GERMANY: Adidas cuts forecast, currency effects hit H1
- First-half net income up 6% to EUR480m versus EUR455m
- Sales slipped 3% to EUR7.13bn from EUR7.34bn
- Gross margin increased 2.1 percentage points to 50.1%
German sportswear brand Adidas has lowered its full-year outlook after the "lacklustre" trading environment in Europe and unfavourable currency effects hit first-half sales and slowed profit growth.
The company today (8 August) said net income attributable to shareholders reached EUR480m (US$640.9m) for the first six months of the year, compared to EUR455m in the same period last year.
Sales slipped 3% to EUR7.13bn from EUR7.34bn in the prior year, weighed down by currency translation effects. On a currency-neutral basis, however, group revenues remained stable.
Revenues in Western Europe fell 9% in euro terms, due to double-digit sales declines in the UK, Italy and Spain. Sales edged down 2% in European emerging markets and 1% in North America. Greater China saw sales increase 7%, while revenues were down 8% in other Asian markets.
Latin America recorded the biggest growth, where sales grew 9% in euro terms and 16% on a currency-neutral basis.
"I am pleased to report that the Adidas Group has again been able to deliver record earnings per share in the first six months of 2013," said CEO Herbert Hainer.
"This is all the more impressive considering the material challenges we faced from currency headwinds, the difficult prior year comparisons related to major sporting events, and the continued soft trading environment in much of Europe."
During the second quarter, net income attributable to shareholders grew 4% to EUR172m from EUR165m last year, while revenues stood at EUR3.38bn, down 4% from EUR3.5bn last year.
Adidas now expects full-year sales to grow at a low- to mid-single-digit rate on a currency-neutral basis, compared to its previous guidance of an increase at a mid-single-digit rate. Gross margin is forecast to increase to a 48.5-49%, compared to an earlier guidance of 48.5%.
"While currency headwinds have added additional significant speed bumps to our path in 2013, from a strategic and operational perspective we are absolutely on track.
"Our powerful product engine, clear market share wins in key categories and the emerging markets and the excitement building ahead of the 2014 FIFA World Cup are all fuelling improving market sentiment."
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