Adidas posted a better-than-expected second-quarter net profit and stepped up its full-year forecast, thanks to earnings from Euro 2012 and the Olympic Games. The group said net profit in 2012 was now projected to grow by 15 to 17 percent, from its previously forecast 12 to 17 percent.
“Management continues to forecast Adidas group sales to increase at a rate approaching 10 per cent on a currency-neutral basis in 2012,” it added in a written statement.
First Half 2012 Results
- Group sales increase 11 percent on a currency-neutral basis
- Net income attributable to shareholders up 30 percent
- Adidas Group to achieve record sales and earnings in 2012
- Adidas grows 14 percent currency-neutral year-to-date
- TaylorMade-Adidas Golf sales increase 29 percent currency-neutral
- Operating margin up 0.7 percentage points despite gross margin decline
- Net borrowings down 63 percent to €318 million at quarter-end
- Inventory growth slows to 8 percent currency-neutral.
Adidas Group currency-neutral sales grow 7 percent in the second quarter of 2012
In the second quarter of 2012, Group revenues grew 7 percent on a currency-neutral basis, driven by double-digit sales increases in Retail and Other Businesses. Currency-neutral revenues in Western Europe increased 5 percent, supported by sustained momentum at Adidas as well as double-digit growth at TaylorMade-Adidas Golf. In European Emerging Markets, currency-neutral sales grew 18 percent as a result of strong increases at both Adidas and Reebok.
Group sales in North America grew 10 percent on a currency-neutral basis, supported by strong double-digit increases at TaylorMade-Adidas Golf and double-digit growth at Adidas. In Greater China, Group sales were up 13 percent on a currency-neutral basis, driven by double-digit growth at Adidas as well as growth at Reebok. Currency-neutral revenues in Other Asian Markets increased 2 percent as double-digit growth at both Adidas and TaylorMade-Adidas Golf was partly offset by a strong sales decline at Reebok. In Latin America, currency-neutral sales decreased 2 percent as growth at Adidas was more than offset by a sales decrease at Reebok. From a brand perspective, second quarter sales at Adidas increased 11 percent currency-neutral. Sales in the TaylorMade-Adidas Golf segment grew 25 percent on a currency-neutral basis. Reebok sales declined 26 percent on a currency-neutral basis, largely as a result of negative impacts from Reebok India Company and the non-recurrence of prior-year licence sales. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 15 percent to €3.517 billion ($4.33 bn) in the second quarter of 2012 from €3.064 billion in 2011.
Second quarter gross margin decreases 90 basis points
The Group’s gross margin decreased 0.9 percentage points to 48.2 percent (2011: 49.2 percent) in the second quarter as product price increases, a more favorable product and regional sales mix as well as a larger share of higher-margin Retail sales only partly offset a significant increase in input costs. Group gross profit increased 13 percent to €1.697 billion ($2.08 bn) (2011: €1.506 billion). Other operating expenses as a percentage of sales decreased 1.0 percentage points to 42.4 percent compared to 43.3 percent the prior year, despite a 13 percent increase in the Group’s marketing expenditure. As a result of the lower other operating expenses as a percentage of sales, which more than offset the lower gross margin, the Group’s operating margin increased to 7.3 percent from 7.1 percent in 2011. Operating profit increased 17 percent to €256 million ($314.9 mm) compared to €219 million in 2011. The Group’s net income attributable to shareholders grew 18 percent to €165 million ($203.0 mm) (2011: €140 million). Diluted earnings per share for the second quarter increased 18 percent to €0.79 (2011: €0.67).
“We have delivered another winning financial performance in the first half of 2012,” commented Herbert Hainer, Adidas Group CEO. “Our clear victory in the summer of football, our increased operating margin and our excellent inventory management show we have the right formula to preserve and sustain our positive earnings and cash flow trajectory.“
Adidas Group currency-neutral sales increase 11 percent in the first half of 2012
In the first half of 2012, Group revenues increased 11 percent on a currency-neutral basis. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 16 percent to €7.341 billion ($9.14 bn) in the first half of 2012 from €6.337 billion in 2011.
First half Group sales increase driven by double-digit growth in Retail and Other Businesses
The Adidas Group’s sales increase in the first half of 2012 was driven by double-digit growth in Retail as well as in Other Businesses. Currency-neutral Wholesale revenues increased 6 percent during the period, driven by double-digit sales growth at Adidas. Currency-neutral Retail sales increased 16 percent versus the prior year as a result of double-digit sales growth at Adidas and Reebok. Comparable store sales grew 9 percent on a currency-neutral basis. Revenues in Other Businesses increased 27 percent currency-neutral, mainly due to double-digit sales growth at TaylorMade-Adidas Golf and Reebok-CCM Hockey. Rockport sales also grew. Currency translation effects had a positive impact on segmental sales in euro terms.
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€ in millions |
in % |
in % |
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Wholesale |
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4,292 |
10 |
6 |
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Retail |
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1,258 |
23 |
16 |
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Other Businesses |
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787 |
36 |
27 |
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Currency-neutral sales increase in all regions
In the first half of 2012, currency-neutral Adidas Group sales grew in all regions. Revenues in Western Europe increased 6 percent on a currency-neutral basis, primarily as a result of double-digit sales growth in the UK and Poland. In European Emerging Markets, Group sales increased 16 percent on a currency-neutral basis due to double-digit growth in most of the region’s markets. Sales for the Adidas Group in North America grew 11 percent on a currency-neutral basis due to increases in both the USA as well as Canada. Sales in Greater China increased 19 percent on a currency-neutral basis. Currency-neutral revenues in Other Asian Markets grew 13 percent, driven by strong double-digit increases in Japan and South Korea. In Latin America, sales grew 6 percent on a currency-neutral basis, with double-digit increases in most of the region’s major markets. Currency translation effects had a positive impact on sales in euro terms in most regions.
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€ in millions |
in % |
in % |
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Western Europe |
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1,961 |
7 |
6 |
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European Emerging Markets |
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751 |
22 |
16 |
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North America |
