Documents just filed with the Companies Registration Office show Adidas Ireland Ltd’s pre-tax profits dropped 85% from €10.4m to €1.5m
The accounts confirm that the sharp decrease took place after the company recorded a 34% drop in sales from €52.7m to €34.6m to the end of December last.
The directors state “the results for the year were satisfactory in the face of extremely difficult trading conditions”.
Earlier this year, Adidas — which derives its turnover from the sale and distribution of sports and leisure wear in Ireland — extended its deal with Munster as the team’s official kit supplier to 2014.
However, the German-owned subsidiary has decided to end its 13-year association with the Dublin City Marathon.
Along with sponsoring Liverpool and Chelsea, Adidas also produces the jerseys for Real Madrid.
However, according to the directors’ report, a key factor in the 34% decrease in sales “was the global economic downturn, which impacted the Irish economy more severely than many other countries”.
“Currency movements have reduced the Republic Of Ireland retailers’ competitiveness versus Northern Ireland and English retailers, which in turn impacted our sales to those retailers”.
The directors state that the impact to profit from the downturn in sales was mitigated in part by cost savings in the year and “can be seen by a 20% decrease versus prior year in the total of distribution costs and administrative expenses”.
Adidas’s operating profits last year declined by 89.7% from €10.4m to €1m.
The directors state that Adidas’s investment in Reebok Ireland was crystallised via a significant dividend receipt of €8.3m from that company during the year.
However, the accounts state that the investment of €7.9m in Reebok was written off to match the dividend income now that Reebok Ltd is to become a dormant company.
Adidas paid a dividend of €13.3m last year to its parent after paying out 9.5m in 2008. The numbers employed by the company remained at 29 last year.