HERZOGENAURACH (dpa-AFX) - The sporting goods group Adidas expects considerable headwind from the currency side in the new year. Exchange rate effects are likely to have a significant impact on profitability in particular. The outlook for 2024 was correspondingly cautious and significantly weaker than analysts had expected. Last year's result, on the other hand, was better than forecast. This did not help the share price on Thursday - it slumped.

The DAX-listed stock lost almost nine percent in the morning and brought up the rear in the leading index. The share thus wiped out the noticeable price recovery of the previous trading days in one fell swoop. So far this year, the share price has fallen by almost 13 percent, making Adidas one of the weakest DAX stocks. Puma shares also lost around 1.4 percent in the wake of this on Thursday. The local rivals had already published weaker figures for the fourth quarter due to negative currency effects.

Analysts criticized the poor outlook. Volker Bosse from Baader Bank called the outlook for 2024 "disappointing". The outlook was below both his and the market's expectations. Adam Cochrane from Deutsche Bank Research also criticized the cautious company targets. For Adidas, 2024 will be another year of transition. For JPMorgan analyst Olivia Townsend, on the other hand, the outlook meets her expectations "at first glance", but takes into account more negative currency effects than she had estimated. The key figures presented were more or less in line with expectations.

In the current year, negative exchange rate effects are likely to have a considerable negative impact on profitability, Adidas announced on Wednesday evening after the close of trading. In addition, there are the "challenges in North America", according to CEO Bjorn Gulden. Adidas expects an operating result of around 500 million euros for 2024. This is significantly more than in the previous year - but is well below market expectations. In a consensus published by Adidas, analysts had assumed significantly more than one billion.

In an analyst conference on Thursday, Gulden said that the negative impact came from various currencies, including the US dollar. This is likely to weigh on the gross margin by two percentage points overall. An easing on the cost side and isolated price increases should have the opposite effect.

The forecast also includes the effects of the tense geopolitical situation, which is leading to problems with the movement of goods across the Red Sea. This is currently causing delivery delays of around three weeks, said Gulden. However, Adidas is able to control this and does not see it as a major problem.

Currency-adjusted sales are expected to increase by a mid-single-digit percentage in 2024. Here, too, analysts had hoped for more. CEO Gulden assumes that "sales at the beginning of the year will initially be at the previous year's level, but will then improve from quarter to quarter". The sales forecast is reportedly based on the assumption that Adidas will sell the remaining Yeezy stock at least at break-even, which would lead to sales of around 250 million euros. Adidas thus decided against a further write-down on the majority of its product inventories from the terminated partnership with the controversial rapper Kanye West.

Overall, Gulden sees the current year as the next "building block to turn Adidas back into a company with double-digit growth and an operating margin of 10 percent".

Last year, however, Adidas performed better than forecast. This was the result of a slightly better than expected final quarter and the decision against further major Yeezy write-offs. The operating result fell from 669 to 268 million euros last year, as the company reported on the basis of preliminary figures. However, Adidas had recently forecast a loss of 100 million euros.

"We owe the improvement to the operating business, which improved by around 100 million euros, and the decision not to write off Yeezy inventories amounting to 268 million euros," said Gulden. Only stock that was "either damaged or only available in isolated large quantities" was written off. According to Adidas, these write-downs only amounted to a low double-digit million euro amount.

Sales fell by five percent to 21.4 billion euros in 2023. Negative currency effects amounting to more than one billion euros had a negative impact, Adidas explained. In the fourth quarter, the devaluation of the Argentinian peso had a negative impact. Adjusted for currency effects, sales were roughly at the previous year's level. However, Adidas had forecast a currency-adjusted decline in the low single-digit percentage range. Due to the reduction of inventories, sales to wholesalers were significantly reduced, it was reported. In addition, the termination of the Yeezy business had a negative impact of around 500 million euros on sales development compared to the previous year.

"Of course we know that our financial results are not good," said Gulden. "But we are in the process of making Adidas a good company again. As we have said from the beginning, we just need the time to put it back on a stable footing."/nas/lew/jha/