PARIS — Bolstered by product launches before the World Cup and the first-time consolidation of Reebok, Adidas reported a 37 percent jump in first-quarter profits.
With the world’s largest sporting event one month away, the activewear giant beat forecasts Tuesday in reporting profits of 144 million euros, or $173.2 million, up from 105 million euros, or $137.8 million, in the first quarter of last year on consolidated, currency neutral sales of 2.46 billion euros, or $2.96 billion. Sales for Adidas Group excluding Reebok increased by 13 percent.
Currency conversions were made at average exchange rates for the respective periods.
Despite the positive results, the group’s enthusiasm was countered by the performance of recently acquired Reebok, which saw sales decline by 14 percent.
Adidas admitted the acquisition could cause short-term turbulence before the $3.8 billion deal bears fruit.
“We expect to see positive sales numbers coming through at the end of 2006, which will show in 2007,” said Herbert Hainer, chief executive officer, during a conference call Tuesday. “There is still work to do in distribution.”
For the full year, the Herzogenaurach, Germany-based firm projects a “mid single-digit” decline for Reebok. Hainer said he remained positive regarding the sales development of its new addition: “Reebok is in a profitable position and is forecasted to have an accretive impact for the group in 2006.”
As the official sponsor of the World Cup, as well as supplier for leading teams such as Argentina and England, the group reported a 30 percent increase of its total soccer business to reach 1.2 billion euros or $1.44 billion. Hainer said World Cup product launches such as the “Tunit” soccer shoe — of which Adidas aims to sell more than 750,000 pairs — boosted the figures.
Soccer balls were also scoring points with expected sales of over 15 million balls, up from the original projection of 10 million balls.
Hainer boasted Adidas’ leading market share placed the group of ahead of its rival Nike in the soccer category.
For the full year, the group projects a “strong double-digit” rise in currency neutral sales in 2006 and “high-single-digit” sales increase excluding Reebok.
Adidas said its profits would grow by “a double-digit percentage rate” in 2006.
“We will have more momentum out of the World Cup to help build a platform to develop our business in the future,” Hainer said. He added that 2007 would be another successful year of product launches as Adidas gears up for the 2008 Olympics in Beijing.