Adidas reports profits jump, plans to sell Salomon
2 May 2005, HERZOGENAURACH - Shares of German sports equipment and apparel company Adidas-Salomon surged almost 8 percent on the stock market on Monday after the company announced a huge jump in profits and plans to sell off the Salomon unit.
2 May 2005
HERZOGENAURACH - Shares of German sports equipment and apparel company Adidas-Salomon surged almost 8 percent on the stock market on Monday after the company announced a huge jump in profits and plans to sell off the Salomon unit.
Late in the afternoon on the Frankfurt Stock Exchange, Adidas shares were running 7.96 percent higher at EUR 129.66 as investors welcomed the news, which was coupled with the company also raising its full-year earnings outlook.
The company said it is to sell Salomon to the Finnish firm Amer Sports Corporation in a projected EUR 485 million deal to be completed by the end of September.
The deal would require the approval of cartel regulators in the European Union, the United States, and a number of other countries, the company said in an ad-hoc announcement to investors.
Adidas and Salomon linked up in 1997 to form the world's second- largest sports equipment company.
"Salomon has been a great member of our Group. However, we decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market as well as the growing golf category," said Adidas-Salomon chief executive Herbert Hainer.
"We are convinced that the Amer Sports Corporation is an ideal partner to bring Salomon to the next level," he added.
In Helsinki, Amer Sports chief executive Roger Talermo also praised the projected deal, saying that "Salomon's offering fits perfectly with our own portfolio...In winter sports, Salomon and Amer Sports' Atomic complement each other very well.
"Furthermore, the two companies and their brands support each other well in geographical terms, making our geographical coverage more balanced than before".
At Salomon headquarters in Annecy, company president Jean-Luc Diard stated that "we have enjoyed being part of the Adidas-Salomon Group for the last eight years in which Salomon developed leading positions both in the winter and summer sports market for Freedom Action Sports.
"We are excited about joining the Amer Sports Corporation given its competencies in the winter sports market. This new partnership will help us to leverage the full potential of our family of brands," he added.
The disclosure came after Adidas-Salomon reported that it had got off to a "powerful start" in 2005 with first-quarter net income surging 46 percent and surpassing analysts' projections.
Adidas said its surplus came to EUR 105 million, compared with EUR 72 million in the first quarter of 2004. The figure was well above analysts' predictions of a EUR 96 million surplus for the period.
The surplus came on operating profits of EUR 179 million, up 27 percent from the EUR 142 million a year earlier.
Revenues, at just under EUR 1.78 billion in the first quarter of 2005, were about 10 percent on the EUR 1.62 billion in the opening 2004 quarter, the company said.
"Adidas-Salomon has got off to a powerful start in the first quarter of 2005," said Hainer.
"By every key measure - sales growth, margin improvement and profitability - we've delivered outstanding performance," he added in comments two days before the company's annual shareholder meeting.
Subject: German news