German sporting goods maker Adidas posted €1,124 million in profit through September, down 41.3% year-on-year, due to problems in China, falling demand in Western markets and extraordinary costs.

As the company revealed today, turnover improved in the same period to €17,306 million (+7.51TP2Q), while operating profit fell to €1,393 million (-27.51TP2Q).

The operating profit margin on sales decreased to 8% (was 11.9% a year earlier) following the increase in operating expenses.

"The market environment changed in early September to the extent that demand in Western markets fell" and the situation in China deteriorated, so stocks increased and it will be necessary to apply greater discounts to be able to sell the products, something that hampers profits, said Adidas CFO Harm Ohlmeyer, quoted by Lusa, when presenting the results.

Ohlmeyer was optimistic about the upcoming Soccer World Cup, as the company already shows significant revenue growth in this area.

Business interruption in Russia reduced revenues by more than 100 million euros in the third quarter, and in China sales fell due to lockdowns to contain the spread of the covid-19 pandemic.

In the third quarter Adidas had extraordinary costs of 300 million euros.

The company has again revised downward its revenue and operating profit margin forecasts for 2022 due to the impact of the discontinuation of its collaboration with American rapper Kanye West, which will have a negative impact of €250 million on the company's net income this year.

Kanye West's "Yeezy" brand products were selling well at the end of the year, but as sales were halted, sales will drop in the fourth quarter.

This is why Adidas expects turnover, discounting the effects of exchange rates, to increase by 2022 by only a single-digit percentage and the margin to be 2.5% (previously it was 4%).

This is the fourth downward revision to Adidas' forecasts this year. The previous one was on October 20, when the company's shares fell, although they recovered after Adidas recruited Puma CEO Bjørn Gulden to replace Kasper Rorsted.