• Q2 earnings double to EUR291m (US$324m)
  • Gross margin up 0.4pp to 49.1%
  • Sales increase 31.2% to EUR4.42bn
Adidas reported double-digit growth across all region

Adidas reported double-digit growth across all region

German sporting giant Adidas has raised its 2016 guidance for a fourth time after posting second-quarter earnings and margin growth driven by strong momentum from its namesake and Reebok brands. 

Net profit in the three month period almost doubled to EUR291m (US$324m) from EUR146m a year earlier. Despite significant pressure from negative currency effects, gross margin improved 0.4 percentage points to 49.1%, driven by a more favourable pricing and product mix.

Group revenues were up 31.2% to EUR4.42bn, due to strong double-digit growth at Adidas and mid-single-digit sales increases at Reebok. All market segments posted currency-neutral sales increases, with double-digit growth across all regions except Russia/CIS, where revenues grew at a mid-single-digit rate. 

"The stellar financial performance in the second quarter is proof positive that our strategy is paying off," said CEO Herbert Hainer. "We are putting the consumer at the heart of everything we do. This is fuelling the outstanding momentum we are enjoying across all regions and categories. And this will continue. It is the perfect platform to drive sustainable top- and bottom-line improvements for the years to come."

Adidas has been working on cutting costs and overhauling its top management in a bid to boost margins, which are expected at 48% to 48.3% for fiscal 2016 compared to 48.3% last year, and previous guidance of a fall of up to 50 basis points.

Group sales are expected to increase at a rate in the high teens on a currency-neutral basis in 2016, supported by double-digit growth in all regions except Russia/CIS, where sales are now forecast to grow at a mid-single-digit rate. Net income from continuing operations is projected to increase at a rate of between 35% and 39%, from a previously forecast of around 25%, to between EUR975m and EUR1bn.

"We are in great shape," Hainer added. "2016 will be a year of records for the Adidas Group. But we will not stop there. In the years to come, we will continue to grow across all categories, channels and geographies and drive our profitability to new heights."

Kepler Cheuvreux analyst, Jürgen Kolb, noted: "We see Adidas as a core holding in the European consumer space. The company delivered self-help strategies, shows a strong momentum and it operates much more disciplined on its product life cycle."