German sporting goods maker Adidas posted an attributable net profit of €776m through June, down 18.7% from a year earlier, due to the troubles in China.
Adidas reported today that turnover improved in the same period to 10,897 million euros (+5.2%), while operating profit fell to 828 million euros (-33.6% from a year earlier).
Supply chain problems as a result of lockdowns in Vietnam last year reduced growth by €200m in the second quarter.
Also, the suspension of operations in Russia reduced revenues by more than 100 million euros in the second quarter.
Operating expenses rose and therefore net attributable profit fell in the second quarter to 294 million euros (-25.8%) despite the 10.2% increase in sales.
The categories of football, running and hiking gear and other outdoor sports grew a strong double-digit percentage.
The positive effect of the increase in prices and exchange rates was absorbed because it sold products that give less profit margin and because of the significant increase in supply costs.
Adidas already said in late July that the sales recovery in China is slower than expected, due to continued covid-19 lockdowns, and a possible slowdown in consumer spending in other markets in the remainder of the month. year.
For this reason, it has revised downwards its billing and profit margin forecasts in 2022.
Adidas forecasts revenue growth of mid to high single digit percentage this year (previously 11-13%, discounting exchange rate effects).
The second quarter result was better than expected, but since the beginning of the third quarter the recovery of the business in China is slower than expected.