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MarketScreener Homepage  >  Equities  >  Xetra  >  Adidas AG    ADS   DE000A1EWWW0

ADIDAS AG

(ADS)
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Adidas : Bucks German Gloom With Profit Growth -- 2nd Update

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08/08/2019 | 07:11am EDT

By William Boston

BERLIN -- Germany's Adidas AG reported higher quarterly earnings on strong sales in China and predicted continued growth in the second half, but warned that a protracted trade and currency war could derail the global economy and hurt business.

Retailers such as Adidas have continued to benefit from strong sales in China, and many that produce goods there remain insulated from trade row with the U.S. But that could change if the conflict deepens and infects the global economy.

"Having the two biggest economies in the world right now at odds with each other has a negative impact on both economies," Adidas Chief Executive Kasper Rorsted told reporters on a conference call on Thursday. "But if we have a currency war that will be a situation where everyone loses."

Despite publishing second-quarter earnings that beat analysts' forecasts, investors were disappointed with weak global sales growth and shares fell more than 2% in early trading.

Mr. Rorsted said he expected the company to have a "milestone year" on strong growth in China, having stemmed falling sales in Europe and turned around its long-ailing Reebok brand.

Adidas said net profit in the three months to the end of June totaled EUR531 million ($595 million), up 34% from a year earlier. Sales rose 4.7% to EUR5.5 billion. Analysts had forecast net profit of EUR464.7 million and sales of EUR5.54 billion.

Growth in revenue was driven by China, the mainstay Adidas and Reebok brands, and e-commerce. But revenue was damped by a decrease in sales of soccer products, which were up sharply last year because of the FIFA World Cup.

Mr. Rorsted attributed the strong earnings to lower taxes, positive foreign-exchange effects, and the impact of growth in China and improvement in Europe, where the company had been losing ground. He said bottlenecks caused by supply-chain issues in the U.S. would be resolved by the end of the year, helping to spur growth in the U.S. market next year.

China was by far the biggest driver of Adidas's revenue growth in the second quarter. Sales in China rose 14% from a year earlier. Rival Nike Inc., whose business year ended on May 31, said its sales in China were up 16% in its fiscal fourth quarter.

The upbeat report by Adidas is a rare bright spot in Germany, where many of the country's biggest companies have reported disappointing earnings, hit by falling demand in the global auto industry, the U.S.-China trade war, and a number of criminal investigations and lawsuits.

Adidas's sales on a currency-neutral basis grew in most regional markets, posting double-digit growth in China and other emerging markets. Sales in North America rose 6%, driven by growth in Reebok brand products, and were up 5% in Latin America. The company continued to struggle in Russia, where sales declined 4% in the quarter.

Write to William Boston at william.boston@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS AG -0.09% 274.75 Delayed Quote.50.63%
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Financials (EUR)
Sales 2019 23 495 M
EBIT 2019 2 715 M
Net income 2019 1 958 M
Finance 2019 974 M
Yield 2019 1,40%
P/E ratio 2019 28,0x
P/E ratio 2020 25,0x
EV / Sales2019 2,25x
EV / Sales2020 2,09x
Capitalization 53 818 M
Chart ADIDAS AG
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Technical analysis trends ADIDAS AG
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
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Buy
Mean consensus OUTPERFORM
Number of Analysts 36
Average target price 269,99  €
Last Close Price 275,60  €
Spread / Highest target 16,1%
Spread / Average Target -2,04%
Spread / Lowest Target -26,3%
EPS Revisions
Managers
NameTitle
Kasper Bo Rørsted Chief Executive Officer
Igor Landau Chairman-Supervisory Board
Harm Ohlmeyer Chief Financial Officer
Willi Schwerdtle Deputy Chairman-Supervisory Board
Wolfgang Jäger Member-Supervisory Board
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