Category: 3. Business

Posted: 30/07/2025

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Penningtons Manches Cooper announces the reappointment of Chief Executive Officer Helen Drayton for a second three-year term, beginning 1 October. Her re-election, unopposed and unanimously supported, follows a year of robust performance and strategic progress.

Strong financial performance

FY25 was the firm’s 16th consecutive year of growth, with revenue up 7% to £120 million, an 18.4% lift in profit to £42 million and a 25% increase in PEP to £555k.

“Our results reflect the power of a purposeful strategy,” Helen commented. “By focusing on delivering meaningful outcomes for our clients and creating agile, collaborative environments for our people, we’re building a business that’s both high-performing and anchored in our ambition to be the most human law firm.”

Three years of strategic progress

Since taking over the leadership, Helen’s priority has been to bring together the firm’s full service offering across its four divisions: Business Services, Dispute Resolution, Private Individuals and Real Estate, concentrating on servicing clients in its core and growth sectors – and internationally.

Client centric strategy

• Developed by a restructured Executive and Strategy Board, the 2023–26 Strategic Plan, focuses on putting clients at the heart of every decision and supporting colleagues to thrive and deliver the quality service clients have come to expect. 
• The introduction of a new key client programme is helping deepen relationships and drive innovation. 

People and culture

• The firm is equipping its lawyers with the tools they need to win, retain and grow client relationships. This has included an overhaul of the training academy for all associates, a new look ‘future leaders’ programme, the adoption of DCM Insights Activator Advantage training for all partners and the firmwide launch of LinkedIn Sales Navigator.
• The firm’s new family leave policy launched at the end of 2024, offering 26 weeks paid leave for all parents, and up to 52 weeks total leave, regardless of circumstances (pregnancy, surrogacy, adoption, or fostering).  It also offers an additional 12 weeks of full pay for parents of babies needing neonatal care. The policy also includes support for fertility treatment, pregnancy loss, and dependents with long-term care needs.

Growth and expansion

• Since the launch of the 2023–26 Strategic Plan, the firm has appointed 23 new partners through a combination of strategic lateral hires and internal promotions. The appointments align with core and growth sectors, and reflect a commitment to supporting clients’ developing needs.
• The firm’s new hub in the port of Antibes, in the Soth of France, enables direct access to the high-growth Mediterranean yacht sector and wider maritime industries.
• The Singapore office has also strengthened its shipping, commodities, and trade finance offering in the Asia-Pacific with two recent partner hires. 

Responsible business

• The firm has rejuvenated its responsible business programme over the last year. A new committee brings together key members of the executive team (including the CEO) together with specialist partners, to help shape and oversee the firm’s commitments to the environment and sustainability, diversity, equity and inclusion, and social impact in its communities.
• The firm’s five-year partnership with the Bumblebee Conservation Trust is among its long-term initiatives.

Real estate transformation

• This Spring saw the successful completion of the firm’s programme to modernise and enhance the working environments across its UK offices. Driven by the firm’s sustainability commitments, the project also aimed to create the best possible spaces for hybrid working and cross-team collaboration, including new premises in Guildford and Cambridge. The programme now moves to focus on the international offices. 

Major client wins

• Significant client mandates strengthened the firm’s position in its core and growth sectors, emphasising its ability to deliver complex work, such as:

• • The cross-border aviation ‘mega-trial’, in which the firm’s specialist aviation team successfully defended Swiss Re against significant reinsurance exposure.
  • The family team’s work on one the most significant cases involving  pre-nuptial agreements since the landmark Radmacher decision in 2010.
  • The Madrid office advising on the delivery of Europe’s first hybrid high speed passenger ferries, and members of the London based shipping team advising on the design, build and delivery of the world’s first ammonia marine duel-fuel supply system – both projects represented important milestones in the sector’s decarbonisation efforts.

“We’ve laid the foundations—and now we’re accelerating,” said Helen.  “It’s a genuine privilege to continue leading such a talented and ambitious team. I’m looking forward to helping shape the next chapter of our journey, really harnessing the successes of the last three years with a clear focus on what matters most to our clients and people.”

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Emma Walmsley, Chief Executive Officer, GSK:

“GSK’s strong momentum in 2025 continues with another quarter of excellent performance driven mainly by Specialty Medicines, our largest business, with double-digit sales growth in Respiratory, Immunology & Inflammation, Oncology and HIV. We also continue to make very good progress in R&D, with 3 major FDA approvals achieved so far this year, 16 assets now in late-stage development, and 4 more promising medicines to treat cancer, liver disease and HIV expected to enter Phase III and pivotal development by the end of the year. With all this, we now expect to be towards the top end of our financial guidance for 2025 and remain confident in our long-term outlooks.”

Assumptions and cautionary statement regarding forward-looking statements

The Group’s management believes that the assumptions outlined above are reasonable, and that the guidance, outlooks, and expectations described in this report are achievable based on those assumptions. However, given the forward-looking nature of these guidance, outlooks, and expectations, they are subject to greater uncertainty, including potential material impacts if the above assumptions are not realised, and other material impacts related to foreign exchange fluctuations, macro-economic activity, the impact of outbreaks, epidemics or pandemics, changes in legislation, regulation, government actions, including the impact of any potential tariffs or other restrictive trade policies on the Group’s products, or intellectual property protection, product development and approvals, actions by our competitors, and other risks inherent to the industries in which we operate.

This document contains statements that are, or may be deemed to be, “forward-looking statements”. Forward-looking statements give the Group’s current expectations or forecasts of future events. An investor can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as ‘anticipate’, ‘estimate’, ‘expect’, ‘intend’, ‘will’, ‘project’, ‘plan’, ‘believe’, ‘target’ and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, dividend payments and financial results. Other than in accordance with its legal or regulatory obligations (including under the Market Abuse Regulation, the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), the Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. The reader should, however, consult any additional disclosures that the Group may make in any documents which it publishes and/or files with the SEC. All readers, wherever located, should take note of these disclosures. Accordingly, no assurance can be given that any particular expectation will be met and investors are cautioned not to place undue reliance on the forward-looking statements.

All guidance, outlooks and expectations should be read together with the guidance and outlooks, assumptions and cautionary statements in this Q2 2025 earnings release and in the Group’s 2024 Annual Report on Form 20-F.

Forward-looking statements are subject to assumptions, inherent risks and uncertainties, many of which relate to factors that are beyond the Group’s control or precise estimate. The Group cautions investors that a number of important factors, including those in this document, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. Such factors include, but are not limited to, those discussed under Item 3.D ‘Risk Factors’ in the Group’s Annual Report on Form 20-F for 2024. Any forward-looking statements made by or on behalf of the Group speak only as of the date they are made and are based upon the knowledge and information available to the Directors on the date of this report.

by Lorenzo Cappiello, Gianluigi Ferrucci, Angela Maddaloni and Veronica Veggente^[1]

Climate-related risks are increasingly recognised as an important threat to long-term fiscal sustainability, raising questions about the extent to which credit rating agencies integrate these risks into their sovereign rating assessments. This article addresses this question in a large sample of advanced, emerging and low-income economies using detailed measures of climate risks. It finds that higher temperature anomalies and more frequent natural disasters – measures of physical risk – lead to lower credit ratings. However, the overall impacts are low and their effects negligible compared with other rating determinants. Ambitious CO₂ reduction targets and actual emission reductions have been reflected in higher ratings, but only since the 2015 Paris Agreement, suggesting increased attention has been paid in recent years to risk related to the transition to a greener economy. Additionally, highly indebted countries and countries reliant on fossil fuel revenues have been assigned lower ratings post-2015, while exporters of transition-critical materials have received higher ratings. These findings highlight the need for caution in using credit ratings for regulatory and macroeconomic policy, as they seem to only partially account for environmental considerations.

How do climate risks affect sovereign ratings?

Climate change can exert significant pressure on countries’ fiscal positions. This occurs through well-documented channels, including rising costs associated with more frequent and severe natural disasters, essential investment in adaptation, and financing the transition to a green economy (Mallucci, 2022; Klusak et al., 2023; Volz et al., 2020; and Zenios, 2022). Sovereign credit ratings aim to measure a country’s creditworthiness and should take these pressures into account. But do they?

Credit rating agencies (CRAs) have recognised that climate change can significantly affect sovereign ratings. For example, pressed by central banks and regulators,^[2] CRAs have begun disclosing how they incorporate climate risks into their rating methodologies.^[3] Major CRAs have also acquired stakes in firms specialising in climate risk data and analytics, as they strive to build capacity and expertise in evaluating climate-related financial risks.^[4] Moreover, historical data show that natural disasters often lead to rating downgrades, especially for shock-prone, low-income countries.^[5]

At the same time, several obstacles hinder the full and systematic integration of climate risks into CRAs’ rating frameworks. These include data limitations, the high uncertainty about the economic impact of climate change, doubts about governments’ commitments to net-zero emission targets, and the relatively short time horizon of credit ratings compared with the long-term nature of climate change (Kraemer, 2021).

Thus, the extent to which sovereign ratings incorporate climate risks is an empirical question. In our study (Cappiello et al., 2025), we examine whether CRAs include physical and transition climate risks in their models and also whether they have assigned greater weight to climate-related factors since the Paris Agreement was adopted in 2015. Our analysis draws on data covering an extended period and a large sample of countries, including advanced, emerging and low-income economies (Figure 1).

We focus on the sovereign ratings issued by the four major credit rating agencies – S&P Global Ratings, Moody’s, FitchRatings and Morningstar DBRS. Because rating disagreement among these agencies is limited, with approximately 90% of ratings differing by no more than one notch since 1991, we use the average ratings across all these agencies as our dependent variable.

Our findings suggest that CRAs take physical risk exposure into account when assessing the probability of sovereign default, which is consistent with anecdotal evidence that natural disasters can lead to downgrades, particularly for low-income countries. Conversely, countries that are more resilient to extreme weather events – typically, advanced economies – tend to receive higher ratings.

However, transition risk factors, such as carbon emissions, primary energy consumption, and CO₂ reduction targets, are not reflected in ratings. Moreover, even when climate variables are statistically significant, they still only have a marginal impact on credit ratings (Figure 2).

Have CRAs changed their assessment of climate risks since the Paris Agreement?

The Paris Agreement marked a significant turning point in public awareness of the consequences of climate change and the urgent need for policy action. This heightened awareness has resulted in more stringent climate policies worldwide that increasingly warrant their inclusion in credit ratings. In addition, after the Paris Agreement was adopted in 2015, all major CRAs signed the UN Principles for Responsible Investment in May 2016, committing to systematically evaluate the relevance of environmental factors in credit assessments and to review how these factors are integrated into credit analysis. Thus, it is reasonable to conjecture that since these events CRAs have reassessed climate change risks and incorporated transition costs into their models for evaluating sovereign creditworthiness. To test this hypothesis, we define a natural experiment using the Paris Agreement as an exogenous event that may have shifted CRAs’ assessments of climate-related risks.

To determine whether major CRAs have updated their models to reflect this commitment to include environmental factors, we rank countries’ exposures to climate risks using the Climate Change Risk Country Scoring Model developed by Ferrazzi et al. (2021). We categorise countries into two groups – countries with high exposure to climate risks (the treatment group) and those with low exposure (the control group) – using the median score as a divider. We apply a difference-in-difference methodology for estimation.

Our findings show that since the Paris Agreement CRAs have assigned lower ratings to countries with higher exposure to physical risk relative to the control group (Figure 3, panel a). This suggests that CRAs recognise that increasingly frequent natural disasters can have a significant impact on sovereign balance sheets, particularly in low-income countries, and that these risks should be adequately reflected in credit risk models. Additionally, we observe a shift in how CRAs evaluate transition risk, with higher ratings awarded to countries that commit to more ambitious CO₂ emission reduction targets and achieve lower CO₂ emission intensity post-Paris Agreement. This indicates that CRAs have started to “reward” countries, including smaller ones, that diversify away from reliance on fossil fuels and adopt cleaner energy sources.

The role of stranded assets, transition-critical materials, and fiscal capacity

Finally, we investigate three country-specific factors that may amplify or mitigate the effects of climate risk exposures: reliance on fossil fuel revenues, high sovereign debt levels and reserves of commodities crucial for the green transition. We find that these factors significantly influence sovereign ratings (Figure 3, panel b). Sovereigns more dependent on fossil fuel revenues and exposed to both physical and transition risks have tended to receive lower ratings since the Paris Agreement, likely owing to the “stranding” of assets, i.e. fossil fuel reserves potentially losing value before the end of their expected economic life owing to decarbonisation efforts. Additionally, countries with high sovereign debt generally receive lower credit ratings post-2015, indicating that high debt levels amplify climate risk exposures. The significant coefficients suggest that constrained fiscal capacity limits a country’s options for mitigating the impacts of rising physical risk and for funding the green transition. Conversely, countries that are major exporters of transition-critical materials (TCM) – such as copper, graphite, nickel, manganese, lithium, cobalt and rare earths – tend to receive higher ratings despite climate risks.

Conclusions

Our results provide insights for market participants and policymakers, as credit ratings are widely used to assess the default probability of sovereign debt and are integral to various economic and regulatory policies. If sovereign ratings do not systematically reflect climate change risks, there is a risk of future asset repricing, which could transmit to different parts of the financial system, potentially affecting banks, insurers, and other financial institutions that hold sovereign bonds. This could lead to financial instability, if climate-related shocks cause sudden rating downgrades and asset value losses.

Moreover, underestimation of climate risks in credit ratings could mislead market participants into taking on risks which they are not fully aware of and which are therefore not adequately reflected in risk premia. Conversely, sovereigns that implement effective adaptation and mitigation measures may not receive adequate rewards in the form of lower borrowing costs. When using sovereign debt as collateral in monetary policy operations, central banks may hold assets that are more vulnerable to climate-related shocks than they think, if the credit ratings used do not reflect climate risks. Therefore, our findings highlight the need for caution when using credit ratings for regulatory and macroeconomic policy, as these ratings appear to underestimate environmental factors.

References

Cappiello, L., Ferrucci, G., Maddaloni, A. and Veggente, V. (2025), “Creditworthy: do climate change risks matter for sovereign credit ratings?”, Working Paper Series, No 3042, ECB, Frankfurt am Main, March.

Ferrazzi, M., Kalantzis, F. and Zwart, S. (2021), “Assessing climate change risks at the country level: the EIB scoring model”, Working Paper Series, No 2021/03, European Investment Bank.

Klusak, P., Agarwala, M., Burke, M., Kraemer, M. and Mohaddes, K. (2023), “Rising Temperatures, Falling Ratings: The Effect of Climate Change on Sovereign Creditworthiness”, Management Science, Vol. 69, No 12, pp. 7468-7491.

Kraemer, M. (2021), “The future is today: Why truly long-term sovereign ratings are needed now”, CEPS Policy Insights, No 2021-11, September.

Mallucci, E. (2022), “Natural disasters, climate change, and sovereign risk”, Journal of International Economics, Vol. 139, 103672.

Volz, U., Beirne, J., Ambrosio Preudhomme, N., Fenton, A., Mazzacurati, E., Renzhi, N. and Stampe, J. (2020), Climate Change and Sovereign Risk, SOAS University of London, Asian Development Bank Institute, World Wide Fund for Nature Singapore and Four Twenty Seven, London, Tokyo, Singapore, and Berkeley, California.

Zenios, S.A. (2022), “The risks from climate change to sovereign debt”, Climatic Change, Vol. 172(30), pp. 1-19.

• Macroeconomic and geopolitical headwinds weigh substantially on half-year results. Porsche responds with comprehensive strategic realignment measures.
• Extensive rescaling and a more flexible product portfolio are its objectives.
• Special charges of around 1.1 billion euros, including for battery activities, US tariffs and the strategic realignment.
• Group sales revenue in the first half of the year at 18.16 billion euros, with operating profit at 1.01 billion euros.
• Record deliveries in North America as well as in the Overseas and Emerging Markets.
• The proportion of electrified vehicles in Europe is around 57 per cent, exceeding the target set at the time of the IPO.
• Success in quality ranking and in motorsport.
• CEO Oliver Blume: “The world is changing dramatically. That’s why we are fundamentally developing Porsche. Our completely revamped product range is very well received by our customers. We therefore expect that we will begin to see positive momentum again from 2026 onwards.”
• CFO Dr Jochen Breckner: “The aim of our strategic realignment is to strengthen our profitability and resilience.”

 

In the first six months of 2025, the sports car manufacturer generated a group sales revenue of 18.16 billion euros (previous year: 19.46 billion euros). Group operating profit amounted to 1.01 billion euros (previous year: 3.06 billion euros). The group operating return on sales was 5.5 per cent (previous year: 15.7 per cent).

Business performance was impacted by ongoing macroeconomic and geopolitical challenges. “We continue to face significant challenges around the world. And this is not a storm that will pass. The world is changing dramatically – and, above all, differently to what was expected just a few years ago. Some of the strategic decisions made back then appear in a different light today. That is why we are fundamentally developing Porsche further,” says Oliver Blume, Chairman of the Executive Board of Porsche AG. “Our completely revamped product range is very well received by our customers. We expect that we will begin to see positive economic momentum again from 2026 onwards.”

According to Blume, three factors in particular are shaping the current situation for Porsche: “In China, demand in the premium and luxury segment has fallen sharply. In the US, import tariffs are also putting huge pressure on our business. Looking ahead, the movement of the dollar could also have an impact. In addition, the transformation to electric mobility is progressing more slowly than expected overall, with consequences for the supplier network.” In light of these conditions, Porsche’s management is resolutely pushing ahead with extensive measures to rescale and recalibrate the company. In the first half of 2025, special expenses for the company’s realignment amounted to around 200 million euros, and to around 500 million euros for battery activities. The US import tariffs resulted in an additional burden of 400 million euros because Porsche offered its customers price protection.

Second package of measures to be negotiated with employee representatives

“The aim of our strategic realignment is to strengthen our profitability and resilience,” says Dr Jochen Breckner, Member of the Executive Board for Finance and IT. In the second half of this year, Porsche will start negotiations with employee representatives on a second package of measures, as announced. “In order to make Porsche fit for the future, we will discuss far-reaching approaches,” says Breckner. “These measures are expected to have a positive impact on earnings and cash flow in the coming years.”

Automotive net cashflow amounted to 394 million euros (previous year: 1.12 billion euros). The automotive net cashflow margin was 2.4 per cent (previous year: 6.3 per cent). In the first half of this year, Porsche delivered 146,391 vehicles to its customers worldwide. Of these, 36.1 per cent were electrified. This percentage is made up of 23.5 per cent all-electric vehicles and 12.6 per cent plug-in hybrids. In Europe, the proportion of electrified vehicles was around 57 per cent. This exceeded the target set at the time of the IPO. The best-selling model was the Macan, with 45,137 deliveries worldwide. Porsche set new delivery records in North America as well as in the Overseas and Emerging Markets.

Porsche Macan, best-selling model line: almost 60 per cent fully electric

Porsche significantly increased the share of electrified vehicles sold in the first half of 2025.

“We will continue to manage supply and demand in close coordination with our sales regions in accordance with our ‘value over volume’ strategy. This is based on our highly attractive product range and the strength of our brand,” says Breckner. “We are also seeing positive momentum from our individualisation offerings.”

Planned ramp-up of battery cell production at V4Smart

A few months after the founding of V4Smart GmbH, the Porsche AG subsidiary has reached its first milestone with the second production line in Nördlingen (Bavaria) now ramped up as planned. Alongside the line in Ellwangen, it is currently the only production facility in Europe for high-performance lithium-ion round cells.

Porsche has also performed well in terms of quality. In the recently published J.D. Power APEAL study in the US, Porsche ranked first among all manufacturers in customer perception. In motorsport, the sports car manufacturer achieved an impressive double victory last weekend. At the season finale of the Formula E in London, Porsche won the world championship title in both the team and manufacturer standings. Prior to that, Porsche celebrated its second consecutive class victory in the LMGT3 category at the 24 Hours of Le Mans with the Porsche 911 GT3 R. In the overall standings, the Porsche 963 finished second at Le Mans after a thrilling finale.

Forecast for 2025 adjusted after tariff agreement 

Following the EU Commission’s agreement with the US government on import tariffs, Porsche has adjusted its outlook for 2025. This takes into account the expected effects of the new tariffs as well as the tariff effects that have been in place since June, which had not yet been included in the previous forecast. The updated forecast now includes expected import tariffs of 15 per cent from August 1, as well as potential countermeasures such as price adjustments. These are designed to mitigate the financial impact. Porsche continues to expect group sales revenue in the range of 37 to 38 billion euros. This is in line with the previous forecast. At the lower end of the range, Porsche expects a group return on sales of 5 per cent and an automotive net cashflow margin of 3 per cent. At the upper end of the range, a group return on sales of 7 per cent and an automotive net cashflow margin of 5 per cent are expected. The upper end remains in line with the original forecast from the end of April. The outlook includes expected special effects related to the strategic realignment, amounting to around 1.3 billion euros.

Porsche AG Group	H1 2025	H1 2024	Alteration
Sales revenue	€18.16 billion	€19.46 billion	-6.7%
Operating profit	€1.01 billion	€3.06 billion	-67.0%
Operating return on sales	5.5%	15.7%
Deliveries to customers	146,391	155,945	-6.1%

 

Disclaimer

This press release contains forward-looking statements and information that reflect Dr. Ing. h.c. F. Porsche AG’s current views about future events. These statements are subject to many risks, uncertainties, and assumptions. They are based on assumptions relating to the development of the economic, political, and legal environment in individual countries, economic regions, and markets, and in particular for the automotive industry, which we have made on the basis of the information available to us and which we consider to be realistic at the time of publication. If any of these risks and uncertainties materializes or if the assumptions underlying any of the forward-looking statements prove to be incorrect, the actual results may be materially different from those Porsche AG expresses or implies by such statements. Forward-looking statements in this presentation are based solely on the circumstances at the date of publication. We do not update forward-looking statements retrospectively. Such statements are valid on the date of publication and can be superseded. This information does not constitute an offer to exchange or sell or an offer to exchange or buy any securities. 

BANGKOK — Shares in Asia were mostly higher on Wednesday after the U.S. and China ended their latest round of trade talks without a deal. U.S, futures edged higher while oil prices slipped.

Beijing’s top trade official said China and the United States agreed during two days of talks in Stockholm, Sweden, to work on extending an Aug. 12 deadline for imposing higher tariffs on each other. The U.S. side said an extension was discussed, but not decided on.

U.S. Trade Representative Jamieson Greer says the American team would head back to Washington and “talk to the president about whether that’s something that he wants to do.”

A Friday deadline is looming for many of Trump’s proposed tariffs on other countries. Several highly anticipated economic reports are also on the way, including the latest monthly update on the job market.

“Markets had been floating on a cloud of trade optimism — first Japan, then the EU — but the sugar high is wearing off. Now, with U.S.-China talks dragging on in Stockholm, there’s a growing sense that the momentum is stalling,” Stephen Innes of SPI Asset Management said in a commentary.

Hong Kong’s Hang Seng index shed 0.3% to 25,441.64 while the Shanghai Composite index gained 0.5% to 3,628.53.

Tokyo’s Nikkei 225 index edged less than 0.1% higher to 40,687.17. Gains for electronics companies were offset by losses for major exporters like Toyota Motor Corp. and Honda Motor Co.

Australia’s S&P/ASX 200 climbed 0.6% to 8,759.20 and in South Korea, the Kospi gained 0.9% to 3,259.00.

Taiwan’s Taiex rose 0.9% while the Sensex in India edged 0.1% higher.

On Tuesday, U.S. stock indexes edged back from their record levels as a busy week for Wall Street picked up momentum. The S&P 500 fell 0.3% to 6,370.86, while the Dow Jones Industrial Average lost 0.5% to 44,632.99.

The Nasdaq composite was down 0.4% at 21,098.29.

SoFi Technologies jumped 7.4%, but Merck dropped 2.2% and UPS sank 9.2% following a torrent of profit reports from big U.S. companies. They’re among the hundreds of companies telling investors this week how much they made during the spring, including nearly a third of the stocks in the S&P 500 index.

UnitedHealth Group dropped 5.8% after reporting a profit for the spring that fell short of analysts’ expectations. It also gave a forecast for profit over all of 2025 that investors found disappointing. The health care giant said it expected to earn at least $16 per share, when analysts were looking for something close to $20, according to FactSet.

Shares of Novo Nordisk that trade in the United States tumbled 21.3% after the Danish company cut its forecast for sales growth this year, in part because of lower expectations for its Wegovy weight-loss drug amid high competition.

Treasury yields sank as the Federal Reserve began a two-day meeting on interest rates.

Despite pressure from President Donald Trump for lower rates, which would give the economy a boost, the widespread expectation is that the Fed will wait for more data about how Trump’s tariffs are affecting inflation and the economy before making its next move.

The U.S. economy appears to be slowing.

One report on Tuesday said that U.S. employers were advertising fewer job openings at the end of June than a month before, though still more than economists expected. A separate report said confidence rose among U.S. consumers, but a measure of their expectations about the near term remains below the level that typically signals a recession ahead.

In other dealings early Wednesday, U.S. benchmark crude oil picked up 7 cents to $69.28 per barrel, while Brent crude, the international standard, was up 13 cents at $71.82 per barrel.

The dollar fell to 148.13 Japanese yen from 148.48 yen. The euro rose to $1.1554 from $1.1546.

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AP Business Writers Matt Ott and Stan Choe contributed.

Major developments Q2 2025:

• adidas brand grows 12% in Q2 with strong increases across categories, channels and markets
• Net sales of € 6.0 billion include negative FX translation impact of around € 300 million
• Gross margin improves 0.9 percentage points to 51.7% despite unfavorable effects from currencies, business mix, and tariffs
• Operating profit up 58% to € 546 million
• Operating margin improves 3.2 percentage points to 9.2%
• Net income from continuing operations increases 77% to € 375 million
• Full-year guidance confirmed taking into account elevated uncertainty due to US tariffs and macroeconomic risks

Major developments H1 2025:

• Revenue growth of 14% for the adidas brand in H1 with double-digit increases across all channels and markets
• Gross margin expands 0.9 percentage points to 51.9%
• Operating profit up 70% to € 1.2 billion, reflecting an operating margin of 9.6%
• Net income from continuing operations more than doubles to € 811 million

 

adidas CEO Bjørn Gulden:

“I am very happy and actually again proud of what our team has delivered in both the second quarter and first half of 2025. We have continuously grown double digits and we ended the first half year with growth of 14% for the adidas brand. We have been able to create brand heat, extend the lifecycle of existing franchises, created new franchises, extended the brand momentum also into apparel with a 17% growth in Q2, and we have seen strong growth across our Performance categories with Running leading in Q2 with more than 25% growth.

The 12% growth for the adidas brand in Q2 and 14% growth for the first half year created enough leverage to almost deliver already now our mid-term target of a 10% EBIT margin. The 9.2% EBIT margin in Q2 and 9.6% for the first half is higher than we had initially planned and it is of course achieved due to increased revenue, a very strong gross margin and tighter cost control.

We still have a lot to improve and we are far away from having optimized our business model. We are convinced that being a global brand with a local mindset is the right strategy to be globally successful. Our vision is to hire, develop and retain the best people to run our business in the different markets, to be close to the consumer and the local culture, have the right products and the relevant marketing for each market. We have the ambition of becoming the leader in all markets except for North America, where we should first have the ambition to double our business. We will not be number one in all markets, but our local leaders should have that ambition and identify what is necessary in terms of products, marketing, organization and resources to achieve this. We in global management must then set the priorities and allocate the resources to the different markets accordingly. We feel the current global growth and the success in markets like Greater China, South Korea or Japan prove that our strategy works and that we are moving in the right direction!

The year has started great for us and normally we would now be very bullish in our outlook for the full year. We feel the volatility and uncertainty in the world does not make this prudent. We still do not know what the final tariffs in the US will be. We have already had a negative impact in the double-digit euro millions in Q2 and the latest indications of tariffs will directly increase the cost of our products for the US with up to € 200 million during the rest of the year. We do also not know what the indirect impact on consumer demand will be should all these tariffs cause major inflation. I have seen that many companies have either removed their outlook fully or reduced it dramatically. We have decided to stay with our initial outlook for the full year and a guidance for an operating profit of between € 1.7 billion and € 1.8 billion. We currently feel confident to deliver it, but of course this might change – also upwards should headwinds be less than we currently assume.

We will as always manage through this volatile environment and all the uncertainties as good as we can but always with the objective of strengthening the adidas brand and our company mid- and long-term. That is what adidas deserves!”

 

Second-quarter results

Continued double-digit growth for adidas brand with 12% currency-neutral increase in Q2

In the second quarter of 2025, currency-neutral revenues for the adidas brand increased 12% versus the prior year reflecting its ongoing momentum. Having completed the sale of the remaining Yeezy inventory at the end of last year, the company’s results for the second quarter of 2025 do not include any Yeezy revenues (2024: around € 200 million). Including Yeezy sales in the prior year, currency-neutral revenues increased 8%. In euro terms, revenues grew 2% to € 5,952 million (2024 € 5,822 million), as the strengthening of the euro against several currencies led to an unfavorable translation impact of around € 300 million in the quarter.

Strong growth in footwear coupled with double-digit increase in apparel

Footwear revenues for the adidas brand increased 9% during the quarter on a currency-neutral basis (+3% incl. Yeezy). Several categories posted double-digit footwear growth, most notably Running, Training, Sportswear, and Performance Basketball. Strong growth in Originals, Outdoor, and Specialist Sports also contributed to the increase. Apparel sales grew 17% in the quarter, as the strong product offering in Originals, Training, Running, Golf, and Specialist Sports drove double-digit increases in those categories. Sportswear, Football, and Outdoor further added to the growth, reflecting a broadening of the brand’s momentum also in apparel. Accessories grew 7% during the quarter.

adidas brand with double-digit increases in both Performance and Lifestyle

On a currency-neutral basis, Performance revenues increased 12% during the second quarter, driven by strong double-digit growth in the Running, Training, and Performance Basketball categories. In Running, adidas introduced the second generation of its record-breaking Adios Pro Evo ahead of London Marathon, where adidas athletes once more delivered a double victory. The brand also launched the Boston 13, the pinnacle training shoe in the Adizero franchise, ahead of the Boston Marathon weekend. Together with the Adios Pro 4, adidas’ lightweight racing shoe, these launches complete the strong footwear offering for ambitious runners. Driven by the strong global credibility of the Adizero franchise as well as higher supply and an increasing number of colorways on offer, the Evo SL, the most comfortable choice in the Adizero family, contributed significantly to an increase of almost 30% across the brand’s running footwear business. Growth in Training benefited from the increasing popularity of the brand’s head-to-toe offerings, including the Dropset and Rapidmove franchises in footwear and the Essentials and Power collections in apparel. The increase in Performance Basketball was driven by continued success of Anthony Edwards’ AE 1, the Harden Vol. 9, and Damian Lillard’s Dame 9, with frequent iterations across the brand’s portfolio of basketball signature models. Football managed to maintain the prior-year revenue level, which included the company’s highly successful business related to last year’s UEFA EURO and CONMEBOL Copa América tournaments. The F50 football boot remained a standout in terms of growth and awareness, with F50 Sparkfusion launching ahead of the UEFA Women’s EURO as a boot specifically designed for female football players. Activations with the likes of Aitana Bonmatí, Leo Messi, and Mo Salah further authenticated the F50 franchise. This also led to positive halo effects on the brand’s growing football lifestyle offering which continues to drive and benefit from the strong soccer culture trend. On the back of technical product innovation as well as retro-inspired collections with the iconic Trefoil logo, other categories, including Golf, Outdoor, Specialist Sports, and Motorsport also contributed to the broad-based growth.

Lifestyle revenues for the adidas brand increased 13% during the second quarter, driven by double-digit growth in both Originals and Sportswear. Fresh and relevant makeovers continued to fuel healthy growth for the brand’s popular Terrace offering and Retro Running franchises. Those included restocks of sought-after animal print and metallic versions or a football-themed Samba pack featuring seven of the company’s biggest clubs in the world. Demand and supply for the brand’s Low Profile offering including Tokyo, Japan, Adiracer, and Rasant continued to scale, with ballerina versions such as the Taekwondo Mei being particularly popular. Local activations of the Superstar gained traction across several markets, with the global campaign featuring icons like Samuel L. Jackson, Missy Elliott, and Anthony Edwards kicking off the next phase of the franchise relaunch in July. To round off its offering with modern footwear silhouettes, the brand also continued to incubate Goukana as well as the Adistar Cushion platform, building on the popularity of Pharrell Wiliam’s Adistar Jellyfish, and revealed the F50 Megaride silhouette during Paris Fashion Week Men’s. The strong momentum of Originals continued to expand into apparel, with classics such as Firebird scaling across channels and contributing to double-digit growth. Collaborations with Edison Chen, Sporty & Rich, and exclusive collections with several retail partners further supported the growth in Originals apparel. In Sportswear, double-digit growth continued as adidas is successfully leveraging its strong brand and product momentum, in Originals and other major categories, into franchises tailored to commercial price points. Additionally, innovative launches such as Climacool, a shoe with a unique lattice structure engineered entirely through 3D printing technology, or Soft Lux in apparel, featuring soft knitted fabrics for enhanced comfort, were well received by sportswear consumers.

Strong underlying growth across all markets

From a regional perspective, currency-neutral net sales for the adidas brand continued to grow at double-digit rates in both North America (+15%; +8% incl. Yeezy) and Greater China (+11%; +2% incl. Yeezy) during the second quarter. In addition, Latin America (+23%; +22% incl. Yeezy), Emerging Markets (+14%; +12% incl. Yeezy) and Japan/South Korea (+15%; +13% incl. Yeezy) also recorded double-digit increases. In these markets, growth was broad-based as reflected in double-digit improvements in both the wholesale and DTC business. Revenues for the adidas brand in Europe grew 7% (+4% incl. Yeezy), despite the non-recurrence of the strong commercial success related to last year’s UEFA EURO, which had generated revenues of around € 100 million in the prior-year quarter.

Strong consumer demand across all channels

From a channel perspective, strong sell-through rates and increased shelf space allocations for the adidas brand continued to drive wholesale revenues, which increased 14% on a currency-neutral basis (+11% incl. Yeezy). Own retail revenues were up 9% (+8% incl. Yeezy), driven by like-for-like growth in the company’s global fleet of own stores. E‑commerce sales also increased 9% (-3% incl. Yeezy) amid an ongoing focus on full-price propositions and on top of more than 30% growth in the prior-year quarter. As a result, sales in the brand’s direct-to-consumer (DTC) channels grew 9% (+3% incl. Yeezy).

Underlying gross margin improves 1.2 percentage points to 51.7%

The company’s gross margin increased 0.9 percentage points to 51.7% during the second quarter (2024: 50.8%). The year-over-year increase of the adidas brand gross margin was even stronger at 1.2 percentage points. The positive development was mainly driven by reduced discounting as well as by lower product and freight costs, which more than offset the unfavorable impacts from currencies and business mix. The first negative effects from increased tariffs also weighed on the gross margin development.

Ongoing brand investments alongside strong overhead leverage

Other operating expenses decreased by 3% to € 2,549 million in the second quarter (2024: € 2,637 million). As a percentage of sales, other operating expenses decreased 2.5 percentage points to 42.8% (2024: 45.3%). Marketing and point-of-sales expenses were up 1% to € 712 million (2024: € 707 million) as the company continued its brand investments. These investments include ‘You Got This,’ adidas’ multi-year brand campaign that features a series of global and local chapters, and ‘The Original,’ a campaign that connects young generations with Originals’ iconic silhouettes. In addition, marketing investments comprise new and extended partnerships, including in Football and Motorsport, activations around events such as Women’s EURO, as well as support for new product launches. As a percentage of sales, marketing and point-of-sale expenses were 12.0% (2024: 12.1%). Operating overhead expenses decreased 5% to € 1,837 million (2024: € 1,930 million), as the company continued to invest into its sales and distribution capabilities while managing its overall cost base. As a percentage of sales, operating overhead expenses decreased 2.3 percentage points to 30.9% (2024: 33.2%), reflecting strong operating leverage.

Operating profit grows strongly to € 546 million as margin increases 3.2 percentage points

The company’s operating profit increased by 58% to € 546 million in the second quarter (2024: € 346 million), reflecting an operating margin increase of 3.2 percentage points to a level of 9.2% (2024: 5.9%). Having completed the sale of the remaining Yeezy inventory at the end of last year, there was no Yeezy contribution to the company’s operating profit in the quarter (2024: around € 50 million). Net financial expenses increased to € 58 million (2024: € 42 million), mainly reflecting negative currency effects. Against an income before taxes of € 488 million (2024: € 304 million), the company recorded income taxes of € 114 million (2024: € 93 million), reflecting a tax rate of 23.3% (2024: 30.5%). As a result, net income from continuing operations increased by 77% to € 375 million (2024: € 211 million) and led to basic and diluted EPS from continuing operations of € 2.03 (2024: € 1.09).

Half-year results

Currency-neutral revenues for the adidas brand up 14% in the first half of the year

In the first half of 2025, currency-neutral revenues for the adidas brand increased 14% compared to the prior-year period. Having completed the sale of the remaining Yeezy inventory at the end of last year, the company’s results for the first half of 2025 do not include any Yeezy revenues (2024: around € 350 million). Including Yeezy sales in the prior year, currency-neutral revenues increased 10%. In euro terms, revenues were up 7% to € 12,105 million (2024: € 11,280 million) as currency developments led to an unfavorable translation impact.

Double-digit growth in footwear and apparel reflecting strong adidas brand momentum

On a currency-neutral basis, footwear revenues for the adidas brand increased 16% during the first half of the year (+9% incl. Yeezy), reflecting strong double-digit growth in Originals, Sportswear, Running, Training, and Performance Basketball. Apparel sales accelerated significantly and grew 12%, led by double-digit growth in Originals, Sportswear, Running, Training, and Outdoor. Accessories grew 8% during the first half of the year.

adidas brand up double digits across all markets

In the first six months of 2025, currency-neutral revenues for the adidas brand increased at double-digit rates in all markets. Europe grew 11% (+9% incl. Yeezy), while North America was up 14% (+6% incl. Yeezy) and Greater China increased 13% (+8% incl. Yeezy). In addition, Latin America (+25%; +24% incl. Yeezy), Emerging Markets (+19%; +18% incl. Yeezy) and Japan/South Korea (+15%; +13% incl. Yeezy) also recorded double-digit increases.

Double-digit growth across channels in the first half of 2025

Growth of the adidas brand was also strong and broad-based from a channel perspective. Wholesale revenues increased 16% on a currency-neutral basis (+15% incl. Yeezy), while the DTC business increased 12% (+4% incl. Yeezy). Within DTC, own retail revenues were up 11% (+10% incl. Yeezy) and e‑commerce sales increased 13% (-3% incl. Yeezy).

Gross margin improves strongly to 51.9%

The company’s gross margin increased 0.9 percentage points to 51.9% (2024: 51.0%) during the first half of the year. The year-over-year increase of the adidas brand gross margin was even stronger at 1.4 percentage points. The positive development was mainly driven by lower product and freight costs as well as reduced discounting, which more than offset unfavorable impacts from currencies and business mix. The first negative effects from increased tariffs also weighed on the gross margin development.

Operating margin reaches 9.6% in the first half of 2025

Other operating expenses increased slightly by 1% to € 5,165 million (2024: € 5,115 million) in the first six months of 2025. As a percentage of sales, other operating expenses decreased 2.7 percentage points to 42.7% (2024: 45.4%). Marketing and point-of-sale expenses were up 7% to € 1,458 million (2024: € 1,363 million). As a percentage of sales, marketing and point-of-sale expenses were flat at 12.0% (2024: 12.1%). Operating overhead expenses decreased 1% to € 3,707 million (2024: € 3,752 million). As a percentage of sales, operating overhead expenses decreased 2.6 percentage points to 30.6% (2024: 33.3%). As a result, the company’s operating profit amounted to € 1,156 million (2024: € 682 million), reflecting an operating margin increase of 3.5 percentage points to 9.6% (2024: 6.0%). Having completed the sale of the remaining Yeezy inventory at the end of last year, there was no Yeezy contribution to the company’s operating profit in the first six months of 2025 (2024: around € 100 million). Net income from continuing operations more than doubled, increasing 112% to € 811 million (2024: € 382 million), while basic and diluted earnings per share from continuing operations increased to € 4.47 (2024: € 2.05).

Operating working capital investments to support further top-line growth

Inventories increased 16% to € 5,261 million as at June 30, 2025 (2024: € 4,544 million) and were up 22% in currency-neutral terms. This development reflects the very low comparison base in the prior year, earlier product purchases, and the planned growth for the second half of the year. The vast majority of the inventory position is related to current or future seasons. Operating working capital was up 19% to € 5,651 million (2024: € 4,756 million) and increased 28% in currency-neutral terms. Average operating working capital as a percentage of sales decreased 1.0 percentage points to 20.7% (2024: 21.7%).

Healthy leverage ratio of 1.7x

Cash and cash equivalents decreased 54% to € 768 million at June 30, 2025 (June 30, 2024: € 1,660 million), reflecting the increased dividend payout of € 357 million and operating working capital investments in the first half of 2025. Adjusted net borrowings increased 6% to € 5,042 million at June 30, 2025 (June 30, 2024: € 4,751 million), mainly due to the decline in cash and cash equivalents. The company’s ratio of adjusted net borrowings over EBITDA decreased to 1.7x (June 30, 2024: 2.7x).

Full-year outlook

Outlook confirmed reflecting uncertainty due to US tariffs and macroeconomic risks

External volatility and macroeconomic risks have been increasing significantly since adidas first issued its full-year outlook at the beginning of March. While the company confirms its outlook, the range of possible outcomes remains increased. The company continues to see upside potential based on the strong results for the first half of the year, continued brand momentum, and the strong order book for the remainder of 2025. At the same time, the increased uncertainty around the possible direct and indirect impacts from higher US tariffs persists.

Currency-neutral sales to increase at a high-single-digit rate in 2025

adidas expects to gain further market share and grow the company’s currency-neutral sales at a high-single-digit rate in 2025. This reflects continued double-digit growth for the adidas brand. A significantly better, broader, and deeper product range combined with an increased focus on local consumer preferences as well as much improved retailer relationships will be the main drivers of the projected top-line increase. In addition, impactful marketing initiatives will further add to the company’s brand momentum and fuel the expected top-line growth. 

Operating profit to increase further to between € 1.7 billion and € 1.8 billion

While adidas will continue to increase marketing and sales investments, operating overhead efficiencies will allow the company to leverage its strong top-line growth. In combination with continued gross margin expansion, this is expected to lead to further significant bottom-line improvements in 2025. As a result, the company still projects operating profit to increase to a level of between € 1.7 billion and € 1.8 billion in 2025.

Having completed the sale of the remaining Yeezy inventory in 2024, the company’s outlook does not include any Yeezy revenues (2024: around € 650 million) or profits (2024: around € 200 million) in 2025.

• Evotec SE and Sandoz AG signed a non-binding term sheet on a planned sale of Just – Evotec Biologics EU in Toulouse to Sandoz
• Under the proposed deal Evotec would transfer biosimilar manufacturing capabilities to enable Sandoz to produce biosimilar medicines using Just – Evotec Biologics’ advanced continuous manufacturing technology
• The deal terms include the purchase price of the site for around US$ 300 m in cash, and in addition will include further technology related consideration, future development revenues, milestones and product royalties
• Planned transaction marks major milestone in Evotec’s strategy to create asset-lighter business model leveraging high-margin offerings, with Just – Evotec Biologics remaining core business for Evotec
• Transaction is expected to immediately improve Evotec’s short-, mid-, and long-term revenue mix, profit margins, and capital efficiency

Evotec SE (Frankfurt Stock Exchange: EVT, MDAX/TecDAX, Prime Standard, ISIN: DE0005664809, WKN 566480; NASDAQ: EVO) today announced the signing of a non-binding agreement with Sandoz AG (SIX: SDZ / OTCQX: SDZNY) regarding the potential sale of Just – Evotec Biologics EU, which owns the J.POD biologics manufacturing facility in Toulouse, France, and to grant access to its proprietary platform for integrated development and advanced continuous manufacturing of biologics via a technology license. The site has been customised and dedicated entirely to Sandoz since July 2024, and the transaction is a natural progression in an already successful partnership. Closing of the planned transaction remains subject to completion of the relevant information and consultation processes with employees and their representatives, final contractual agreements and to meeting regulatory requirements, expected in the fourth quarter. Further deal terms will be disclosed after successful signing of the contracts.

Execution on strategy to create an asset-lighter business model for Just – Evotec Biologics

The agreement marks a milestone in Evotec’s new strategy to drive sustainable and profitable growth. A key pillar of this strategy is the transition to an asset-lighter and capital-efficient model that can better leverage its technology & IP and scale its service offerings. 

Under the proposed terms of the transaction, Sandoz would assume full ownership of the Just – Evotec Biologics Toulouse site, while Evotec would retain short-, mid-, and long-term economic upside through revenue, milestones and royalty optionality. The planned deal terms include the purchase price of the site for around US$ 300 m in cash, and in addition would include further technology related consideration, future development revenues, milestones and product royalties.

The planned deal would immediately improve Evotec’s revenue mix, profit margins, and capital efficiency. Additionally, the agreement is testament for Evotec’s ability to leverage its technology advantage to shape a new segment in a fast-growing market.

Continuation of strategic collaboration

The planned transfer of Just – Evotec Biologics’ biosimilars manufacturing facility, a dedicated single-customer site, including proprietary platform for integrated development and advanced continuous manufacturing, is the natural next step in the multi-year strategic partnership between Evotec and Sandoz. It follows the agreement in July 2024 to grant Sandoz long-term commercial supply access to the facility. 

Dr Christian Wojczewski, Chief Executive Officer of Evotec, said: 

“We are excited about the evolution of our strategic partnership. Today’s agreement marks a significant milestone in Evotec’s new strategy to refocus on its core strengths and deliver sustainable profitable growth. By leveraging Just – Evotec Biologics’ capabilities as a scalable technology provider while moving to a more capital efficient model, we are well positioned to shape a new segment in the biologics manufacturing market and expand the scope of our partner base.”

Dr Linda Zuckerman, EVP and Global Head of Just – Evotec Biologics, said: 

“We are thrilled to see our technology and vision further validated through this transaction. Just – Evotec Biologics and Sandoz are united in our missions to broaden global access to life-changing biotherapeutics. Our perfusion-based continuous manufacturing platform plays a pivotal role in achieving this mission, unlocking greater efficiency, scalability, and agility.”

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