Adidas Q3 net income falls 30 percent

Adidas Q3 net income falls 30 percent

Nov 4, 2009 at 12:33 | Associated Press
FRANKFURT — German sportswear company Adidas AG said Wednesday its net income fell 30 percent in the third quarter as it saw sales decline, especially at its sport performance division.

Adidas, based in Herzogenaurach, said net income fell to €213 million ($315 million) in the July-September period from €302 million in the third quarter of 2008.

Revenue for the period fell to 7 percent €2.9 billion from €3.1 billion.

Adidas, which also owns the Reebok brand, said it expected sales to decline at a low to mid-single-digit rate in 2009, assuming unchanged currency values, due to weaker consumer confidence and rising unemployment in many major markets.

The company also said net income and earnings per share for the full year would decline, but expected them to rise during the second half of the year compared with the first half.

"Due to a more moderate increase of input costs and positive impetus ahead of the 2010 FIFA World Cup, group profitability will be significantly better in the second half compared to the first half of the year," the company said in its report.

The football World Cup in South Africa next year is expected to add significantly to the company's revenue and earnings in coming months.

Adidas said earnings would also be affected by higher sourcing costs for materials and higher labor costs as well as currency effects, particularly the depreciation of the Russian rouble.

"This year, our industry and our group have faced unprecedented challenges," said Chief Executive Herbert Hainer in the report.

"However, we have tackled the challenges head-on. We have successfully adapted to our difficult surroundings. And our drive for operational excellence has meant we have strongly improved our financial position."

The company said that in the first nine months of the year, net income fell 62 percent to €226 million from a year earlier and revenue was 7 percent lower at €7.9 billion.

Adidas said revenue at its main Adidas brand fell 4 percent in the first nine months of the year to nearly €5.8 billion.

Revenue at the Reebok division fell 6 percent in the first nine months to €1.5 billion. TaylorMade-Adidas Golf saw revenue improve 3 percent to €633 million.

Revenue in Latin American markets improved 10 percent in the first nine months while Asian revenue rose 1 percent. Revenue fell 9 percent in Europe and 3 percent in North America.

Shares of Adidas closed unchanged at €32.64 in Wednesday trading.

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