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Football/International – Adidas could lose up to 50% of its revenues in Russia due to the invasion of Ukraine.

German sporting brand Adidas posted an attributable net profit of €2.116 billion in 2021, up 389.6% from a year earlier, after sales recovered from the pandemic slump.

Adidas reported Wednesday that turnover improved in the same period to 21.234 billion euros (+15.2 %), while operating profit increased to 1.986 billion euros (+166.3 % than a year earlier). The operating profit margin on sales increased to 9.4 % (4 % a year earlier).

“Unfortunately, we are publishing our 2021 results at an alarming time,” said Adidas CEO Kasper Rorsted, who said last year’s results were “very good” despite external factors that impacted supply and demand throughout the year.

Sales grew by double digits in Europe, the Middle East and Africa, North America and Latin America.

Adidas forecasts revenue growth of 11-13% in 2022, net of exchange rate effects, after recovering from the coronavirus pandemic in 2021.

These forecasts take into account the risk of up to 250 million euros of business in Russia, which represents 50% of Adidas’ total revenue in the region, due to the war in Ukraine.

Adidas has foreseen this risk after disrupting its business and also internet sales in Russia.

This amount represents 1% of the company’s growth and explains why the initial forecasts have been corrected.

It also decided last week to stop its partnership with the Russian Football Federation with immediate effect after the Russian invasion of Ukraine last Thursday.

Adidas had a turnover of €584m in Russia/Commonwealth of Independent States in 2020, 11% less than in 2019 (€658m in 2019) due to the negative effects of the depreciation of the rouble.

Management and the supervisory board will propose to pay a dividend of €3.30 per share for 2021, 10% more than in 2020.

Adidas, which sold US brand Reebok to brand management company Authentic Brands Group (ABG) for 2.1 billion euros, will buy back up to 1.5 billion euros worth of its own shares from mid-March until the end of the third quarter.

This share buyback is in addition to the current share buyback of up to 4 billion euros until 2025.

Abdessalam Hayek

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