a result, we expect the company’s currency-neutral sales to increase at a high-single-digit rate in 2025, reflecting continued double-digit growth for the adidas brand. The strong top-line growth, in combination with operating overhead leverage, is projected to lead to further significant bottom-line improvements in 2025. We expect operating profit to increase to a level of between € 1.7 billion and € 1.8 billion in 2025. SEE OUTLOOK

We believe our outlook for 2025 realistically describes the underlying development of the company. However, the outlook for 2025 as outlined in this report is subject to change. Ongoing uncertainties regarding macroeconomic challenges, the impact from geopolitical conflicts, the development of consumer sentiment, and potential supply-chain disruptions represent risks to the achievement of our stated financial goals and aspirations. No other material event between the end of 2024 and the publication of this report has altered our view. SEE OUTLOOK