9M net income plummets 21% at adidas Group

07 Nov '14

5 min read

In the first nine months of 2014, income before taxes (IBT) for the adidas Group decreased 19% to € 892 million from € 1.105 billion in 2013.

As a result of its lower operating margin, IBT as a percentage of sales reduced 2.0 percentage points to 8.0% in the reporting period from 10.0% in the same nine months of 2013.

Its tax rate went up marginally by 1.1 percentage points to 28.8% in the first nine months of 2014 against 27.7% in last year’s first nine months, mainly due to a less favourable earnings mix.

Group inventories expanded 5% to € 2.647 billion at the end of September 2014 versus € 2.513 billion in 2013.

On a currency-neutral basis, inventories were up 7%, as a result of the Group's expectations for growth in the coming quarters as well as higher inventories at TaylorMade-adidas Golf.

Group receivables increased 8% to € 2.322 billion at the end of September 2014 against € 2.156 billion. On a currency-neutral basis, receivables were up 7% year-on-year.

Net borrowings as on September 30, 2014 amounted to € 543 million, compared to net borrowings of € 180 million in 2013, representing an increase of € 363 million.

“This increase is mainly a result of higher capital expenditure during the first nine months of 2014, while currency exchange rates had a positive effect of € 12 million on net borrowings,” adidas explains.

adidas expects sales to increase at a mid- to high-single-digit rate on a currency-neutral basis in whole of 2014 and gross margin is forecasted to dip to between 48.0% and 48.5%, from 49.3% in 2013.

CEO Herbert Hainer said, "In any sport, to reach your goals, tactics and desire are critical to compete and win. We are here to do both.”

He adds, “We will use 2015, to prepare the ground for our next strategic plan, where we will take the powerful capabilities we have built, and apply them with more vigour and intent to unlock the potential of our brands.” (AR)

Fibre2fashion News Desk - India

More Adidas News... More Apparel/Garments News - Germany...