Adidas shares jump as North America growth outpaces Nike

The World Cup boosted Adidas sales while North Amercia performed especially well. (Reuters)
Updated 09 August 2018
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Adidas shares jump as North America growth outpaces Nike

  • Shares surge on earnings
  • Greater China sales growth accelerates to 27 percent

BERLIN: German sportswear firm Adidas reported higher than expected second-quarter results on Thursday, as its sales growth continued to outpace rival Nike in North America even as it stagnated in western Europe.

Shares in the company famous for its three-stripe brand jumped 10 percent to a four-month high, before paring gains.

The results are the latest endorsement of a strategy implemented by CEO Kasper Rorsted since taking over in 2016, focused on improving profitability as well as expanding in North America and China and pushing sales via ecommerce.

Adidas has a strong pipeline of new products that will support sales this year and beyond, Rorsted told journalists, noting strong demand for its 1980s retro “Continental” leather sneakers that were relaunched in June.

“Full-year guidance reconfirmed ... which should reassure investors ... particularly given Adidas will have good visibility on the important third-quarter wholesale order book,” said Piral Dadhania, analyst at Royal Bank of Canada.

Sales rose 10 percent to €5.26 billion ($6 billion) after currency effects, beating the 8 percent expected by analysts.

Some analysts had expected higher marketing spending in the quarter due to the soccer World Cup would dent the bottom line, but Adidas counteracted that with higher prices and sales through more profitable channels such as ecommerce.

Adidas saw sales growth in North America slow slightly to 16 percent, but that was still well ahead of the 3 percent growth Nike reported for its March to May fiscal fourth quarter, the firm’s first increase in the region for a year.

In greater China, Adidas sales growth accelerated to 27 percent, slightly ahead of Nike’s 25 percent.

As Adidas had previously cautioned, sales were flat in western Europe, where Nike has been growing faster, but they jumped 14 percent in Russia, which hosted the World Cup.
Adidas has made management changes in western Europe after the company failed to focus enough on the launch of new products, Rorsted said, adding sales were likely to stay flat in the region in the second half of the year.

Nike teams dominated the final rounds of the World Cup, but Rorsted said the tournament was still a success as Adidas sold more than 8 million shirts and more than 10 million balls, and saw a boost to downloads of its app, advertised in stadiums.

Adidas said it was taking an impairment of 475 million euros related to the Reebok trademark in 2016 after the German Financial Reporting Enforcement Panel disagreed with how it calculated historical book value.

But it said the restatement had no impact on its cash position and reiterated its guidance for 2018 and beyond, adding Reebok’s prospects were unchanged. Rorsted noted that sales in North America rose 6 percent despite many store closures.

Adidas bought the Reebok brand in 2005, but it has performed poorly since. Rorsted has given Reebok until 2020 to return to profitability and said it should be helped by a new partnership with British designer Victoria Beckham.


Tunisia to almost double gas production this year

Updated 18 January 2019
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Tunisia to almost double gas production this year

  • The project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP
  • It will include investments of about $700 million

TUNIS: Tunisia will almost double production of natural gas to about 65,000 barrels of oil equivalent per day this year, the industry and energy minister, Slim Feriani, told Reuters on Friday.
The country’s gas output will jump from 35,000 barrels of oil equivalent per day (boed) when the southern Nawara gas field comes onstream in June, Feriani said.
“We will raise our production by about 30,000 barrels of oil equivalent when the Nawara project in the south will start,” Feriani told Reuters in interview.
This project will be jointly owned by Austria’s OMV and Tunisian National Oil Company ETAP with investments of about $700 million.
Feriani also said Tunisia was seeking to attract about $2 billion in foreign investment to produce 1,900 megawatts (MW) of renewable energy in three years. “We will start launching international bids for the production of renewable wind and sun energy. We aim to produce 1,900 MW by investment of up to $2 billion until 2022,” he said.
This would represent about 22 percent of the country’s electricity production.
PHOSPHATE
Tunisia also plans to raise production of phosphate from 3 million tons to 5 million in 2019, he said.
Raising the output will boost economic growth and provide revenue to revive its faltering economy, the minister said.
Phosphate exports are a key source of foreign currency reserves, which have dropped to levels worth just 82 days of imports, according to Tunisia’s central bank.
Tunisia produced about 8.2 million tons of phosphate in 2010 but output dropped after its 2011 revolution. Annual output has not exceeded 4.5 million tons since 2011.
Feriani said lower production has caused Tunisia to lose markets and about $1 billion each year.
Phosphate exports were hit by repeated protests in the main producing region of Gafsa, where unemployed youth demanding jobs blockaded rail transport.