"We had a strong start into the year, with continued sales and earnings momentum. Our major brands adidas and Reebok as well as all of our key markets posted double-digit sales increases," said adidas CEO Kasper Rorsted. "As consumer demand for our products was strong across the world, we were again able to significantly improve our profitability despite ongoing currency headwinds. Building on this performance, we are confirming our full-year guidance. We aim to deliver double-digit revenue growth and an over-proportionate profitability increase in 2017 yet again."
The company’s operating profit increased 29 per cent during the first quarter to a level of €632 million. As a result, the operating margin improved 0.9 percentage points to 11.1 per cent. This development solely reflects the anticipated significant FX headwind in the quarter, which more than offset the positive effects from a better pricing and product mix as well as lower input costs. However, the company's gross margin decreased 0.2 percentage points to 49.2 per cent as against 49.4 per cent for the same period in the previous year.
Net borrowings at March 31, 2017 amounted to €859 million representing an increase of €51 million compared to the prior year. This development was mainly a result of the utilisation of cash for the purchase of fixed assets as well as the continued repurchase of Adidas AG shares.
For 2017, Adidas continues to expect sales to increase at a rate between 11 per cent and 13 per cent on a currency-neutral basis driven by double-digit growth in Western Europe, North America and Greater China. The company’s gross margin is forecasted to increase up to 0.5 percentage points to a level of up to 49.1 per cent. Gross margin will mainly benefit from the positive effects of an improved pricing, product and regional mix as well as further enhancements in the company’s channel mix. The operating margin is forecasted to improve between 0.6 and 0.8 percentage points to a level between 8.3 per cent and 8.5 per cent, reflecting the projected gross margin improvement as well as an expected decline in other operating expenses as a percentage of sales. As a result, operating profit is expected to grow between 18 per cent and 20 per cent. Net income from continuing operations is also projected to increase at a rate between 18 per cent and 20 per cent to a level between €1.200 billion and €1.225 billion. (RR)
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