| Asia growth runs up Nike profits |
| Last Updated(Beijing Time):2006-12-22 13:40 |
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Nike Inc said that sales growth in Asia and a tax agreement with the Dutch government boosted earnings eight percent in the second quarter for the world's largest athletic shoe and clothing company.
Profits rose to US$325.6 million, or US$1.28 per share, from US$301.1 million, or US$1.14 per share, a year ago.
Nike said on Wednesday the tax benefit claimed from the Dutch agreement boosted earnings per share by 13 US cents - but even without that benefit, the company beat Wall Street estimates of US$1.12 per share.
Sales increased 10 percent to US$3.82 billion for the quarter ended on November 30, up from US$3.47 billion in the same period last year.
"How are we doing? In a word, I'd say good," Nike Chief Executive Mark Parker said in a conference call with analysts.
The other brands owned by the company were doing particularly well, Parker said, especially Converse, with revenue up nearly 50 percent.
He also hinted that Nike was interested in acquiring other companies to invest some of the cash it is building up.
"There are no specific acquisitions on the radar screen right now," Parker said. "But I will add quickly that we are actively looking. I think in our history it's safe to say we've been a bit more reactive on the acquisition front, so we're taking a more proactive view."
John Shanley of Susquehanna Financial Group said other brands have become a significant contributor to the Nike bottom line.
"Those other businesses now represent nearly 14 percent of total revenue," Shanley said. "It's a huge increase."
He noted that operating profit for other brands jumped to US$54 million in the second quarter compared with US$23 million last year, following a jump to US$90 million in the first quarter compared with US$40 million for the same period last year.
"That's really having a profound effect on their bottom line," Shanley said. "These are very profitable businesses. I think Converse, with that 50 percent increase in revenue, is clearly the driver there."
By region, sales rose eight percent in the US to US$1.4 billion and six percent in Europe to US$1 billion. Sales in the company's smaller Asia Pacific and Americas segments climbed 15 percent and four percent, respectively.
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