Adidas Sees 24 Percent Boost in Profit

Herbert Hainer, CEO of the Adidas group, poses with a World Cup soccer ball in front of the Brandenburg Gate in Berlin in this April 18, 2006 file photo. Adidas AG said Wednesday, Aug. 9, 2006 that its second-quarter net profit rose 24 percent as consumers snapped up its World Cup-related merchandise and the effects of its acquisition of Reebok took hold. The Herzogenaurach-based company earned 82 million euro (US$105 million). (AP Photo/ Jan Bauer) (Jan Bauer - AP)

FRANKFURT, Germany -- Adidas AG said Wednesday that its second-quarter net profit rose 24 percent as consumers snapped up its World Cup-related merchandise and the effects of its acquisition of Reebok took hold.

The company, which trails only Nike Inc. in global sales of sporting goods and apparel, earned 82 million euros ($105.2 million) in the April-June period compared with 66 million euros a year earlier. This quarter's profits exceeded the prediction of 76 million euros from analysts polled by Dow Jones Newswires.

Sales rose nearly 60 percent to 2.43 billion euros ($3.1 billion) from 1.52 billion euros, also more than the 2.37 billion euros expected by analysts.

The results were the opposite of those posted by Puma, Adidas' crosstown rival in Herzogenaurach, Germany. Puma, the world's third-largest sporting goods company, said its second-quarter profits declined 15 percent because of hefty World Cup-related marketing costs despite a strong rise in sales.

Shares of Adidas rose 1.7 percent to 36.30 euros ($46.60) in Frankfurt trading.

Adidas sponsored several teams at the June 9-July 9 World Cup, including host Germany and Argentina. The company benefited tremendously from sales of its Teamgeist soccer ball, which it designed specifically for the tournament. German for "team spirit," Adidas has sold more than 15 million of the 14-panel balls, at a price that has ranged from $113 to $138. The figures beat the company's initial expectations of 10 million and blew past the 6 million balls it sold during the 2002 World Cup.

As a result, the company expects the World Cup tournament to help provide more than 1.2 billion euros in revenue from soccer-related products, including shoes and replica jerseys. In all of 2005, Adidas had 6.6 billion euros in sales, with 434 million euros in profit.

The company raised its full-year sales forecast for the Adidas brand and said it expected growth to increase in the low double-digits. But it said that sales of its Reebok-branded products were likely to dip in the coming months, citing a drop in order backlogs. Adidas acquired Reebok for 3.8 billion euros last year, completing the deal in January.

For the first six months of the year, Adidas earned 226 million euros ($290 million) compared with 171 million euros in the first half of 2005. Sales for the January-June period rose to 4.9 billion euros ($6.3 billion) from 3.2 billion euros.

___

On the Net:

http://www.adidas.com