Adidas warns of irregularities in Indian business
German sportswear maker Adidas reported Monday a strong rise in first-quarter profits but warned full-year earnings would be hit by the discovery of irregularities in its Indian business.
Adidas reported a net profit of 289 million euros ($383 million) in the period January to March, up 38 percent over the year-earlier figure.
Operating profit grew 30 percent to 409 million euros on a 17-percent rise in sales to 3.8 billion euros.
"Growth rates in Greater China, Japan as well as at TaylorMade-adidas Golf were stronger than originally anticipated," Adidas said.
Looking ahead to the whole of 2012, however, the company said "commercial irregularities" had been discovered at the Indian branch of its Reebok subsidiary which would likely affect its full-year results.
Adidas could not reveal what the problems were but said that "due to the sensitivity of the on-going investigation, specific details will be disclosed as appropriate in due course."
Nevertheless, "the currently estimated maximum negative impact could be up to a pre-tax amount of 125 million euros," Adidas warned.
Despite this, and on the basis of the stronger-than-expected first quarter, Adidas said it was upgrading its full-year forecasts, with sales set to rise by 10 percent and net profit to increase 12-17 percent.