FRANKFURT, Germany, Mar 14 – The chief executive of German sportswear maker Adidas said Wednesday it stood by its sponsorship of this year’s football World Cup in Russia, as tensions mount between Moscow and London over the poisoning of an ex-spy on British soil.
Football gear makes up a smaller share of Adidas’ fast-growing business than in the past, but the firm remains keen to see the balls it has provided to FIFA since 1970 and the shirts of its sponsored teams adorn TV screens worldwide.
“We do hope that the tournament goes on, because isolation is not the best way to resolution” of tensions with Russia, Kasper Rorsted told journalists at the group’s Bavarian headquarters.
“There are hundreds of millions of consumers around the world that are looking forward to a football tournament and want to watch football despite the political situation.”
British Prime Minister Theresa May is expected to tell lawmakers Wednesday how her government will retaliate against Russia for its alleged role in the poisoning of ex-spy Sergei Skripal and his daughter Yulia with a nerve agent.
May has said it was “highly likely” that Russia was behind the attack, either directly or because Moscow had “lost control” of the poison.
“How can we go to (President Vladimir) Putin’s World Cup now?” the front page of influential tabloid the Daily Mail asked Tuesday.
The British government has so far threatened a boycott by officials and dignitaries, but there are as yet no plans to withdraw the England squad.
If it materialises, a boycott would not harm Adidas’ business as much as it might have in the past, with the beautiful game now accounting for around 2.0 billion euros ($2.5 billion) of the group’s 21.2 billion euros in sales last year.
“The times are gone when one event can make a huge impact on the overall number,” CEO Rorsted said.
– Eyes on 2020 –
Presenting its annual results for 2017, Adidas reported higher profits as its most popular lines sold more and it honed efficiency, putting it on track for more muscular returns in future.
Net profit at the group grew 7.8 percent to 1.1 billion euros last year, with sales up almost 15 percent.
The revenue boost was powered by a 27-percent surge in currency-adjusted North American sales and a 29-percent leap in China.
Operating, or underlying profit grew almost 31 percent, to 2.1 billion euros.
“We want to have the right balance of growing market share and profitability, that is what we call winning,” Rorsted said as he laid out an upgraded profitability goal for 2020.
Adidas aims to boost its operating margin to 11.5 percent by 2020, from 9.8 percent last year.
That would put the group on track to hit its upgraded target of average growth between 22 and 24 percent per year in net profit from continuing operations between 2015 and 2020.
Looking ahead to 2018, Adidas expects currency-adjusted sales to grow around 10 percent in 2018, combining with efficiency savings to produce an operating profit between 9.0 and 13 percent higher.
Executives plan to offer investors a dividend of 2.60 euros per share for 2017, up from 2.00 euros the previous year.
The group also unveiled plans to further reward shareholders with a 3.0-billion-euro share buyback scheme to run until May 2021, with 1.0 billion euros of purchases set for this year.