- Prachi Singh |
For the second quarter, Adidas said that revenues from the company’s continuing operations increased 19 percent on a currency-neutral basis and 20 percent in euro terms to 5 billion euros (5.8 billion dollars). The company said, operating profit increased 18 percent to 505 million euros (590 million dollars) driven by a higher gross margin as well as operating expense leverage. Net income from continuing operations increased 16 percent to 347 million euros (405 million dollars) during the quarter.
Adidas said, as previously announced, due to the existence of signed agreements to divest the TaylorMade, Adams Golf, Ashworth and CCM Hockey brands, the results from these businesses are reported as discontinued operations. In the second quarter, the TaylorMade and CCM Hockey divestitures had a non-operational negative impact on discontinued operations of around 200 million euros (234 million dollars). However, the company’s continuing operations, which now mainly consist of the Adidas and the Reebok brand, were not affected.
Adidas updates FY17 outlook
Due to the strong first half year performance, the company has increased its 2017 financial outlook. Management now projects currency-neutral sales to grow at a rate between 17 percent and 19 percent against previous forecast of increase by between 12 percent and 14 percent compared to the adjusted 2016 net sales of 18.483 billion euros (21.646 billion dollars) for the company’s continuing operations).
Furthermore, the company forecasts a year-over-year gross margin improvement during the second half and expects to continue to generate operating leverage throughout the remainder of the year. As a result, net income from continuing operations is now forecasted to increase at a rate between 26 percent and 28 percent in 2017 to a level between 1.360 billion euros (1.592 billion dollars) and 1.390 billion euros (1.627 billion dollars). This compares to the original guidance as provided in March of an increase of between 13 percent and 15 percent to a level between 1.200 billion euros (1.405 billion dollars) and 1.225 billion euros (1.434 billion dollars) for the company’s net income from continuing operations.