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Adidas expects 2011 to be record earnings year

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Sports specialist Adidas has today predicted a record year for earnings in 2011 as group revenues grew 13 per cent year-on-year, on a currency-neutral basis, in its third quarter.

Sales in the wholesale and retail segments of the group increased by ten per cent and 21 per cent respectively over the period, while net income reached a new record level of €652 million (£484.4 million).

Increases in input costs have led to a gross margin decrease of 0.3 percentage points to stand at 47.1 per cent.

Although gross margin was flat at 48.2 per cent in the first nine months, group revenues grew eight per cent to €3.744 billion in the third quarter of 2011 from €3.468 billion in 2010.

Adidas and Reebok currency-neutral sales rose 14 per cent and nine per cent respectively, while group sales grew in all geographies in Q3, with sales in North America and Greater China increasing 13 per cent on a currency-neutral basis.

“Our brands and products are resonating with consumers around the world like never before,” commented Herbert Hainer, Adidas Group CEO.

“Our record third quarter results were driven by growth in all key geographies, brands and channels. We will finish 2011 clearly exceeding our initial expectations after already surpassing our 2008 record earnings mark after the first nine months.

“Therefore I can already confirm today: 2011 will be another record year for the Adidas group.”

The business’s operating margin remained stable at 11.8 per cent, as operating profit rose seven per cent to €441 million compared to €411 million in 2010.

Group operating profit increased 12 per cent over the period to €973 million versus €865 million in 2010.

In good news for shareholders, basic and diluted earnings per share amounted to €3.12 compared to €2.68 in 2010, representing an increase of 16 per cent due to operating leverage.

Earnings per share are forecasted to increase faster than sales, at a rate between ten per cent and 15 per cent.

Management has increased the full year 2011 Adidas Group sales and earnings guidance, forecasting group sales to increase at a rate approaching 12 per cent on a currency-neutral basis in 2011, two per cent higher than the previous forecast.

Hainer noted that the company’s involvement as sponsor of a number of high-profile sporting events, including the London 2012 Olympics, will improve its profile and aid profits.

“The traction we are gaining as we implement our strategies is especially pleasing as the external environment is not without its challenges, be it the economic uncertainty, stalling consumer confidence or struggling regional competitors.

“Although we continue to face pressures from higher input costs as well as volatility on currency markets, we are well prepared for continued top and bottom-line growth.”

A detailed 2012 outlook will be given with the presentation of the Group’s 2011 full year results on March 7, 2012.

Published on Thursday 03 November by Editorial Assistant

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