Adidas beats forecasts

FRANKFURT – German sporting goods firm Adidas reported a better-than-forecast 24 per cent rise in second-quarter net profit yesterday on the back of a surge in sales spurred by the soccer World Cup.

Adidas shares rose almost two per cent in early trade, making it the top gainer on Germany’s blue-chip DAX index. Adidas, the second-largest sporting goods firm after US giant Nike, said in a statement net profit attributable to shareholders rose to 82 million euros, despite higher marketing expenses for the World Cup.Adidas, known for its three-stripe logo, had launched a record sales campaign for the World Cup to defend its position as market leader for soccer boots against increasing competition from Nike and archrival Puma.As a result, quarterly sales jumped 60 per cent to 2,428 billion euros, above the average forecast of 2,366 billion euros, with growth coming from all regions, including the tough European market.For the full year Adidas reaffirmed it expected double-digit percentage profit growth, with net income approaching 500 million euros in 2006 after 383 million euros a year ago.Group sales would rise by a “strong” double-digit percentage rate.Adidas also increased its forecast for currency-neutral sales growth excluding Reebok to 10-12 per cent after earlier expecting a high single-digit percentage growth rate.”In light of our strong performance in the first half of the year, we are confident that we will achieve our ambitious full-year targets,” Chief Executive Herbert Hainer said.Despite recent losses after markets became choppy in May, Adidas shares are still more expensive than Nike stock in terms of price to earnings multiples.According to Reuters Estimates, Adidas shares trade at nearly 15 times 2006 forecast earnings, while Nike is at 14 and Puma almost 17.Order backlogs for the key Adidas brand were up six per cent at the end of the quarter compared with a year ago.But Reebok saw orders decline by 16 per cent, which Adidas mainly blamed on a weak footwear business and a transfer of the licence sales rights for the US basketball league NBA to Adidas.Adidas bought Reebok for US$3,8 billion to take on Nike but has launched a revamp to tackle falling orders.While Adidas said Reebok would help improve 2006 group earnings, analysts are split whether the US acquisition will pay off.Despite a surge in sales of soccer gear, Adidas suffered a defeat at the World Cup at the hands of Puma, which for the first time backed a champion with its sponsorship of Italy.Adidas had fewer teams than Puma and Nike in the tournament.Nampa-ReutersAdidas, the second-largest sporting goods firm after US giant Nike, said in a statement net profit attributable to shareholders rose to 82 million euros, despite higher marketing expenses for the World Cup.Adidas, known for its three-stripe logo, had launched a record sales campaign for the World Cup to defend its position as market leader for soccer boots against increasing competition from Nike and archrival Puma.As a result, quarterly sales jumped 60 per cent to 2,428 billion euros, above the average forecast of 2,366 billion euros, with growth coming from all regions, including the tough European market.For the full year Adidas reaffirmed it expected double-digit percentage profit growth, with net income approaching 500 million euros in 2006 after 383 million euros a year ago.Group sales would rise by a “strong” double-digit percentage rate.Adidas also increased its forecast for currency-neutral sales growth excluding Reebok to 10-12 per cent after earlier expecting a high single-digit percentage growth rate.”In light of our strong performance in the first half of the year, we are confident that we will achieve our ambitious full-year targets,” Chief Executive Herbert Hainer said.Despite recent losses after markets became choppy in May, Adidas shares are still more expensive than Nike stock in terms of price to earnings multiples.According to Reuters Estimates, Adidas shares trade at nearly 15 times 2006 forecast earnings, while Nike is at 14 and Puma almost 17.Order backlogs for the key Adidas brand were up six per cent at the end of the quarter compared with a year ago.But Reebok saw orders decline by 16 per cent, which Adidas mainly blamed on a weak footwear business and a transfer of the licence sales rights for the US basketball league NBA to Adidas.Adidas bought Reebok for US$3,8 billion to take on Nike but has launched a revamp to tackle falling orders.While Adidas said Reebok would help improve 2006 group earnings, analysts are split whether the US acquisition will pay off.Despite a surge in sales of soccer gear, Adidas suffered a defeat at the World Cup at the hands of Puma, which for the first time backed a champion with its sponsorship of Italy.Adidas had fewer teams than Puma and Nike in the tournament.Nampa-Reuters