Net income at Adidas AG advanced 5.5 percent to 480 million euros, or $624 million, in the six months to June 31, on the back of a 2.8 percent decrease in sales, the company said Thursday.
Earnings per share advanced 5.5 percent to a new record of 2.29 euros, or $3.05.
All figures have been converted at average exchange rates for the periods to which they refer.
On a constant currency basis, sales were flat at 7.13 billion euros, or $9.27 billion, with only China and Latin America showing growth. Profits climbed due to a stronger gross margin, boosted by more favorable pricing, product and regional sales mix, as well as a larger share of higher-margin retail sales, Adidas said.
“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 Herbert Hainer, the company’s chief executive officer on Thursday. “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.”
Looking ahead, he added: “While currency headwinds have added 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 fueling improving market sentiment.”
Revenues in Western Europe decreased 9 percent at actual exchange rates, mainly due to high prior-year comparisons related to the sales of event-related products for the UEFA Euro 2012 European soccer championship, and the London 2012 Olympic Games as well as the “ongoing macroeconomic challenges” in the region, the company said.
Group sales in North America were down 1 percent at actual exchange rates, due to sales declines at TaylorMade-Adidas Golf. The company cited a “more challenging” golf market due to a late seasonal start and lower rounds played.
In Greater China, group sales were up 7 percent on an actual currency basis, due to continued momentum across all channels, while in Latin America, they were up 9 percent.
In the second quarter, the company said currency headwinds dented revenues, which fell 4 percent to 3.38 billion euros, or $4.39 billion. From a brand perspective, Adidas said second-quarter sales remained stable on a currency-neutral basis.
The company also revised guidance for the full year, due to the “lackluster trading environment in Europe and the unfavorable development of several currencies versus the euro.” It said sales are now expected to grow at a low- to midsingle-digit rate on a currency-neutral basis. Previously, the company had expected sales to increase at a midsingle-digit rate.
Top-line momentum is set to improve in the remaining quarters of 2013, with the fourth quarter expected to be stronger than normal, while net income is set to land between 890 million euros and 920 million euros, or $1.18 billion and $1.22 billion.