Adidas hit by rising costs

Sports gear giant Adidas barely broke even in the fourth quarter of 2011 as it confronted higher purchasing costs and sagging sales in Latin America.

The company said today that its net profit rose to €18m from €7m in the same quarter a year ago. The return came on an 11% rise in sales to €3.26bn.

The results show that Adidas’s more profitable product mix and regional distribution of sales was offset by higher purchasing costs. Weak spots were Asia, apart from China, where sales grew 5%, and in Latin America, where they fell 5%.

However, profit for 2011 hit a new record of €671m, up 18% on the year before. The company also said strong cashflow would permit it to increase its dividend payout by 31% to €1 per share from 80 cents.

Revenue for the year rose 13% to €13.3bn as the company increased its sales across all regions, with China leading with a 23% rise.

Western Europe, where debt crises have weighed on growth and consumer behaviour, nevertheless saw an increase of 11%.

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