Business
Adidas net profit slips on Q4 charges
By Holger Elfes (China Daily)
Updated: 2010-03-04 08:03
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FRANKFURT - Adidas AG, the world's second-largest sporting-goods maker, plunged in Frankfurt trading after fourth-quarter profit fell 64 percent, more than analysts estimated.
The company reported that fourth-quarter net income fell to 19 million euros ($25.9 million) from 54 million euros a year earlier. That missed the 27.6 million-euro average estimate of eight analysts compiled by Bloomberg.
Sales slid 4.5 percent to 2.46 billion euros as the company wrote down the value of its Reebok retail unit in China by 33 million euros after closing some stores in the country. Revenue in China dropped by almost a third in the quarter as consumers spent less compared with the same quarter in 2008, the year of the Beijing Olympics.
The sporting-goods maker forecast that profit this year will rise as much as 84 percent, to between 400 million euros and 450 million euros, with currency-adjusted sales rising at a "low to mid single-digit pace", boosted by the soccer World Cup in South Africa.
"I don't see much growth potential this year except from the World Cup," Christoph Schlienkamp, an analyst at Bankhaus Lampe in Dusseldorf with a "hold" rating on the stock, said before the figures were released.
World Cup apparel
Adidas, which has supplied Olympic athletes and soccer players since the 1920s, will provide apparel to 12 teams at the World Cup, increasing marketing spending "moderately" to highlight its position at the event and drive sales.
Full-year profit fell 62 percent to 245 million euros as sales dropped 3.9 percent to 10.4 billion euros, meeting the company's forecast. Per-share earnings were 1.22 euros, compared with company guidance of between 1.15 euros and 1.30 euros.
Gross margins as a percentage of sales narrowed to 46.2 percent in the quarter and to 45.4 percent in the year.
Sales at the company's main Adidas brand fell 4.2 percent in the quarter and dropped 7.6 percent at the Reebok division. Revenue rose 2.1 percent in western Europe and jumped 19 percent in Latin America. Sales fell 29 percent in China, 16 percent in North America and 3 percent in eastern Europe.
Adidas reduced its net debt to 917 million euros at the end of 2009 from 2.19 billion euros a year earlier and the company plans to cut borrowings further this year, according to the earnings statement.
BLOOMBERG NEWS
(China Daily 03/04/2010 page16)
