In Greater China, Group sales were up 13% on a currency-neutral basis, driven by double-digit growth at adidas as well as growth at Reebok. Currency-neutral revenues in Other Asian Markets increased 2% as double-digit growth at both adidas and TaylorMade-adidas Golf was partly offset by a strong sales decline at Reebok.
In Latin America, currency-neutral sales decreased 2% as growth at adidas was more than offset by a sales decrease at Reebok. From a brand perspective, second quarter sales at adidas increased 11% currency-neutral. Sales in the TaylorMade-adidas Golf segment grew 25% on a currency-neutral basis. Reebok sales declined 26% on a currency-neutral basis, largely as a result of negative impacts from Reebok India Company and the non-recurrence of prior-year licence sales. Currency translation effects had a positive impact on sales in euro terms. Group revenues grew 15% to € 3.517 billion in the second quarter of 2012 from € 3.064 billion in 2011.
The Group's gross margin decreased 0.9 percentage points to 48.2% (2011: 49.2%) in the second quarter as product price increases, a more favourable product and regional sales mix as well as a larger share of higher-margin Retail sales only partly offset a significant increase in input costs. Group gross profit increased 13% to € 1.697 billion (2011: € 1.506 billion). Other operating expenses as a percentage of sales decreased 1.0 percentage points to 42.4% compared to 43.3% the prior year, despite a 13% increase in the Group's marketing expenditure. As a result of the lower other operating expenses as a percentage of sales, which more than offset the lower gross margin, the Group's operating margin increased to 7.3% from 7.1% in 2011. Operating profit increased 17% to € 256 million compared to € 219 million in 2011. The Group's net income attributable to shareholders grew 18% to € 165 million (2011: € 140 million). Diluted earnings per share for the second quarter increased 18% to € 0.79 (2011: € 0.67).
"We have delivered another winning financial performance in the first half of 2012," commented Herbert Hainer, adidas Group CEO. "Our clear victory in the summer of football, our increased operating margin and our excellent inventory management show we have the right formula to preserve and sustain our positive earnings and cash flow trajectory."
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