German sports goods giant Adidas AG (ADDDF.PK,ADDYY.PK) Thursday reported 18 percent increase in profit for the second quarter, as sales climbed nearly 15 percent from last year. Looking ahead, the company raised the lower end of its earnings outlook for the year, citing benefits from the London Olympics and the Euro Cup.
Net income attributable to shareholders grew to 165 million euros, or $202 million, from 140 million euros in the previous year.
Net sales climbed to 3.52 billion euros from 3.06 billion euros in the previous year. Gross margin slid 0.9 percentage points to 48.2 percent due to increase in input costs.
Sales growth was 7 percent on a currency-neutral basis, driven by double-digit sales increases in Retail and Other Businesses.
Wholesale revenues advanced over 7 percent to 2.11 billion euros, while Retail revenues climbed more than 25 percent to 854 million euros.
The adidas brand improved sales by 18.6 percent at 2.65 billion euros. Reebok sales dropped over 21 percent to 336 million euros, amid negative impacts from Reebok India Co. and the non-recurrence of prior-year license sales.
Geographically, sales climbed 28.2 percent in European emerging markets and 22.5 percent in North America. Sales improved 29.4 percent in Greater China and 6.6 percent in Western Europe. Other Asian markets witnessed 11.5 percent increase in second-quarter sales.
Looking ahead, the company expects net income attributable to shareholders of 770 million euros - 785 million euros. The previous outlook was for net income between 750 million euros and 785 million euros.
Full-year basic earnings per share is currently estimated to be between 3.68 euros and 3.75 euros, in comparison with the previous range of 3.58 euros and 3.75 euros.
The company still expects group sales in 2012 to increase at a rate approaching 10 percent on a currency-neutral basis.
However, currency-neutral Wholesale segment revenues are now projected to increase at a mid-single-digit rate compared to the prior forecast of mid- to high-single-digit rate due to the negative impact from the commercial irregularities discovered at Reebok India.
Revenues of Other Businesses are now expected to increase at a high-teens rate compared to the previous forecast of low-teens rate growth on a currency-neutral basis.
Herbert Hainer, CEO of Adidas, said, "Right at this very moment, we are capitalising on our involvement in the London Olympic Games, an event that echoes the shared values of our Group: performance, passion, integrity and diversity...We will harness this energy across our portfolio of brands and will use it to sustain our success as we strive to achieve our Route 2015 aspirations."
The stock is currently down 2.4 percent at 59.44 euros in early morning trade.
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