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Production bottlenecks to hobble Adidas in 2019

RFI 2019-03-13 13:54:38
Profits jumped at Adidas last year, but production bottlenecks may hold it back in 2019 AFP/File

German sporting goods maker Adidas said Wednesday it booked vaulting profits in 2018, but crimped its expectations for this year as it runs into limits on production capacity.

Net profit at the Herzogenaurach-based group leaped 45 percent year-on-year, to 1.7 billion euros ($1.9 billion), Adidas said.

The firm booked an 3.0-percent increase in revenues to a record 21.9 billion euros last year, a figure it aims to lift by "between five and eight percent" in 2019.

But while Adidas claimed in a statement to see a "strong increase in demand" for its clothing, "supply chain shortages" mean it will not manage to keep up.

"Growth is expected to be negatively impacted, particularly in North America during the first half of the year," it added.

The region had been one of the "strategic growth drivers" contributing double-digit expansion to 2018's result alongside China and the group's growing e-commerce operation, chief executive Kasper Rorsted said.

Across the world, Adidas' flagship three-stripe brand saw sales grow 9.0 percent adjusted for currency effects.

But subsidiary Reebok's turnover fell 3.0 percent, continuing a struggle for growth that has persisted since Adidas took it over in 2005.

Looking ahead to 2019, Asia will defend its title as the Adidas group's sales powerhouse with double-digit expansion, while North America and emerging markets are expected to add high single-digit figures.

Meanwhile the firm hopes to "return to growth" in Europe after a 6.0-percent decline in sales in the final quarter of 2018, forecasting "a slight increase" in currency-adjusted revenues.

Adidas aims for a bottom line between 10 and 14 percent higher than 2018, at up to 1.95 billion euros.

And it said it would offer investors a dividend of 3.35 euros per share for last year, up 29 percent on 2017.

But the higher payout failed to impress the market, with the group's stock falling 5.6 percent to 198.15 euros by 9:15 am in Frankfurt (0815 GMT), trailing the DAX index of blue-chip shares.