March 6 – Announcing quarterly results, Adidas said its income for the quarter was €42 million. This is higher than the average €37.1 million analyst estimated – for the same quarter last year Adidas made a loss of €7 million. But end year figures look likely to be below analyst expectations.
Adidas estimates profit will be between €830 million ($1.14 billion) and €930 million this year – this falls short of the €1 billion average estimate of 30 analysts compiled by Bloomberg.
The biggest cloud on the Adidas horizon is exchange rates, with the German company vulnerable to currency swings. CEO Herbert Hainer (pictured) said that the crisis in Ukraine adds risk as it may make consumers nervous. Russia accounts for more than €1 billion of sales and would have been more if there hadn’t been interruptions in the company’s supply chain.
Up to 75% of Adidas’ revenue comes from outside Western Europe so currency exchange is a key determinant in profit, The euro is 24% up on the Russian ruble and 64% up on the Argentiniean peso, hence creating challenges to margins.
Chief Financial Officer Robin Stalker said currency movements may reduce 2014 sales growth by a mid-single-digit percentage, and that Adidas may increase prices to compensate.
Adidas is looking forward to the World Cup in June – it is one of FIFA’s main sponsor partners and will supply the official match ball – the Brazuca – as well as the kit for eight of the 32 competing teams. The company has been hard promoting branded boots and shirts of their contracted star players including Lionel Messi and Gareth Bale.
Adidas expects to make €2 billion of sales from football this year.
The company also announced that the Hainer will continue as CEO for a further two years until March 2017, and that that the ‘transition’ to his successor has begin. Hainer has been CEO since 2001 and is 59.
Hainer said he is aiming for sales of €17 billion by 2015 and profit that advances faster than sales.
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