GERMANY: adidas suffers Q4 loss as Reebok orders dive
Athletic major adidas said it suffered a surprise fourth-quarter loss and admitted a lack of orders at newly-bought Reebok.
adidas, which has enjoyed good profit increases over recent years, said costs associated with the Reebok purchase had contributed to the net loss of EUR4m compared to last year's EUR20m profit.
Quarterly operating profit was EUR35m compared to EUR20m last year, helped by good growth within North America and Asia. Sales were up 27.2% during the quarter to EUR1.52bn from EUR1.20bn a year ago.
Reebok's orders fell by nearly a quarter at the end of 2005.
Full-year 2005 net income including discontinued operations jumped 22% to EUR383m from EUR314m in 2004.
Operating profit increased 21% to EUR707m in 2005 from EUR584m. Full-year sales rose 13.2% to EUR6.64bn.
"Many of our current efforts will now focus on turning around the Reebok brand," said adidas-Salomon chairman and chief executive Herbert Hainer.
He remained positive on the company's accomplishments during the past year: "2005 has been a great year for our Group. The acquisition of Reebok and the divestiture of Salomon clearly generated a lot of attention for us, and we also completed an impressive turnaround in our business in North America.
"With all these changes, we increased our focus on the group's core activities and delivered, once again, record financial results".
He added: "adidas and TaylorMade are the strongest they've been in years, and when I look to the future I see significant opportunities to develop and strengthen them even more…In the World Cup year 2006, our group will approach the EUR10bn revenue mark for the first time ever, with all regions contributing to our revenue increase. As a result, we expect earnings will grow at double-digit rates for the sixth year in a row."
adidas is pinning its hopes on a US market boost from the US$3.8bn Reebok buy, which would up its competitive edge against market leader Nike.
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