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Adidas result hit on dual fronts
By George Frey |
August 6, 2009, Thursday
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Print Edition
Print Edition
SPORTSWEAR company Adidas AG said yesterday that its second-quarter net profit fell 93 percent as currency effects and tough competition hit earnings.
The Herzogenaurach, Germany-based company said net profit in the April-June period dropped to 9 million euros (US$13 million) from 116 million euros in the second quarter of 2008, as sales dipped 3 percent to 2.46 billion euros from 2.52 billion euros.
As well as the sales decline, the world's second-largest sportswear company behind Nike Inc blamed currency devaluations - the Russian ruble in particular - and the "highly promotional retail environment" for a steep fall in profits. Operating profit for the quarter slid 66 percent to 72 million euros from 208 million euros a year earlier.
"The impacts of the economic downturn and repercussions on consumer spending certainly continued to influence our performance in the second quarter," Chief Executive Herbert Hainer said.
However, Hainer laid out the hope that trading conditions may be improving.
"We did not see any fundamental deterioration in our business since publishing our first-quarter results," he said.
"Our financials for the first half of 2009 are exactly in line with the guidance we provided in May - if not a little better. As a result, I believe we have seen the bottom in our financial performance this year."
Adidas, which also owns the Reebok brand, said it expected group sales to decline at a low-to-mid, single-digit rate for the full year, though sales of the TaylorMade-Adidas golf brand are expected to rise at a low single-digit rate for the year.
Only Latin America saw sales rise in the first half of the year.
Its increase of 24 percent contrasted with an 8 percent decline in Europe, a 9 percent fall in Asia and a 10 percent slide in North America.
The Herzogenaurach, Germany-based company said net profit in the April-June period dropped to 9 million euros (US$13 million) from 116 million euros in the second quarter of 2008, as sales dipped 3 percent to 2.46 billion euros from 2.52 billion euros.
As well as the sales decline, the world's second-largest sportswear company behind Nike Inc blamed currency devaluations - the Russian ruble in particular - and the "highly promotional retail environment" for a steep fall in profits. Operating profit for the quarter slid 66 percent to 72 million euros from 208 million euros a year earlier.
"The impacts of the economic downturn and repercussions on consumer spending certainly continued to influence our performance in the second quarter," Chief Executive Herbert Hainer said.
However, Hainer laid out the hope that trading conditions may be improving.
"We did not see any fundamental deterioration in our business since publishing our first-quarter results," he said.
"Our financials for the first half of 2009 are exactly in line with the guidance we provided in May - if not a little better. As a result, I believe we have seen the bottom in our financial performance this year."
Adidas, which also owns the Reebok brand, said it expected group sales to decline at a low-to-mid, single-digit rate for the full year, though sales of the TaylorMade-Adidas golf brand are expected to rise at a low single-digit rate for the year.
Only Latin America saw sales rise in the first half of the year.
Its increase of 24 percent contrasted with an 8 percent decline in Europe, a 9 percent fall in Asia and a 10 percent slide in North America.
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