Adidas shares are almost 10% higher, Wednesday, as the German-based sportswear business announced plans to buy back some €3 billion worth of shares in the next three years. It also said it expects profitability growth to be stronger than previously anticipated.
By 1100 BST, Adidas shares were trading 9.62% higher at €185.25. Prior to the jump, the stock has lost considerable ground in the past six months.
Share buyback plans
Ahead of the results release early Wednesday, Adidas announced Tuesday, its plans to buy back €3 billion of its stock by 2021. That would total a little under 9% of the its total share capital.
The trainer maker initially plans to purchase €1 billion worth of stock in 2018, with activity beginning March 22.
“The sizable multi-year buyback program announced today shows the confidence in our strategy ‘Creating the New’,” said Adidas CFO, Harm Ohlmeyer.
“We will continue to relentlessly drive operating cash flow, while at the same time investing back into our company to provide for future growth,” Ohlmeyer added.
Adidas results details
Following that positive news, the sportswear firm’s 2017 results showed that revenues rose 16% and net income grew 32% from 2016. Fourth quarter activity was also positive, with sales rising 12%.
Adidas proposed a dividend of €2.60 per share, which was above analyst’s expectations of around €2.53 per share.
The company’s positivity was also apparent in its profitability outlook. Adidas now anticipates long-term profitability to rise by between 22-24% between 2015 and 2020. That’s up from its previous guidance of 20-22%.
In addition, it’s results statement showed the German-based business is expecting sales growth of 10% during 2018 and for net profits to rise between 13% and 7%.
“2017 was a strong year – financially and operationally,” said Adidas CEO Kasper Rorsted.
“2018 is a key milestone on the road to achieving our long-term targets for 2020. We expect quality growth, with overproportionate bottom-line improvements. This will enable an even stronger increase in profitability by 2020 and allows us to upgrade our long-term target yet again,” Rorsted added.