adidas AG : AD-HOC: adidas Group announces preliminary first quarter 2012 results
04/30/2012| 02:51am US/Eastern
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· Commercial irregularities at
Reebok India Company
· Increased 2012 financial
outlook
Herzogenaurach, April 30, 2012- Management
is providing preliminary first quarter figures which are
materially above market expectations. In the first quarter of
2012, adidas Group revenues increased 14% on a
currency-neutral basis or 17% in euro terms to € 3.8 billion.
Growth rates in Greater China and Japan as well as at
TaylorMade-adidas Golf were stronger than originally
anticipated. Despite a 0.7 percentage points decline in the
Group's gross margin to 47.7%, Group operating margin
improved 1.1 percentage points to 10.7%. In absolute terms,
Group operating profit grew 30% to € 409 million. Due to
lower financial expenses and a lower tax rate, the Group's
net income attributable to shareholders increased 38% to €
289 million.
In addition, Management also announces that commercial
irregularities discovered at Reebok India Company, in India,
will likely affect the consolidated financial statements of
the adidas Group. The currently estimated maximum negative
impact could be up to a pre-tax amount of
€ 125 million. Due to the sensitivity of the
on-going investigation, specific details will be disclosed as
appropriate in due course. As these irregularities have been
deemed to have occurred prior to the 2012 financial year, the
adidas Group might have to restate prior-year consolidated
financial statements in line with the requirements of IAS 8.
The financial statements of adidas AG will not be affected by
this issue. 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.
Under this new leadership team, Management is further
planning an accelerated restructuring of its business
activities in India, including significant changes to its
commercial business practices. This could lead to additional
one-time charges in the remaining quarters of 2012 in an
estimated amount of up to € 70 million.
Taking into account the stronger than expected first
quarter financial performance, the continuing strong momentum
of the Group's brands in key markets, as well as the impacts
from potential one-time charges for 2012, Management is
updating its financial forecasts for the full year
accordingly. Group sales for the full year are now expected
to grow at a rate approaching 10% on a currency-neutral basis
(previously: mid- to high-single-digit). Net income
attributable to shareholders is expected to increase at a
rate between 12% and 17% (previously: between 10% and
15%).
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