Adidas posts 38% profit due to strong China sales

PanARMENIAN.Net - Sportswear company Adidas AG reported Monday that first-quarter net profit rose 38 percent to €289 million ($382 million), helped by strong sales in China and lower borrowing and tax expenses, AP reported.

Revenues rose 14 percent to €3.8 billion, the company said, as China and other Asia markets saw a 26 percent improvement in sales, after exchange rate fluctuations were stripped out. That compared with a weaker 7 percent in Western Europe.

Adidas raised its outlook for the year, helping send its stock sharply higher. It said full year earnings would increase 12-17 percent instead of 12-15 percent, and sales would rise "at a rate approaching" 10 percent instead of a mid- to high-single digit increase.

It said stronger sales helped the company overcome what it said were higher raw materials costs.

Adidas AG shares traded 5.2 percent higher at €62.96 in afternoon trading in Europe.

The company also acknowledged that "commercial irregularities" discovered at its Reebok India business could impact earlier financial statements by up to €125 million pre-tax. It said it had installed a new management team there but that the sensitivity of an investigation meant it couldn't provide details. Since the losses occurred before 2012, the company said it might have to re-state the prior year's statements.

"Management assures its stakeholders that it has, and will continue to, vigorously pursue a course of action to protect the Group's interests, which has already resulted in the appointment of a new local leadership team in India at the end of March," the company said in a statement.