Adidas optimistic for year after beating 2015 targets

11th February 2016, Comments 0 comments

Adidas said Thursday that it performed better than expected in 2015 and is confident for this year, even if the US market still appears to be something of an Achilles' heel for the German maker of sportshoes and equipment.

In a welcome piece of news for the group which has long been struggling to catch up with arch-rival Nike, Adidas said in a statement that it "exceeded its top- and bottom-line financial targets in the past financial year."

Adidas is bringing in a new chief executive later this year as its tries to keep pace with Nike in the key US market.

In 2015, group sales grew by 16 percent to 16.9 billion euros ($19 billion), driven primarily by double-digit growth in western Europe, China and Latin America as well as the Middle East, Asia and Africa region, Adidas said.

And the "stellar" sales performance pushed net profit up by 12 percent to 720 million euros.

Adidas also owns the Reebok brand has long been struggling to keep up in the race in the key US market, but was recently overtaken there by upstart Under Armour.

Nevertheless, chief executive Herbert Hainer, who is to be succeeded by Kasper Rorsted later this year, insisted that Adidas was "in great shape."

- Forecasts upgraded -

He insisted Adidas experienced "accelerated momentum in North America and Western Europe during the fourth quarter as well as continued double-digit growth in most emerging markets including Greater China."

"This gives us every confidence that we will again grow the top and bottom line at a double-digit rate" in 2016, Hainer said.

As a consequence, the company "has increased its revenue guidance for 2016 and now expects group sales to grow at a double-digit rate," or at least 10 percent, he added.

At the level of operating profit, too, earnings were now projected to grow "at a double-digit rate as well and, as a result, keep the 2016 operating margin at least stable compared to the 2015 level."

So far, Adidas has been pencilling in only single-digit growth in earnings and sales for 2016.

The group's confidence was welcomed by investors. Adidas shares were the sole gainers on the Frankfurt stock exchange on Thursday, adding 0.49 percent, while the overall blue-chip DAX 30 index was showing a loss of 3.23 percent.

The share has performed well since it was announced last month that Danish-born Rorsted, currently chief executive of the consumer chemicals giant Henkel, has been poached to replace Hainer.

Piral Dadhania, analyst at RBC Capital Markets estimated that Adidas shares had outperformed Nike and other similar stocks by more than 15 percent in recent months.

Adidas said that it had increased its "brand-building investments" by 20 percent in 2015.

In a bid to gain ground in the United States, it has signed up 500 athletes from American football and baseball, including NBA star James Harden and quarterback Aaron Rodgers.

Last month, media reports suggested that Adidas, the biggest sponsor of the scandal-hit International Association of Athletics Federations, is to end its multi-million dollar backing of the governing body four years early.

The BBC said Adidas's decision was related directly to the doping scandal engulfing global track and field.


© 2016 AFP

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