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Adidas lifts outlook after Q3 profit rises 25 pct

Adidas lifts outlook after Q3 profit rises 25 pct

Sportswear maker Adidas AG on Thursday reported a 25 percent increase in third-quarter earnings, helped by strong demand for football products and a return to growth in its Chinese business, and raised its full-year outlook.
Adidas said it made a net profit of (EURO)266 million ($373 million) in the July-September period, up from (EURO)213 million a year earlier.
Revenues climbed 20 percent to (EURO)3.47 billion from (EURO)2.89 billion. In currency-neutral terms, Adidas said revenues were up 10 percent; the euro traded above this year's levels in the third quarter of 2009.
The company raised its earnings forecasts for the full-year and now expects sales to increase by about 8 percent on a currency-neutral basis, up from a previous forecast of a mid-single-digit rise.
It pointed to "positive effects" from this year's football World Cup as well as "high exposure to fast-growing emerging markets as well as strong improvements at the Reebok brand."
It forecast earnings per share ranging from (EURO)2.68 to (EURO)2.70. In August, it had predicted a figure between (EURO)2.50 and (EURO)2.62; last year's figure was (EURO)1.22.
Adidas forecast that, on a currency-neutral basis, sales will grow at a mid-single-digit rate in 2011. It added that, although rising labor costs and currency volatility could dampen profitability, earnings per share should increase faster than sales, by between 10 and 15 percent.
"We have made an explosive comeback in 2010, and I fully expect us to round off the year on a high," CEO Herbert Hainer said, although "the fourth quarter is a seasonally small one in terms of sales and profit."
"We are ready to face any challenges 2011 may bring our way," Hainer added in a statement. "And I am already confident we have what it takes to deliver considerable top- and bottom-line improvements in the year ahead."
The company said its revenues in western Europe, which rose 9.4 percent, were "supported by strong growth in the football category." Revenues in China were up 21.4 percent, although that figure shrank to 9.5 percent in currency-neutral terms, and nine-month revenue there was down 2.9 percent.
Adidas was one of the official sponsors of the World Cup, which ended in July, and outfitted teams including champion Spain and third-place finisher Germany.
For the year's first nine months, net earnings climbed to (EURO)560 million from (EURO)226 million. Adidas said its overall tax rate decreased thanks to a more favorable regional earnings mix.
Revenues rose 14.3 percent to (EURO)9.06 billion.
Adidas shares were down despite the improved outlook, sliding 2.4 percent to (EURO)46.93 in Frankfurt.