Production bottlenecks to hobble Adidas in 2019

Looking ahead to 2019, Asia will defend its title as the Adidas group’s sales powerhouse with double-digit expansion, while North America and emerging markets are expected to add high single-digit figures. — AFP pic
Looking ahead to 2019, Asia will defend its title as the Adidas group’s sales powerhouse with double-digit expansion, while North and emerging markets are expected to add high single-digit figures. — AFP pic

FRANKFURT, March 13 — German sporting goods maker Adidas said today it booked vaulting profits in 2018, but crimped its expectations for this year as it runs into limits on production capacity.

Net profit at the Herzogenaurach-based group leaped 45 per cent year-on-year, to €1.7 billion (RM7.85 billion), Adidas said.

The firm booked an 3.0-per cent increase in revenues to a record €21.9 billion last year, a figure it aims to lift by “between five and eight per cent” in 2019.

But while Adidas claimed in a statement to see a “strong increase in demand” for its clothing, “supply chain shortages” mean it will not manage to keep up.



“Growth is expected to be negatively impacted, particularly in North America during the first half of the year,” it added.

The region had been one of the “strategic growth drivers” contributing double-digit expansion to 2018’s result alongside and the group’s growing e-commerce operation, chief executive Kasper Rorsted said.

Across the world, Adidas’ flagship three-stripe brand saw sales grow 9.0 per cent adjusted for currency effects.

But subsidiary Reebok’s turnover fell 3.0 per cent, continuing a struggle for growth that has persisted since Adidas took it over in 2005.

Looking ahead to 2019, Asia will defend its title as the Adidas group’s sales powerhouse with double-digit expansion, while North America and emerging markets are expected to add high single-digit figures.

Meanwhile the firm hopes to “return to growth” in Europe after a 6.0-per cent decline in sales in the final quarter of 2018, forecasting “a slight increase” in currency-adjusted revenues.

Adidas aims for a bottom line between 10 and 14 per cent higher than 2018, at up to €1.95 billion.

And it said it would offer investors a dividend of €3.35 per share for last year, up 29 per cent on 2017.



But the higher payout failed to impress the market, with the group’s stock falling 5.6 per cent to €198.15 by 9.15am in Frankfurt (0815 GMT), trailing the DAX index of blue-chip shares. — AFP

Source: The Malay Mail Online





Leave a Reply

Your email address will not be published. Required fields are marked as *

Time limit is exhausted. Please reload CAPTCHA.