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Adidas Q4 profits tumble 61%

Adidas chief executive Herbert Hainer said that 2009 had been his most difficult year at the top, as fourth quarter operating profits plummeted 61%to €42m (£38m).

Group sales in the fourth quarter remained stable, with currency-neutral revenues in Western Europe rising 3%.

Group gross margin fell by 0.3 percentage points to 46.2% over the quarter.

Four the full year, Adidas, which also owns the Reebok and Rockport brands, saw total sales on a currency-neutral basis fall 6% to €10.38bn (£9.4bn). This was largely due to an 8% fall in wholesale revenues, which were down 9% in currency-neutral terms to €7.1bn (£6.43bn). Retail sales grew by 7% year-on-year to €1.9bn (£1.72bn). This was driven by both the Adidas and Reebok brands.

Full-year sales in the Western Europe region fell by 5 to €3.2bn (£2.89bn).

Adidas chief executive Herbert Hainer said: “Without question 2009 was the most difficult year since I became CEO of the group. However, we rose to the challenge. Despite a 53% decline in operating profit, we generated a 141% increase in net cash from operations for a record €1.2bn (£1.08bn). This is definitely the outstanding achievement of the year and a credit to all the hard work and dedication of our employees.”

Adidas said it expected group sales to increase at a low- to mid-single-digit rate on a currency neutral basis in 2010. It said in a statement: “Despite the projected global economic recovery, sales development will be negatively tempered by a slow turnaround in consumer demand and continuing cautious retailer behaviour. However, positive impacts from the 2010 FIFA World Cup, the group’s high exposure to fast growing emerging markets as well as improvements in the Reebok brand are forecast to more than offset these negative effects.”

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