Adidas Q4 Net Profit Up, Lifts Dividend; Sees Higher FY22 Results; Stock Up

Shares of Adidas AG were gaining around 8 percent in the morning trading in Germany after the sportswear maker Wednesday said it expects higher results for fiscal 2022 after reporting strong growth in fourth-quarter attributable net income. Quarterly net income from continuing operations, meanwhile, was lower, with nearly flat revenues. The company also announced higher dividend.

Looking ahead for fiscal 2022, the company expects net income from continuing operations to increase to a level of between 1.8 billion euros and 1.9 billion euros.

The company’s operating margin is expected to increase significantly to between 10.5 percent and 11.0 percent.

After the recovery from the coronavirus pandemic in 2021, adidas expects double-digit top-line growth to continue in 2022 amid heightened uncertainty. Currency-neutral sales would increase at a rate between 11 percent and 13 percent with increase in all markets.

The revenue growth view already includes a risk of up to 250 million euros in the company’s Russia/CIS business, which is about 50 percent of adidas’ total revenues in the region, due to the war in Ukraine and reflects the suspension of adidas’ retail and e-commerce operations in Russia.

The amount represents around 1 percentage point of growth for the total company.

Kasper Rorsted, CEO, said, “Taking it all together, 2021 was a successful first year within our new strategic cycle. In 2022, we will build on this momentum and continue to grow both our top- and bottom-line at double-digit rates amid heightened uncertainty.”

Further, adidas said its Executive and Supervisory Boards will recommend paying a dividend of 3.30 euros per share to shareholders at the Annual General Meeting on May 12. This represents an increase of 10 percent compared to the prior year dividend.

For the fourth quarter, net income attributable to shareholders climbed 33.6 percent to 202 million euros from last year’s 151 million euros. Earnings per share grew 35.6 percent to 1.05 euros from 0.77 euro a year ago.

Net income from continuing operations declined 13.8 percent to 123 million euros from last year’s 143 million euros. Earnings per share from continuing operations were 0.58 euro, down from 0.70 euro a year ago.

In the quarter, the gross margin declined slightly by 0.1 percentage points to 49 percent. Operating margin also declined to 1.3 percent from 4.4 percent last year.

adidas revenues were 5.137 billion euros, nearly flat with last year’s 5.142 billion euros. Currency-neutral revenues in the fourth quarter declined 3 percent.

According to the company, significant supply shortages as a result of the lockdowns in Vietnam last year, the challenging market environment in Greater China as well as covid-19-related lockdowns in Asia-Pacific reduced revenue growth.

Currency-neutral revenues in North America declined 4 percent, mostly impacted by the supply shortages with almost half of the total negative impact recorded in this particular market.

Compared to the 2019 level, e-commerce revenues grew 39 percent in the fourth quarter.

In Germany, adidas shares were trading at 203.95 euros, up 8.20 percent.

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