Adidas AG increased its full-year forecast for a fourth time this year after receiving boosts from the Euro 2016 tournament and a payment to bring an early close to a sponsorship deal with England’s Chelsea soccer club.
Group revenues increased 21 percent on a currency-neutral basis and 13 percent in euro terms to €4.4 billion. As a result of a higher gross margin as well as operating expense leverage, group operating profit increased 77 percent to €414 million in the second quarter of 2016 (2015: €234 million). The positive impact from the early termination of the Chelsea F.C. contract, which lifted the Q2 other operating income by a mid- to high-double-digit million euro amount, also contributed to the improvement.
Consequently, net income from continuing operations increased 99 percent to €291 million (2015: €146 million). Basic earnings per share from continuing and discontinued operations amounted to €1.45 in the quarter, reflecting a 100 percent increase over the prior year level (2015: €0.73).
In light of the strong brand momentum, the Group has increased its 2016 financial outlook. Management now projects currency-neutral sales to grow at a rate in the high teens in 2016 (previously: increase by around 15 percent). As a result of the stronger-than-expected top-line development and further operating leverage, net income from continuing operations is now forecasted to increase at a rate between 35 percent and 39 percent to a level between €975 million and €1.0 billion in 2016 (previously: increase by around 25 percent). The Group’s operating margin is now projected to increase to a level of up to 7.5 percent in 2016 (previously: increase to a level of around 7.0 percent).
“We are extremely pleased how well our brands are connecting with the consumer and how fast our new strategy has started to gain traction,” said Herbert Hainer, CEO of the Adidas Group.
“Double-digit growth rates across all key regions and all major categories is proof positive of the initial success of Creating the New. We have every confidence that the strong momentum our brands are enjoying around the globe will continue in the second half of 2016 and beyond,” added Hainer.
More details on the improved outlook will be given with the publication of the quarterly results on August 4.
