Adidas expects €250m sales hit amid Russia conflict
However, Adidas still expects double-digit growth to continue in 2022 amid heightened uncertainty and the recovery from the pandemic in 2021
Adidas has reported its expects the war in Ukraine to risk up to €250m (£208.37m) sales in the company’s Russia/CIS business in FY22, representing approximately 50% of adidas’ total revenues in the region.
The announcement comes as Adidas revealed its currency-neutral revenues increased year-on-year by 16% in FY21 from €18.43bn (£15.36bn) to €21.23bn (£17.69bn). The company witnessed growth across all markets despite external factors reportedly impacting both demand and supply throughout the year.
Adidas’ operating profit also surged 166% to €1.986bn (£1.65bn) in FY21, compared to €746m (£621.77m) in FY20, due to an improved gross margin and lower operating expenses.
Additionally, net income from continuing operations increased year-on-year by 223% from €461m (£384.23m) to €1.49bn (£1.24bn), growing more than €1bn (£833.48m).
E-commerce revenues also increased 4% during the year, on top of the company’s growth in FY20 when e-commerce revenues had grown by more than 50%.
However, the “challenging” market environment in Greater China, Covid-19 related lockdowns in Asia-Pacific and supply chain disruptions reduced revenue growth by more than €1.5bn (£1.25bn) during the year.
Looking to FY22, Adidas expects double-digit growth to continue in 2022 amid heightened uncertainty and the recovery from the pandemic in 2021. Adidas said this will be driven by the execution of its “Own the Game” strategy.
Its product pipeline currency-neutral revenues are also projected to increase at a rate between 11% and 13%, and revenues are expected to increase in all markets.
Kasper Rorsted, CEO of Adidas, said: “Our thoughts and prayers are with the Ukrainian people, our teams on the ground and everyone affected by the war. We strongly condemn any form of violence and stand in solidarity with all those calling for peace. We also provide immediate humanitarian aid to those in need of support.
“Wherever markets operated without major disruptions we have been experiencing strong top-line momentum. This is reflected in double-digit revenue growth in EMEA, North America and Latin America.”
