Companies

Adidas says India operation irregularities may cost €70 m

Vidya Ram London | Updated on March 12, 2018

adidas

An investigation is on into commercial irregularities at Reebok India.

German sports titan Adidas announced its preliminary first quarter figures on Monday.

It follows the sudden and unexplained departure of two of Adidas India's top executives last week.

Replacements

No reason was given for the exit of the Managing Director, Mr Subhidher Singh Prem, and the Chief Operating Officer, Mr Vishnu Bhagat.

Mr Claus Heckerott, Adidas Vice-President for Finance and Global Sales, was brought in as Mr Prem's replacement effective immediately, while Mr Frederic Serrant will take over as Sales Director from May 1.

Irregularities' impact

Adidas said that the irregularities could impact its consolidated results from previous years to a pre-tax maximum of €125 million, while restructuring costs associated with changes being brought in by the new management “including changes to commercial business practices” could lead to an additional one-off cost of €70 million.

Management has assured its stakeholders that it has, and will continue to pursue a course of action to protect the Group's interests, which has already resulted in the appointment of a new local leadership team in India at the end of March, Adidas said in a statement.

Q1 revenues up

Due to the sensitivity of the on-going investigation, specific details will be disclosed as appropriate in due course.

It came as Adidas announced a 14 per cent increase in first quarter revenues, driven by China, Japan and increasing demand for its TaylorMade golf range.

It raised its target for full year sales growth to 10 per cent, from five-nine per cent previously.

Ramp up presence

Adidas, which sells under its own name as well as Reebok, and TaylorMade in India, is hoping to ramp up its presence in the country, having identified it as one of its key growth markets in Route 2015 plan laid out two years ago.

Published on April 30, 2012

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