FIFA World Cup 2010 drives first half year, adidas

07 Aug '10

3 min read

adidas Group, a global leader in the sporting goods industry announced first half year result for 2010.

“We had an outstanding first half year driven by the FIFA World Cup 2010 and the resurgence of the Reebok brand in North America,” commented Herbert Hainer, adidas Group CEO. “Sales momentum at both adidas and Reebok accelerated in the second quarter with currency-neutral sales increasing 13% and 16% respectively.”

Herbert Hainer stated: "The record first half performance and the financial strength of our Group provides us with plenty of firepower to accelerate our marketing and investment offensive in the coming quarters. Whether it's toning, lightweight technologies or lifestyle, our brands are right on the consumer pulse. The energy we are creating in the market this year will be an important catalyst in propelling our Group to new heights in the years to come."

adidas Group currency-neutral sales increase at double-digit rate in the second quarter
During the second quarter of 2010, Group revenues increased 11% on a currency-neutral basis. Currency-neutral revenues in Western Europe increased 13% supported by strong growth in the football category. Currency-neutral sales in European Emerging Markets increased 25% driven by double-digit growth in both the Wholesale and Retail segments.

Group sales in North America grew 8% on a currency-neutral basis, driven by a 7% sales increase for adidas and a 30% sales increase for Reebok in the region during the second quarter. Currency-neutral sales in Greater China declined 18% due to the continued efforts to reduce inventories in the market. Currency-neutral sales in Other Asian Markets and in Latin America were up 11% and 27% on a currency-neutral basis, respectively. Currency translation effects had a positive impact on segmental sales in euro terms. Group revenues grew 19% to € 2.917 billion in the second quarter of 2010 from € 2.457 billion in 2009.

Second quarter diluted EPS at € 0.60
The Group's gross margin increased 4.0 percentage points to 48.9% (2009: 45.0%) in the second quarter mainly due to lower input costs, less clearance sales and a larger share of higher-margin Retail sales as well as positive currency effects, particularly related to the Russian rouble. Group gross profit increased 29% to € 1.427 billion (2009: € 1.105 billion).

Other operating expenses as a percentage of sales were stable compared to the prior year at 43.9%. Higher marketing expenses were offset by a decline in operating overhead expenditures as a percentage of sales. As a result of the higher gross margin, the Group's operating margin increased 3.8 percentage points to 6.7% in the second quarter of 2010 versus 2.9% in 2009.

Operating profit increased 172% to € 195 million in the second quarter of 2010 compared to € 72 million in 2009. In the second quarter of 2010, the Group's net income attributable to shareholders amounted to € 126 million (2009: € 9 million). Diluted earnings per share for the second quarter increased significantly to € 0.60 (2009: € 0.06).

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