Frankfurt (Germany) (EFE).- The German sporting goods manufacturer Adidas had an attributable net profit of 612 million euros in 2022, 71.1% less than in 2021, after interrupting its collaboration with the American rapper Kanye West, because of inflation and problems in China.
Adidas reported this Wednesday that the management and the supervisory board will propose to greatly cut the dividend distribution to 0.70 euros per share (3.30 euros per share for the 2021 financial year).
Adidas, which had already advanced some figures for the balance of 2022 at the beginning of February, confirmed that it foresees a loss of 700 million in 2023.
This loss includes 500 million euros for the depreciation of the Yeezy inventory, the brand with which Kanye West markets its products, and other extraordinary costs of 200 million for its strategic review.
Adidas studies options to use the Yeezy inventory, but if it does not succeed, it will have to eliminate the value of the inventory.
New Adidas CEO Bjørn Gulden, who previously held this role at Puma, said that “2023 will be a transition year to build the foundation for 2024 and 2025.”
“We need to reduce inventories and lower discounts. Then we can start building a profitable business again in 2024,” Gulden added.
The operating profit fell in 2022 to 669 million euros (-33.7%), which reflects an operating profit margin of 3% (9.4% in 2021).
In the fourth quarter, the discontinuation of the collaboration with Yeezy generated a turnover loss of 600 million and sales in China fell by 50%.
For this reason, Adidas suffered a net attributable loss of 512 million euros in the fourth quarter, compared to the profit of 202 million in the same quarter of 2021.
Billing increased in 2022 to 22,511 million euros (+6% or +1% discounting the effects of exchange rates).
Sales rose last year especially in Latin America (+44%) and North America (+12%), but fell in China (-36%).
In Europe, sales rose less because Adidas ended its activities in Russia.
The gross profit margin fell last year to 47.3% (50.7% in 2021).
Adidas expects sales to decline in high single digits in 2023 and operating profit to be at the level where revenue equals costs as macroeconomic difficulties and geopolitical tensions persist.
The German company considers that a high risk of a recession in Europe and North America persists and that uncertainty remains about the recovery of China.
Although Adidas studies options to use Yeezy inventory, forecasts reflect a loss of revenue of 1.2 billion euros if it does not sell it, which will have a negative operating impact of 500 million.