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adidas achieves record earnings in 2016

Revenues in Western Europe increased by 20% on a currency-neutral basis, driven by double-digit sales growth in all major countries.

9th March 2017

Innovation in Textiles
 |  Herzogenaurach

Clothing/​Footwear, Sports/​Outdoor

Currency-neutral revenues for the adidas brand increased by 22%, driven by double-digit sales increases in Sport Performance, as well as at adidas Originals and adidas neo. At the Reebok brand, currency-neutral sales were up by 6% versus the prior year, reflecting double-digit sales increases in Classics, as well as mid-single-digit growth in the training and running categories.

"2016 was an exceptional year for adidas. We have improved the desirability of our brands and products around the globe. As a consequence, we were able to increase revenues strongly and achieve a record net income of more than EUR 1 billion for the first time in the history of our company. These results are proof positive that our strategy Creating the New is paying off," said adidas CEO Kasper Rorsted. "Building on our 2016 performance, our momentum continues and we will again achieve strong top- and bottom-line improvements in 2017."

Double-digit revenue growth

Revenues in Western Europe increased by 20% on a currency-neutral basis, driven by double-digit sales growth in all major countries. Currency-neutral sales in North America and Greater China increased by 24% and by 28%, respectively. Revenues in Russia/CIS grew by 3% on a currency-neutral basis. In Latin America, revenues increased by 16% on a currency-neutral basis, as all major countries grew at double-digit rates with the exception of Brazil, where sales increased at a low-single-digit rate.

In Japan, sales were up by 16% on a currency-neutral basis. Revenues in MEAA also grew by 16% on a currency-neutral basis, reflecting double-digit growth in almost all of the region's countries. Revenues in Other Businesses were up by 1% on a currency-neutral basis. Increases in other centrally managed businesses and at Runtastic were largely offset by sales declines at CCM Hockey and TaylorMade-adidas Golf, the company reports.

Growth in key market segments

From a market segment perspective, combined currency-neutral sales of the adidas and Reebok brands in the fourth quarter of 2016 grew at double-digit rates in key market segments, such as North America (+29%), Greater China (+25%), Latin America (+22%) and Western Europe (+12%).

While double-digit increases in MEAA (+14%) also supported the strong top-line development, revenues in Russia/CIS (-5%) and Japan (-6%) were below the prior year level. Currency-neutral sales in Other Businesses declined 14% in the fourth quarter, reflecting declines at TaylorMade-adidas Golf and CCM Hockey.

Outlook 2017

adidas expects ongoing strong top- and bottom-line expansion in 2017. For 2017, the company expect sales to increase at a rate between 11% and 13% on a currency-neutral basis. Currency-neutral combined revenues of the adidas and Reebok brands are expected to grow at double-digit rates in Western Europe, North America, Greater China and Russia/CIS, while currency-neutral sales in Latin America, Japan and MEAA are forecasted to improve at a high-single-digit rate each.

In 2017, the gross margin is forecasted to increase up to 0.5 percentage points to a level of up to 49.1%. This, together with a forecasted decline in other operating expenses as a percentage of sales, is expected to drive an increase in operating profit of between 18% and 20%.

Net income from continuing operations is projected to increase at a rate between 18% and 20% to a level between EUR 1.200 billion and EUR 1.225 billion.

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