>>> What to look at today - 27th of March 2015

Dow -0.23% S&P -0.24% Nasdaq -0.27% Russell -0.15% VIX @ 15.80
US Market close lower, with S&P Settling below its 100d MA but not on the low of the day, Yemen strike was one of the catalyst putting pressure on the mkt...USD & Oil were stronger...Energy sector didn't follow the Crude...technology sector, large cap names like Apple (AAPL 124.24, +0.86), IBM (IBM 160.59, +1.39), and Oracle (ORCL 42.99, +0.06) gained between 0.1% and 0.9% while Accenture (ACN 94.17, +5.69) and Red Hat (RHT 75.36, +6.91) posted respective gains of 6.8% and 10.1% after beating estimates...Semi were still weak for the second day in a row...volume were above average with 808mil shares...US After Hours VJET +12.9%, STRI +12%, OXM +10.1%, OGXI +5%, DGSE +4.3%, MARA +3.2%, NVEE +3.1%, NERV +3%, GEVO +0.4%...Despite the rumored differences between Japan PM Abe and BOJ Gov Kuroda on the fiscal side, both have taken every opportunity to cheerlead progress made on tackling deflation. The latest CPI data could make that more challenging going forward. Nationwide CPI slowed to an 11-month low of 2.0% y/y, but when adjusted for April's consumption tax, that rate of CPI screeched to a halt of zero - the first time that prices failed to show y/y growth in nearly two years. Undeterred, PM Abe reiterated there was progress being made on exiting deflation while also promising to reach the goal of primary balance surplus by FY2020. Leading inflation figures in the Tokyo area were in line with consensus, but retail sales disappointed and household spending also continued to fall...After a Yemen-conflict driven steep rally in oil markets yesterday, the retreat evident in US session continued during the Asian hours. May crude was down about a $1, as Goldman Sachs remarked that Saudi strikes on Yemen or any nuclear deal with Iran would only have negligible near-term impacts on oil (over)supply.

Nikkei -0.95% Hang Seng -0.14% Shanghai +0.25%

RUB $57.64 WTI $50.44 (-1.92%) EURCHF 1.05 CHF 0.9656

Eur$ 1.0873 S&P +0.15% EuroStoxx +0.08% Dax +0.24% SMI +0.17%

Macro :
- Weidmann ‘Doesn’t Buy’ Argument Greek Debt Insurmountable: Focus, against expanding emergency liquidity for Greece

Keep an eye on :
- AREVA FP : EDF Ready to Acquire Stake in Areva NP, Les Echos Reports
- BKIA SM : Bankia Offers EU900M of Past-Due Mortgages to Funds: Expansion
- IMA IM : IMA Says Sofima Selling Max 1.88m Shrs in Accelerated Offering
- KER FP : Gucci Said to Appoint Consumer Officer Amid Management Shakeup
- KGX GY : Superlift to Sell About 13.8m Kion Shrs, or 13.9% Stake
- MOR GY : Morphosys to Host Public Call on MOR202 Today at 1pm CET
- PMI IM : Popolare Milano Working With JPM on Merger Options: Reuters
- PTC PL : Oi Shareholders Said to Pass New Portugal Telecom Merger Terms
- RIO LN : Rio Tinto CEO Says Job Cuts Expected in Iron Ore and Alcan Units
- SHP LN : Shire said to be weighing "transformational" acquisition of BioMarin - Betaville
- TEF SM : Telefonica to Cut Jobs in Germany Quicker Than Planned: Focus
- TEF SM : Telefonica Hit by EU437 Million Fine in Peru: El Confidencial
- VOD LN : Vodafone Plans to Bundle Services in Spain, Economista Reports

>>> Brokers Upgrades & Downgrades - 27th of March 2015

>>> Up
*DELTA LLOYD RAISED TO BUY AT GOLDMAN
*EASYJET RAISED TO OUTPERFORM AT RBC CAPITAL
*FAROE PETROLEUM RAISED TO TOP PICK VS OUTPERFORM AT RBC
*GAZPROM RAISED TO BUY VS NEUTRAL AT GOLDMAN
*PORSCHE RAISED TO BUY VS NEUTRAL AT UBS

>>> Down
*AEGON CUT TO NEUTRAL VS BUY AT GOLDMAN
*ARCELORMITTAL CUT TO SELL VS NEUTRAL AT CITI
*BOUYGUES CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
*FINMECCANICA CUT TO NEUTRAL VS BUY AT ODDO
*ITALCEMENTI CUT TO HOLD VS BUY AT BERENBERG
*TELEFONICA DEUTSCHLAND CUT TO SELL VS HOLD AT BANKHAUS LAMPE
*ZURICH INSURANCE CUT TO NEUTRAL VS BUY AT GOLDMAN

>>> PT Change


>>> Initiation
*HUNTING RATED NEW NEUTRAL AT JPMORGAN, PT 515P
*REPSOL RATED NEW UNDERPERFORM AT JEFFERIES

>>> Call
>> Stock
*E.ON RUSSIA, RUSHYDRO EXIT GOLDMAN CEEMEA FOCUS LIST

(Betaville) Shire said to be weighing "transformational" acquisition of BioMarin


Shire said to be weighing "transformational" acquisition of BioMarin Pharmaceutical

Perhaps I spoke (or wrote) to soon about Shire's next "transformational" deal taking a while to happen - see the link: http://betaville123.blogspot.co.uk/2015/03/rare-alert-shires-next-deal-likely-to.html.

Top sources (and I mean top) tell me FTSE 100-listed Shire has set it sights on BioMarin Pharmaceutical, a US-listed company that specialises in making therapies for people with extremely rare genetic diseases.

I have been told by well informed types that Shire, led by Flemming Ornskov, recently approached BioMarin about a deal although it's not clear whether things have progressed further.

Bankers from Morgan Stanley and Lazard are advising Shire on this potential transaction, with the former said to be leading the financing for the deal, said my sources.

An acquisition of BioMarin would be "transformational" for Shire as the company currently has a market capitalisation of about $18 billion. And Shire is likely to have pay a significant premium to BioMarin's current price given the current M&A frenzy in the pharmaceutical sector.

BioMarin is thought to have already drafted in its own financial advisers, thought to be a boutique firm such as Centreview Partners (who seem to be advising on everything nowadays) or Evercore, to defend the company from a larger predator, according to my sources.

This is because Shire may not be the only suitor interested in BioMarin. Indeed, a couple of years ago Swiss giant Roche, which last year bought InterMune for $7.4 billion, took a good look at BioMarin, according to past reports.

I'm told by sources that the Swiss pharmaceutical giant may revisit its interest in California-based BioMarin on hearing Shire is interested in the business.

Shire and BioMarin both declined to comment on the "speculation".

Although this story has been tested through some formal journalistic channels, this information is RARE (well, more like medium RARE). For readers that don't recall what RARE is, here is the definition:

Market gossip that hasn't been tested through formal journalistic channels (public relations executives, bankers etc). The rumour might be total codswallop but then again there may be something in it, so it's worth airing on Betaville.

>>> Asian Update

Asian Mid-session Update: Japan ex-sales tax CPI flatlines; China industrial profits fall again

***Economic Data***
- (CN) CHINA JAN-FEB INDUSTRIAL PROFITS Y/Y: -4.2% V -8.0% PRIOR
- (JP) JAPAN FEB NATIONAL CPI Y/Y: 2.2% V 2.3%E; CPI EX FRESH FOOD Y/Y: 2.0% (11-month low) V 2.1%E
- (JP) JAPAN MAR TOKYO CPI Y/Y: 2.3% V 2.3%E; CPI EX FRESH FOOD Y/Y: 2.2% V 2.2%E
- (JP) JAPAN FEB RETAIL SALES M/M: 0.7% V 0.9%E; RETAIL TRADE Y/Y: -1.8% (2nd consecutive decline) V -1.5%E
- (JP) JAPAN FEB OVERALL HOUSEHOLD SPENDING Y/Y: -2.9% V -3.2%E; 11TH MONTH OF DECLINE
- (JP) JAPAN FEB JOBLESS RATE: 3.5% V 3.5%E; JOB TO APPLICANT RATIO: 1.15 V 1.15E

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX +0.5%, Kospi flat, Shanghai Composite -0.3%, Hang Seng -0.2%, Jun S&P500 +0.2% at 2,055

***Commodities/Fixed Income***
- Apr gold -0.2% at $1,201/oz, May crude oil -1.4% at $50.30/brl, May copper -0.8% at $2.78/lb
- GLD: SPDR Gold Trust ETF daily holdings fall 6.0 tonnes to 737.2 tonnes; Lowest since Jan 17th
- SLV: iShares Silver Trust ETF daily holdings fall to 10,074 tonnes from 10,118 tonnes prior; lowest since Feb 17th
- (JP) BOJ offers to buy ¥300B in 1-3yr JGBs, ¥350B in 3-5yr JGBs, ¥240B in 10-25yr JGBs and ¥140B in JGBs with maturity over 25-yr as well as ¥750B in T-Bills
- (US) Weekly Fed Balance Sheet Total Assets for week ending Mar 25th: $4.48T v $4.50T prior; M1 y/y change: 9.3% v 9.4% w/w; M2 y/y change: 6.1% v 6.1% w/w

***Market Focal Points/FX***
- Despite the rumored differences between Japan PM Abe and BOJ Gov Kuroda on the fiscal side, both have taken every opportunity to cheerlead progress made on tackling deflation. The latest CPI data could make that more challenging going forward. Nationwide CPI slowed to an 11-month low of 2.0% y/y, but when adjusted for April's consumption tax, that rate of CPI screeched to a halt of zero - the first time that prices failed to show y/y growth in nearly two years. Undeterred, PM Abe reiterated there was progress being made on exiting deflation while also promising to reach the goal of primary balance surplus by FY2020. Leading inflation figures in the Tokyo area were in line with consensus, but retail sales disappointed and household spending also continued to fall. USD/JPY still traded without much direction within a 40pip range above ¥119.

- AUD/USD was the biggest mover among the dollar majors in an otherwise quiet session ahead of Friday's final Q4 US GDP report. The aussie fell about 40pips below the $0.78 in the aftermath of another decline in China industrial profits. The dataset reflected Jan-Feb period, stripping away seasonality around the holiday period. Economist with China stats bureau attributed the decline to lower prices, rising costs and significant profit declines in the oil and coal industries - some of Australia's key exports to China. Elsewhere, property developers saw some modest strength on a statement from Chinese Ministry of Land and Resources, calling on certain cities to halt new land supply and control the pace of construction.

- After a Yemen-conflict driven steep rally in oil markets yesterday, the retreat evident in US session continued during the Asian hours. May crude was down about a $1, as Goldman Sachs remarked that Saudi strikes on Yemen or any nuclear deal with Iran would only have negligible near-term impacts on oil (over)supply.

***Equities***
US equities / ADRs:
- OXM: Reports Q4 $1.08 v $1.04e, R$274.5M v $274Me; Raises quarterly dividend 19% to $0.25/shr; Announces sale of Ben Sherman business, terms not disclosed; +11.8% afterhours
- YHOO: Announces additional $2B share repurchase program (4.8% of market cap) - filing; +2.2% afterhours
- PBR: Chairman Guido Mantega to resign; Names Luciano Galvao Coutinho as new chairman - financial press; -0.4% afterhours
- RH: Reports Q4 $1.02 v $1.01e, R$582.7M v $582Me; -4.4% afterhours
- GME: Reports Q4 $3.15 v $2.18e, R$3.48B v $3.60Be; -5.8% afterhours

Notable movers by sector:
- Consumer Discretionary: Toray Industries 3402.JP +2.3% (press speculation on FY14/15 results); Panasonic Corporation 6752.JP +4.2% (M&A plan); Air China Ltd 753.HK -1.3% (FY14 results); Haier Electronics Group 1169.HK -2.7% (FY14 results)
- Financials: Industrial and Commercial Bank of China Ltd 601398.CN -0.9% (FY14 results); Bank of Communications 601328.CN -0.8% (FY14 results); China Merchants Properties 000024.CN +4.1%, Poly Real Estate 600048.CN +1.9%, China Vanke 000002.CN +1.2% (China issues statement to limit housing construction and land supply)
- Materials: Mitsui Mining & Smelting 5706.JP +4.0% (FY14/15 guidance); Whitehaven Coal WHC.AU +1.7% (lending facility); BBMG Corp 2009.HK -2.1% (FY14 results)
- Energy: Shunfeng Photovoltaic International 1165.HK +3.8% (FY14 results)
- Technology: Mesoblast Ltd MSB.AU +2.5% (announces key patent in Japan)
- Healthcare: Shanghai Pharmaceuticals Holding 2607.HK -1.0% (FY14 results)

(BFW) *BANCA POPOLARE SAID WORKING WITH JPM ON MERGER OPTIONS: REUTERS


BFW 03/26 21:11 *BANCA POPOLARE SAID WORKING WITH JPM ON MERGER OPTIONS: REUTERS
Popolare Milano Working With JPM on Merger Options: Reuters
2015-03-26 21:38:42.575 GMT


By Robin Stringer
(Bloomberg) -- Banco Popolare, Banca Popolare dell’Emilia
Romagna, Banca Carige most likely candidates for merger, Reuters
reports, citing two people familiar.
* Popolare di Milano not immediately available for comment to
Reuters
* All other banks declined to comment to Reuters
Link to Story: http://reut.rs/1NeHqvL

Link to Company News:{JPM US <Equity> CN <GO>}
Link to Company News:{PMI IM <Equity> CN <GO>}
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Link to Company News:{CRG IM <Equity> CN <GO>}

For Related News and Information:
First Word scrolling panel: {FIRST<GO>}
First Word newswire: {NH BFW<GO>}

To contact the editor responsible for this story:
Robin Stringer at +1-212-617-2526 or
rstringer7@bloomberg.net

>>> US After Hours Summary: VJET +12.9%, STRI +12%, OXM +10.1%, GME -5

After Hours Summary: VJET +12.9%, STRI +12%, OXM +10.1%, GME -5.3%, RH -5.1%, REED -3.6%

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings: VJET +12.9%, STRI +12%, OXM +10.1%, OGXI +5%, DGSE +4.3%, MARA +3.2%, NVEE +3.1%, NERV +3%, GEVO +0.4%

Companies trading higher in after hours in reaction to news: DF +2.4% (entered into a new $450 mln senior secured revolving credit facility), YHOO +2.0% (disclosed its Board approved an additional $2 bln share repurchase program), CCL +1.1% (entered into strategic partnerships with Fincantieri S.p.A and Meyer Werft to add nine cruise ships to its fleet from 2019 to 2022), SRC +0.5% (appointed Phil Joseph as Chief Financial Officer; current CFO, Michael A. Bender, to become Chief Accounting Officer)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings: GME -5.3%, RH -5.1%, REED -3.6%, UPLD -0.3%, NEWT -0.1%,

Companies trading lower in after hours in reaction to news: TPVG -5.0% (co estimates that the net asset value of its common stock on March 26, 2015 is between $14.45 per share and $14.55 per share), JMI -4.3% (declared a monthly dividend of $0.09/share vs. prior dividend of $0.12/share), CWEI -2.3% (announced that Mel G. Riggs has succeeded Clayton W. Williams, Jr. as President, effective immediately), OFC -0.3% (filed for ~3.86 mln share offering of common shares of beneficial interest by selling shareholders) 

>>> US Closing Market : S&P 500 Settles Below 100-Day Moving Av


Closing Market Summary: S&P 500 Settles Below 100-Day Moving Average

The major averages ended Thursday with modest losses after climbing off their opening lows. The S&P 500 shed 0.2% and settled below its 100-day moving average (2,057) while the Nasdaq Composite (-0.3%) underperformed.

Equity indices could not avoid registering their fourth consecutive decline, but they were able to avoid settling on their lows. Still, the benchmark index will enter the Friday session down 2.5% for the week.

The market began the day under pressure after overnight reports revealed that coalition forces from ten countries, led by Saudi Arabia, carried out air strikes against rebel forces in Yemen. This followed yesterday's reports indicating Yemen's President Hadi fled his country by sea.

The news gave a boost to the dollar, but the yen also rallied against its peers, which signaled caution among participants in the foreign exchange market. The Dollar Index (97.36, +0.38) gained 0.4% as the greenback spiked 0.8% against the euro, sending the single currency from a morning high near 1.1050 to 1.0880. For its part, the dollar/yen pair slipped 0.3% to 119.20 after testing the 118.50 level in the morning.

In addition, the latest developments in the Middle East led to concerns about potential disruptions to the energy market. As a result, crude oil surged 4.6% to $51.43/bbl. However, the energy sector (-0.2%) could not make it out of the red.

Meanwhile, the remaining cyclical sectors ended in mixed fashion. Consumer discretionary (-0.6%) and industrials (-0.3%) underperformed while materials (+0.2%) and technology (+0.1%) registered slim gains.

In the technology sector, large cap names like Apple (AAPL 124.24, +0.86), IBM (IBM 160.59, +1.39), and Oracle (ORCL 42.99, +0.06) gained between 0.1% and 0.9% while Accenture (ACN 94.17, +5.69) and Red Hat (RHT 75.36, +6.91) posted respective gains of 6.8% and 10.1% after beating estimates.

The tech sector managed to turn positive despite notable weakness among chipmakers that sent the PHLX Semiconductor Index lower by 1.4%. The industry group struggled after SanDisk (SNDK 66.20, -14.97) lowered its Q1 revenue guidance below analyst estimates.

Elsewhere, another high-beta group—biotechnology—pressured the market in the early going, but was able to return near its flat line by the end of the session. The
iShares Nasdaq Biotechnology ETF (IBB 340.81, -0.49) will enter tomorrow's affair down 6.8% for the week.

Treasuries spent the day in a steady retreat from their early morning highs. The benchmark 10-yr yield spiked eight basis points to 2.01%.

Today's participation was above average with more than 808 million shares changing hands at the NYSE floor.

Economic data was limited to weekly initial claims, which declined to 282,000 from last week's unrevised 291,000 while the  consensus expected a reading of 290,000.

After three weeks above 300,000, the 4-week moving average for initial claims has dropped below that threshold, suggesting the claims level is reestablishing a trend below 300,000.

Tomorrow, the third estimate of Q4 GDP will be released at 8:30 ET (consensus 2.4%) while the final reading of the Michigan Sentiment Index for March (consensus 92.0) will cross the wires at 10:00 ET.
  • Nasdaq Composite +2.7% YTD 
  • Russell 2000 +2.3% YTD 
  • S&P 500 -0.1% YTD 
  • Dow Jones Industrial Average -0.8% YTD

Special Situations: Fiat Chrysler Automobiles NV (BIT: FCA/NTSE: FCAU), hol


Special Situations: Fiat Chrysler Automobiles NV (BIT: FCA/NTSE: FCAU)

 

FCA was issued in the beginning of FY14 following the completion of the merger between Fiat and Chrysler, as the parent company of the group. In October shares commenced trading on the NYSE (NYSE: FCAU) and on the MTA (BIT: FCA).

 

Investments strategy & catalysts

We consider FCA as one of the most interesting short term and long term stories within the Auto manufactures universe, given a number of potential catalysts we identify and would recommend investors to follow: (1) Implementation of the 5 year business plan that was announced following the merger with Chrysler; (2) Ferrari IPO and spin-off in Q315; (3) further euro/US dollar weakness.

 

FY14-FY18 business plan – Following the merger with Chrysler, FCA management laid out a detailed 5 year Business Plan with clear strategic and financial targets that should deliver significant earnings growth over FY14-FY18. Management targets a 50% increase in volume units and a significant improvement in margins by FY18, mainly through brand globalization and cost synergies. These goals clearly look aggressive and the street is not expecting FCA to fully meet them, indicating that a better than expected implement will lead to a material upside to the stock.

 

Ferrari IPO - the expected IPO and spin-off of Ferrari will be in the spotlight of investors as it should unlock hidden value by moving the focus to the sum of FCA’s other brands and geographical segments. We assign to Ferrari a valuation of €7 billion which reflects 28% of total equity value, based on 2.5 EV/Sales multiple which we believe is appropriate given Ferrari’s margins and growth prospect vs. the luxury universe. However, Ferrari IPO could be a positive catalyst if investors are prepared to assign Ferrari a full luxury multiple value.

 

Euro/US dollar weakness – FCA generates more than half of its revenues and earnings in US Dollar while its functional currency is Euro. Further euro/US dollar weakness should have a positive impact on earnings and balance sheet, and on FCA stock.

 

Valuation

We value FCA at €16.5 per share using a sum of the parts analysis based on 2015E EV/Sales multiple through the company’s seven reportable segments. Our price target includes pension and OPEB obligations, and full conversion of convertible bonds resulting in approx. 10% upside from current levels. We see additional 10%-15% upside if we assign to Ferrari a higher valuation of €9-€10 billion.

 

Key risks

Main risks include: (1) unexpected drop in global vehicle demand; (2) poor execution of FCA business plan along with significant capex investments that would result in high debt balance; (3) product recalls and warranty obligations which may result in direct costs; (4) strengthening of the euro/US dollar exchange rate.

 

 

 

For full report and additional data please refer to our new format

 

 

 

 

Regards,

 

Dafna Yagur | Head of Research (Israel)

Makor Capital

Direct

+972 3 5453747

Mobile

+972 54 6655357

Fax

+972 3 7162680

 

 

 

 

 

 

FT : Regulators crack down on auto loan abuse


--> could impact sales on next few months...

Auto dealers and lenders in the US and Canada have been hit with 252 enforcement actions over the past year for deceptive advertising, loan application fraud and misleading add-on fees in a broad crackdown by authorities, including the US Federal Trade Commission.
The charges, announced on Thursday, are part of a wider crackdown on auto sales and lending practices that have also ensnared big banks and the world’s largest auto manufacturers. One focus is on the securitisation of auto loans, which is smaller than the subprime mortgage market that sparked the 2008 financial crisis but is vulnerable to similar abuses.

The financing arms of GM, Toyota and Honda, in addition to JPMorgan Chase, Ally Financial and Santander Consumer USA have disclosed probes by the Department of Justice, the Securities and Exchange Commission and other authorities for alleged auto loan abuses.
In the crackdown, dubbed “Operation Ruse Control”, civil and criminal charges have been filed as part of the 187 enforcement actions in the US and 65 similar cases in Canada.
The FTC’s actions, related to the practice of add-ons for products and services such as extended warranties or payment programmes, are the first since receiving expanded authority over auto dealers under the Dodd-Frank financial reform legislation of 2010.
In the probe, California-based National Payment Network agreed to refund more than $1.5m to consumers and waive another $949,000 in fees for pitching a payment programme that it claimed would save customers money. The FTC says the company had failed to disclose that the charges for that programme often cancelled out any savings.
The National Payment Network did not respond to a request for comment.

“For most people, buying a car is one of the largest purchases they’ll make,” said Jessica Rich, director of the FTC’s consumer protection bureau. “Car ads must be truthful, loan terms must be clear, and dealer practices must be honest.”
Auto dealers in Florida, Alabama and California settled charges for deceptive ads, which touted the benefits of sales, lease or financing options that were actually cancelled out by fine-print disclaimers, which sometimes did not disclose terms such as downpayments.
“Growing fraud and other deceptive practices in auto sales and financing are important issues affecting consumers when they are buying a vehicle,” said Joyce White Vance, US attorney for the northern district of Alabama.
Auto dealers would face more scrutiny under a proposal by the US Consumer Financial Protection Bureau, which wants to supervise large nonbank auto lenders that make, acquire or refinance at least 10,000 loans or leases a year.
The agency estimates that about 38 auto lenders, which originate 90 per cent of nonbank auto loans and leases, would fall under the proposal. The auto finance arms of the largest car manufacturers, like Ford Motor, would also fall under CFPB oversight
Auto dealers are opposed to the plan. However officials say it would help ensure that nonbank auto lenders do not use deceptive tactics to market loans or leases and that consumers understand the terms of such financing.

WSJ : Adidas Targets Turnaround With New Strategy

Adidas Targets Turnaround With New Strategy
Sporting goods company surprised investors with two profit warnings in a year

HERZOGENAURACH, Germany—Adidas AG said Thursday that it aims to lift profit by 15% a year through 2020 as it battles to assuage investors’ concerns after abandoning earlier financial targets.

The world’s No. 2 sporting goods company behind Nike Inc. said it would speed production while increasing its presence in major cities and investing in its core brands

It expects to outperform the sporting goods industry with group sales growing at a “high-single-digit rate” for each of the next five years, it said.

“We will accelerate our growth story and deliver superior returns to our shareholders,” Chief Executive Herbert Hainer said.

Adidas has suffered a number of setbacks lately, surprising investors with two major profit warnings in the course of a year.

The political turmoil in Russia—where Adidas has a strong presence—and the resulting impact on the Russian ruble knocked the shine of the company’s earnings. Sales at its once-booming TaylorMade-Adidas Golf division plummeted.
At the same time, Mr. Hainer failed to achieve his aim to rebuild the company’s position in North America. According to Sterne Agee and SportScanInfo, its U.S. retail market share fell to 7% in 2014 from roughly 18% in 2006.

The company’s previous five-year strategic plan announced in 2010 anticipated sales growth of more than 45% to €17 billion ($18.65 billion), but Adidas said last year that it was unable to meet those targets.

For more than a decade, the company looked invincible. Mr. Hainer became known as a strategic and business-minded leader, reporting year-on-year sales growth of up to 20%. The company’s share price more than quadrupled between 2002 and 2014. In March last year, Mr. Hainer’s contract was extended until 2017.

Then his winning streak ended abruptly.

He issued two major profit warnings and slashed the company’s financial goals for 2014 and 2015. The Adidas stock price tumbled 40% last year.

As a result, some Adidas investors have questioned Mr. Hainer’s leadership and recently pushed for his departure. Adidas said last month that it had started looking for his successor.

“I know that we disappointed,” Mr. Hainer said Thursday, adding that the company aims to “come back even stronger than before.”

In the new five-year strategic business plan, named “Creating the New,” Adidas said it would reduce its production lead times. It also plans to expand its e-commerce business to above €2 billion by 2020.

It plans to “over-proportionally” invest in talent and marketing in metropolitan areas around the world. Its key focus will be on six cities: Los Angeles, New York, London, Paris, Shanghai and Tokyo.

“If we win running in New York and Los Angeles, we will win running in the U.S.,” Roland Auschel, Head of Adidas’s global sales said.

Earlier this month, the company reported 2014 net profit of €490 million, down from €787 million the year before on sales worth €14.5 billion.