Adidas anticipates profit increase ahead of the ‘World Cup’

The German sports equipment manufacturer Adidas reported on Thursday a surge in profit for the first quarter, highlighting the positive impact of the upcoming World Cup and strong results in North America and China.

In the period from January to March, their net profit jumped by 18.7 percent to 540 million euros. Operating profit increased by 17.1 percent to 746 million euros. Revenues, however, recorded a significantly more modest growth rate of 1.9 percent, reaching 5.5 billion euros.

>>>Adidas raised its targeted profit and European stock exchanges

“We have achieved profit growth that is significantly stronger” than revenues, emphasized CEO Kasper Rorsted, “and at the same time, we continued to invest in creating desire for our brands.”

Excluding the impact of exchange rates, revenues grew by about 10 percent, the group noted, explaining this jump by strong sales of the Originals fashion line, as well as running, training, and football equipment lines. Sales of football equipment were boosted by preparations for the World Cup, which will take place in Russia from mid-June to mid-July.

>>>Adidas aims to double online sales, closing physical stores

Adidas also highlights particularly strong revenue growth in the North American region, by as much as 21 percent, and in China, by 26 percent. Double-digit growth rates were also recorded in the Asia-Pacific region and Latin America. In Western Europe, revenues grew by only five percent, while in Russia, Eastern Europe, and Central Asia, they decreased.

For the entire year of 2018, Adidas expects an increase in revenues adjusted for the impact of exchange rates of about 10 percent, thanks to strong growth in North America and the Asia-Pacific region. They also target a stronger growth in net profit from retained business segments, ranging from 13 to 17 percent, to 1.675 billion euros.