Adidas shares rise on Forecast for Profit Growth

Adidas reported its fourth quarter and full year financial results for 2017, although the company had a slower growth in the year, the German sportswear maker is forecasting for a strong profit growth in 2018. Shares rose by 12 percent on the German stock exchange on Wednesday.

For the fourth quarter, Adidas reported a 19 percent increase in quarterly revenue, driven by a 22 percent increase at brand adidas. The strong growth reflects double digit sales growth in running, football, and outdoor categories. Sales rose by 12 percent to 5.06 billion euros, falling short of analysts’ forecasts of 5.13 billion euros.

Revenues for Reebok declined by 1 percent. Losses were mitigated by the double digit increase in the running category.

Combined sales of both Adidas and Reebok grew 32 percent in Greater China and 31 percent in North America, representing the strongest growth, followed by Europe increasing by 17 percent.

“2017 was a strong year – financially and operationally. We made great progress toward achieving our mission to be the best sports company in the world. Our strategic growth areas – North America, Greater China and Digital Commerce – were the main drivers of our performance.” said Kasper Rorsted, CEO of Adidas.

For 2018, Adidas forecasts sales to increase by 10 percent driven by an increase operating profit of 9 percent to 13 percent. The company forecasts basic EPS to increase by 12 percent to 16 percent.

Adidas also provided its long term forecast saying that due to its strong 2017 year, the company has upgraded its 2020 profitability target. Adidas forecasts revenues to grow between 10 percent and 12 percent on average between 2015 and 2020.

The company also forecasts net income to increase by 22 percent to 24 percent, increasing from the previous forecast of 20 percent to 22 percent.

“2018 is a key milestone on the road to achieving our long-term targets for 2020. We expect quality growth, with over proportionate bottom-line improvements. This will enable an even stronger increase in profitability by 2020 and allows us to upgrade our long-term target yet again,” concluded Rorsted.

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