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Adidas 2017 net income grows 32% to €1.430 billion
Mar '18
Courtesy: Adidas
Courtesy: Adidas
The net income of Adidas from continuing operations increased 32 per cent to € 1.430 billion during 2017 (2016: € 1.082 billion). The company has recorded increase in gross margin to 50.4 per cent (2016: 49.2%). In 2017, the German multinational delivered another year of strong performance, increasing currency-neutral revenues by 16 per cent.

This development mainly reflects an 18 per cent increase at brand Adidas, which was mainly driven by double-digit sales increases in the running category as well as at Adidas Originals and Adidas Neo.

The company's operating profit grew 31 per cent in 2017 to €2.070 billion (2016: €1.582 billion), representing an operating margin increase of 9.8 per cent (2016: 8.6%). The company's tax rate in 2017 reached a level of 33.0 per cent. Net cash amounted to €484 million, representing an improvement of €587 million compared to the prior year (2016: net borrowings of €103 million)

"2017 was a strong year - financially and operationally. We made great progress toward achieving our mission to be the best sports company in the world. Our strategic growth areas - North America, Greater China and Digital Commerce - were the main drivers of our performance," said adidas CEO Kasper Rorsted. "2018 is a key milestone on the road to achieving our long-term targets for 2020. We expect quality growth, with overproportionate bottom-line improvements. This will enable an even stronger increase in profitability by 2020 and allows us to upgrade our long-term target yet again."

During the fourth quarter, adidas revenues increased 19% on a currency-neutral basis, driven by a 22% increase at brand adidas. The company's gross margin increased 51.7 per cent (2016: 49.5%), mainly due to the positive effects from a better pricing and channel mix. Other operating expenses were up 13 per cent to € 2.559 billion (2016: € 2.265 billion). The operating profit increased strongly to €132 million from €41 million in 2016, representing an operating margin increase of 2.6 per cent (2016: 0.9%).

The company expects sales to increase at a rate of around 10 per cent on a currency-neutral basis in 2018. Following the strong operational and financial performance in 2017, the company has also upgraded its 2020 profitability target. While Adidas continues to forecast currency-neutral revenues to grow between 10-12 per cent on average per year between 2015 and 2020, the company now projects net income from continuing operations to grow by an average of 22-24 per cent per year (previously: 20% to 22%) between 2015 and 2020. As a result, the company now expects to reach an operating margin of up to 11.5 per cent by 2020 (previously: 11%). (RR)

Fibre2Fashion News Desk – India

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