Q2 profits down 27.9% due to Russia suspension, China lockdowns, and supply chain issues
- Adidas operating profits dropped 27.9% YoY in Q2 FY22
- Suspension of operations in Russia caused a €100m revenue loss
- Covid-related lockdowns in Greater China and supply chain costs impacted results
- FY22 guidance adjusted with lower net income forecast
- North America revenues expected to grow high teens, Latin America 30%-40%
- Supply chain constraints reduced top-line growth by €200m in Q2
- Revenue development strongest in Football, Running and Outdoor
- CEO Kasper Rorsted expects potential slowdown in consumer spending
Adidas has reported a 27.9% drop in Q2 operating profits YoY, leading the company to adjust its FY22 guidance with expectations for total group revenues to grow at a mid-to-high single-digit rate. The suspension of operations in Russia caused more than €100m revenue loss and Covid-related lockdowns in Greater China and higher supply chain costs impacted the results. However, North America and Latin America forecasts were increased with revenues expected to grow high teens. Supply chain constraints from last year’s Vietnam lockdowns reduced top-line growth by €200m in the quarter, while Football, Running, and Outdoor categories showed strong revenue development. CEO Kasper Rorsted expects potential slowdown in consumer spending for the rest of the year.
Factuality Level: 9
Factuality Justification: The article provides accurate and objective information about Adidas’ financial performance, including specific numbers and details on revenue growth or decline in different regions and product categories. It also includes quotes from the CEO that support the reported data.
Noise Level: 3
Noise Justification: The article provides relevant information about Adidas’ financial performance and factors affecting it, such as the suspension of operations in Russia, Covid-related lockdowns in Greater China, and supply chain costs. It also includes specific numbers for revenue growth in different regions and product categories. However, it lacks a deeper analysis or exploration of the underlying causes and consequences of these events.
Financial Relevance: Yes
Financial Markets Impacted: Adidas’s stock price and related sports apparel industry
Financial Rating Justification: The article discusses Adidas’s financial performance, including changes in operating profits, adjusted FY22 guidance, and impacts on revenue from various regions. It also mentions the company’s decision to suspend operations in Russia and supply chain constraints, which all have direct implications for the company’s financial situation and can impact the stock price and related industries.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: Adidas reported a drop in operating profits due to suspension of operations in Russia, Covid-related lockdowns in Greater China, and higher supply chain costs, but no extreme event occurred.
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