Adidas Q3 net income grows 35 percent, confirms positive outlook

During the third quarter, Adidas Group’s currency-neutral revenues rose 12 percent. In euro terms, sales for the company were up 9 percent to 5.677 billion euros (6.59 billion dollars). The company’s operating profit increased 35 percent during the third quarter to 795 million euros (922 million dollars), resulting in an operating margin increase of 2.7 percentage points to 14 percent. Net income from continuing operations was up 35 percent to 549 million euros (637 million dollars) and basic earnings per share from continuing operations grew 33 percent to 2.70 euros (3.13 dollars).

“The company’s strategic growth areas – North America, Greater China and eCommerce – were again the main drivers of our strong top-line performance during the third quarter. We delivered another set of strong results and are fully on track to achieve our ambitious 2017 financial targets,” said Adidas CEO Kasper Rorsted in a statement.

Adidas, Reebok revenues rise across geographies

The revenue growth, the company said, was driven by 13 percent sales increase at brand Adidas, led by double-digit increases in the running and outdoor categories as well as at Adidas Originals and Adidas Neo. From a channel perspective, the company witnessed revenue growth in all distribution channels, with particularly strong support from ecommerce, where revenues grew 39 percent.

On a currency-neutral basis, Adidas said, the combined sales of the Adidas and Reebok brands grew in all regions except Russia/CIS. Sales in Greater China were up 28 percent and North America, 23 percent, driven by the Adidas brand, which reported sales growth of 29 percent and 31 percent, respectively. Currency-neutral revenues in Western Europe rose 7 percent and Latin America, 8 percent, while currency-neutral revenues in MEAA and Japan increased 6 percent and 3 percent, respectively.

The company added that sales in Russia/CIS declined 17 percent, reflecting the ongoing challenging consumer sentiment as well as additional store closures during the third quarter. Revenues in other businesses, comprising Adidas Golf, Runtastic and other centrally managed businesses, were up 14 percent on a currency-neutral basis, driven by double-digit increases at Adidas Golf.

Operating margin increases 2.7 percentage points to 14 percent, while gross margin increased 2.4 percentage points to 50.4 percent. Losses from discontinued operations, net of tax, mainly related to the divestiture of the TaylorMade and CCM Hockey businesses, amounted to 22 million euros (25 million dollars), as a result, net income attributable to shareholders increased 36 percent to 526 million euros (610 million dollars), resulting in basic earnings per share from continuing and discontinued operations of 2.59 euros (3.01 dollars), up 34 percent.

Adidas confirms positive outlook for FY 2017

Against the background of the strong financial performance in the first nine months of 2017, Adidas has confirmed its outlook for the financial year 2017, which the company had previously increased with the announcement of its preliminary second quarter results on July 27, 2017. The company continues to expect sales to increase at a rate between 17 percent and 19 percent on a currency-neutral basis in 2017. Net income from continuing operations is projected to increase at a rate between 26 percent and 28 percent to a level between € 1.360 billion euros (1.58 billion dollars) and 1.390 billion euros (1.61 billion dollars).

The company expects improvement will be driven by a gross margin increase of up to 0.8 percentage points to a level of up to 50 percent. These positive effects, Adidas said, will be partly offset by the significant decline in other operating income, mainly reflecting the non-recurrence of the one-time gain related to the early termination of the Chelsea FC sponsorship that was included in the prior year. As a result, operating profit is expected to increase between 24 percent and 26 percent, reflecting an operating margin improvement of up to 0.6 percentage points to a level of up to 9.2 percent. Due to an increase in the average number of shares following conversions of convertible bonds into adidas AG shares, basic earnings per share from continuing operations are expected to increase at a rate between 25 percent and 27 percent.

Picture:Adidas website