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Adidas 2018 Profit From Cont. Ops. Rises; Currency-neutral Sales Up 8%

adidas (ADDYY.PK,ADDDF.PK) reported that its fiscal 2018 net income from continuing operations, excluding the negative one-time tax impact recorded in 2017, increased 20% to 1.71 billion euros from 1.43 billion euros. Basic EPS from continuing operations grew 20% to 8.46 euros from 7.05 euros. The company's operating profit grew 14% in 2018 to 2.37 billion euros, representing an operating margin increase of 1.1 percentage points to 10.8% from 9.8%. Gross margin increased 1.4 percentage points to 51.8%.

In 2018, adidas recorded currency-neutral revenues increase of 8%. The company said this development was driven by a 9% improvement at brand adidas, reflecting a double-digit sales increase in Sport Inspired as well as a high-single-digit gain in Sport Performance. In euro terms, the company's revenues grew 3% to 21.91 billion euros from 21.22 billion euros, reflecting significant negative currency translation effects.

For the fourth-quarter, excluding the negative one-time tax impact recorded in the fourth quarter 2017, net income from continuing operations increased 29% year-over-year to 93 million euros. Basic EPS from continuing operations was up 33% to 0.47 euros from 0.35 euros.

During the fourth quarter, adidas revenues increased 5% on a currency-neutral basis. This development reflects an increase of 5% at brand adidas. Revenues at the Reebok brand declined 1%, for the quarter. In euro terms, sales for the company were up 4% to 5.23 billion euros from 5.06 billion euros.

Looking forward, the company projects sales to increase at a rate of between 5% and 8% on a currency-neutral basis in 2019. The company's gross margin is forecast to increase to a level of around 52.0%. Net income from continuing operations is projected to increase to a level between 1.88 billion euros and 1.95 billion euros, reflecting an increase of between 10% and 14% compared to the prior year level.

The Executive and Supervisory Boards will recommend paying a dividend of 3.35 euros per dividend-entitled share to shareholders at the Annual General Meeting on May 9, 2019. This represents an increase of 29% compared to the prior year dividend.

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