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World Cup helps Adidas profits soar 172%

Adidas chief executive Herbert Hainer said the FIFA World Cup had helped the footwear giant to deliver “outstanding” results as its operating profit rose 172% to €195m (£162m) for the second quarter of the year.

Group sales rose 11%, while currency-neutral revenues in Western Europe jumped 13% helped by the strong growth in the football category. Group operating margin increased 29% to €1.427bn (£1.183bn).

For the first half of the year, Adidas saw group revenues jump 7% on a currency-neutral basis, driven by wholesale, retail and other businesses. Currency-neutral wholesale revenues increased 6% during the period, helped by an increase in Adidas and Reebok sales. Retail sales grew 16% while revenue in other businesses, which include footwear business Rockport and golf equipment company TaylorMade, rose 3%.

Half-year sales in Western Europe increased 8% as a result of double-digit sales increased in the UK, Germany and Spain. Group revenues in the region jumped 10% to €1.772bn (£1.469bn) for the first half of 2010.

Hainer said: “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 said the group margin is forecast to increase to around 47.5% compared to 45.4% in 2009, benefiting from lower sourcing costs as a result of “reduced material costs and lower capacity utilisation among suppliers”.

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