A slower recovery of business in China due to the corona-related lockdowns and an expected weaker consumer mood in other countries are the reasons for this, the company announced on Tuesday in Herzogenaurach. According to preliminary figures, however, the second quarter was “slightly” better than expected.
The share lost 2.5 percent on the Tradegate trading platform in the evening. The balance of the paper is deep red in the last three years, with a minus of more than 40 percent. This year alone, the losses of the shares listed in the Dax (DAX 40) add up to almost a third.
For 2022, the management around CEO Kasper Rorsted now expects currency-adjusted sales growth in the mid to high single-digit percentage range – significantly less than before. Most recently, adidas had posted a plus at the lower end of the range of eleven to 13 percent. Analysts had previously expected currency-adjusted sales growth of 8.8 percent in a consensus provided by adidas.
The company now sees the operating margin at seven percent after previously announced around 9.4 percent, and profit from continuing operations is also expected to be around 1.3 billion euros, below the previously expected 1.8 billion to 1.9 billion euros. Here, too, adidas recently set the lower end of the range as a target. The group had already become more cautious in May because of the corona restrictions in the important Chinese market.
The new earnings forecasts are below the expectations of the analysts, who had previously expected weaker results than initially issued by the company. In the run-up to the figures announced for August 4, market experts had already speculated about a forecast reduction. For example, Christian Salis from Hauck Aufhäuser Investment Banking feared such a step at the beginning of July and changed his buy recommendation to a sell recommendation. adidas rival PUMA SE will report its numbers on Wednesday. Analysts are more optimistic for this one.
According to adidas, it had previously assumed that business in China would recover from the third quarter if there were no further lockdowns. But now management expects currency-neutral sales there to fall by a double-digit percentage for the rest of the year. According to the group, this and the measures to reduce excess stocks in the market will weigh on margins.
In addition, adidas is concerned about the difficult macroeconomic environment. In the other markets, adidas has not yet seen any significant slowdown in demand or significant cancellations of wholesale orders, the company said. However, the forecast also takes into account a possible weakening of consumer spending. Nevertheless, the sporting goods manufacturer still expects double-digit sales growth overall for the second half of the year. Among other things, major sporting events such as the soccer World Cup in Qatar are expected to drive growth.
According to provisional calculations, currency-adjusted revenues increased by four percent in the second quarter. The company reported double-digit growth in North and Latin America. In the European region of Emea, adidas posted high-single-digit growth. In euros, group sales increased by ten percent to almost 5.6 billion euros. The operating margin, on the other hand, fell from 10.7 to 7.0 percent. The numbers were slightly above the analyst consensus provided by adidas.
Income from continuing operations fell from 387 million to 360 million. adidas benefited from a one-time positive tax effect of more than 100 million euros as a result of the reversal of a provision recognized in a previous year.
HERZOGENAURACH (awp international)
–
