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Adidas warns of difficult times after posting 2008 profit

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Adidas warns of difficult times after posting 2008 profit
Photo: DPA
08:00 CET+01:00
The German sports equipment and clothing maker Adidas posted on Wednesday a 2008 profit that exceeded its target, but the company warned that business would be tougher this year.

Adidas made a net profit of €642 million ($800 million), an increase of 16 percent from the previous year and better than its goal of 15 percent.

Analysts polled by Dow Jones Newswires had also forecast a more modest profit of €635 million.

In the fourth quarter of the year, the group's profit more than doubled to €54 million from €21 million in the same period a year earlier, owing to a lower tax rate, the company said in a statement.

The strong results came mainly from the group's Adidas line, while earnings at its Reebok and TaylorMade-adidas golf divisions declined.

The troubled Reebok unit managed to clear away some of its backlog but "as a result of higher clearance sales at lower margins," the group acknowledged.

Overall sales increased by 4.9 percent to €10.8 billion, the statement said, and management would propose an unchanged dividend of €0.50 per share.

It quoted chairman and chief executive Herbert Hainer as saying that the group's results were "a testament to the underlying strength of our business model - being global, diversified and consumer focused."

Lower earnings were foreseen this year however, the company warned.

"We cannot ignore the unprecedented economic crisis all global businesses are facing today," Hainer said.

"I believe the real winners of this crisis will be the ones who remain consistent with their long-term strategies."

The outlook in 2009 for the sporting goods industry was "subject to a high degree of uncertainty," the company said.

As a result, its business prospects were "difficult to forecast, especially with regard to the second half of the year."

But group sales and earnings were both forecast to decline between one and five percent, after allowing for changes in foreign exchange rates.

Reebok sales were expected to be at least stable compared to 2007 on that basis, while TaylorMade-adidas golf sales were forecast to grow slightly.

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