Adidas sees World Cup boost for profits

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Adidas

Reuters.

A shoe of the Adidas fashion line is pictured in a Munich shoe shop.

Frankfurt - Adidas, the German maker of sportswear and equipment, said Wednesday it expects the World Cup football championships in Brazil to boost earnings this year, but warned that the crisis in Ukraine could hurt its business.

“From an operational perspective, there is no doubt that 2014 will be a successful year for us,” said chief executive Herbert Hainer, as the group set a profit target of between 830 million and 930 million euros (1.14 billion and 1.28 billion) for the year.

“Driven by our dominant role at the 2014 FIFA World Cup, we will generate high-single-digit currency-neutral growth,” Hainer predicted.

But he cautioned: “Currency headwinds had a significant negative impact on our results in euro terms, and this is also expected to continue in 2014.”

The crisis in Ukraine could also dampen earnings, he noted.

“We cannot ignore the significant weakness of the Russian rouble since the beginning of the year as well as the current uncertainty in the region, both of which have added considerable risk to our results in euros,” Hainer said.

Russia accounts for revenues of nearly 1.0 billion euros.

Russia is locked in the worst stand-off with the West since the Cold War, after pro-Moscow forces seized control of Ukraine's Crimea peninsula following president Viktor Yanukovych's ouster.

Adidas said it met all of its targets for 2013, with its net profit for the year soaring 49 percent to 787 million euros.

Sales, on the other hand, slipped by 2.6 percent to 14.49 billion euros, largely due to currency effects.

“We finished 2013 with an exceptionally strong fourth quarter. Currency-neutral sales grew 12 percent, which was above our expectations,” said Hainer.

“This ensured that we met our revised full year targets from September, despite a further worsening of currency exchange rates.”

In November, Adidas extended its long-standing sponsorship agreement with the FIFA World Cup tournament until 2030.

The championships are being held in Brazil this year and in Russia in 2018.

“In particular, this year's major sporting events will provide positive stimulus to group sales. As the official partner of the 2014 FIFA World Cup in Brazil, the Adidas brand will be the most visible brand during the event and will benefit from record sales in the football category,” the group said.

Sales would also be favourably impacted by Adidas's high exposure to fast-growing emerging markets, the group said.

Adidas said it would pay an increased dividend of 1.50 euros per share for 2013, up from 1.35 euros a year earlier.

Investors did not appear to be particularly impressed, however, and Adidas shares were showing a loss of 2.23 percent in mid-afternoon trade on the Frankfurt stock exchange in a slightly softer market. - Sapa-AFP


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