THE OFFICIAL kit supplier to the Munster rugby team, Adidas, last year sustained a collapse in its pretax profits in its Irish operations, new accounts show.
Documents just filed with the Companies Office show Adidas Ireland Ltd’s pre-tax profits last year fell 85 per cent, from €10.4 million to €1.5 million.
The sharp decrease in pretax profits took place after the company recorded a 34 per cent drop in sales from €52.7 million in 2008 to €34.6 in 2009.
The directors state that “the results for the year were satisfactory in the face of extremely difficult trading conditions”.
Earlier this year, Adidas extended its deal with Munster as the team’s official kit supplier to 2014. However, the subsidiary of the German sports clothing maker has decided to end its 13-year association with the Dublin Marathon, which attracted a record number of participants on Monday.
The Irish arm of the international sports giant would have benefited last year from the sales of replica shirts of Liverpool’s Steven Gerrard and Chelsea’s Didier Drogba. Along with sponsoring Liverpool and Chelsea, Adidas also produces the jerseys for the world’s richest club, Real Madrid.
Adidas also sponsors the All-Blacks and its revenues last year would have received a boost with its sponsorship deal with the British and Irish Lions through the South African test series.
However, according to the directors’ report, a key factor in the 34 per cent decrease in sales was the global economic downturn, “which impacted the Irish economy more severely than many other countries”.
The directors add that “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 Adidas’s investment in Reebok Ireland was crystallised via a significant dividend receipt of €8.3 million from that company during the year. However, the accounts show that the investment of €7.9 million in Reebok was written off to match the dividend income now that Reebok Ltd is to become a dormant company.
The accounts confirm that Adidas paid a dividend of €13.3 million last year to its parent, after paying out a dividend of €9.5 million in 2008.
