Company Expects Growth in Q2 Despite Challenges in Greater China
- Adidas Q1 profits drop almost 40%
- Operating profits dropped 38% to €437m (£374.13m)
- Income-before-tax down 38.5% to €411m (£351.87m)
- Sales drop of 3% due to supply constraints
- Western markets grew with combined revenues increasing 13%
- EMEA sales impacted by supply shortages
- Revenues in Greater China decreased 35% and Asia-Pacific 16%
- Net income from continuing operations down 38.2% to €310m (£265.4m)
- Expected growth in Q2 despite sales decline in Greater China
- €200m negative impact from supply chain constraints
- Net sales expected to grow more than 20% in Q2
- Strong double-digit growth in majority of markets
- CEO Kasper Rorsted: ‘well positioned for success in 2022’
Adidas has reported a significant drop in its first-quarter profits, with operating profits falling by 38% year-on-year to €437m (£374.13m) and income-before-tax down 38.5% to €411m (£351.87m). The company faced supply chain constraints that reduced growth by €400m (£342.45m), leading to a 3% sales drop. However, Western markets showed growth with combined revenues increasing by 13%. EMEA was particularly impacted by supply shortages, while Greater China and Asia-Pacific faced revenue decreases of 35% and 16%, respectively. Adidas anticipates a return to growth in Q2 despite ongoing sales decline in Greater China and a €200m (£171.22m) impact from supply chain issues. The company expects net sales to grow more than 20% in Q2, driven by unconstrained supply and strong demand in Asia-Pacific, as well as major sporting events. CEO Kasper Rorsted remains optimistic about 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 percentages, as well as the company’s outlook for future growth. It also includes quotes from the CEO to support its claims.
Noise Level: 3
Noise Justification: The article provides relevant information about Adidas’ financial performance and outlook, but it could benefit from more analysis or context on the reasons behind the drop in profits and supply chain constraints.
Financial Relevance: Yes
Financial Markets Impacted: Adidas’ stock price and related sports apparel industry
Financial Rating Justification: The article discusses Adidas’ financial performance, including drops in profits, sales, and net income, as well as the impact of supply chain constraints on their business. This directly pertains to financial topics and impacts the company’s financial markets and competitors within the sports apparel industry.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: The article discusses Adidas’ financial performance, but there is no mention of an extreme event in the last 48 hours.
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