Adidas net profit up +20% in Q2

Worldwide
Published:  13 August, 2018

The international sportwear Group has reported a +20% increase in net profit in the second quarter of 2018, to €418 million, beating analysts’ expectations of €387 million.

Total sales in the quarter amounted to €5.3 billion, up +10% after currency effects, while analysts had estimated an 8% rise, boosted by strong demand in the key North America and Greater China markets. Shares in the Company are reported to have increased by more than +10% upon the announcement of results to a four-month high.

Reportedly, the results are attributes to the strategy pursued by CEO Kasper Rorsted since taking over in 2016, which focussed on improving profitability as in North America and China, as well as expanding and pushing sales via e-commerce platforms. Rorsted says he will now also focus on Western Europe by launching new products.

In the first half of 2018, revenues increased +10% on a currency neutral basis. In euro terms, revenues grew 3% to €10.809 billion. From a brand perspective, currency-neutral revenues for brand Adidas grew +12%, driven by double-digit sales increases in the football, running and training categories as well as in Sport Inspired. Currency neutral, Reebok sales declined- 3% versus the prior year. The gross margin improved 1.8 percentage points to 51.7%, reflecting the “positive effects from an improved pricing mix, which more than offset negative currency effects as well as a less favourable channel mix and higher input costs”.

In 2018, the Company continues to expect sales to increase at a rate of around 10% on a currency-neutral basis, driven by double-digit growth in North America and Asia-Pacific. Adidas expects the global sporting goods industry to grow at a mid-single-digit rate in 2018, with consumer spending on sporting goods in the developing economies forecast to grow faster than in the more developed markets.