Adidas-Salomon Breaks All Records

Europe’s largest producer of sports articles, adidas-Salomon, has curbed its profit expectations for 2002. Despite record results last year, the group said a weak euro and higher marketing costs for the World Cup in soccer will push down its original forecast.

However, the group said it has registered a growing demand in North America, its most important market.

Record results in 2001

The group, based in Herzogenaurach, Germany, saw net sales up 5% to 6.1 billion euro last year. Growth in all product categories contributed to this growth, it said.

The largest division, footwear, posted a 5% gain, with net sales totalling 2.7 billion euro.

Asia was the fastest-growing region for the group in 2001. Net sales grew 15% in Asia, to reach a record 1 billion euro. Adidas-Salomon registered large increases from adidas Japan. It said this signalled rising momentum in connection with this year's World Cup in Japan and South Korea.

In 2001, net profits climbed 15% to 208 million euro. The group said it expects this figure to improve 5% to 10% in 2002. Last year, it had announced an anticipated annual plus in profits of 15% by the year 2003.

However, sales are expected to remain at the 5% growth forecast.

Aid agency criticizes factory policies

Although adidas-Salomon and fellow sportswear giant Nike have taken steps to shed their sweatshop image in Indonesia, employees are still overworked and underpaid, a leading aid agency said.

"This report concludes that although some improvements have been made in working conditions in sport shoe factories producing for Nike and adidas-Salomon in Indonesia, the measures taken fall well short of ensuring that workers are able to live with dignity," said Australia-based Oxfam Community Aid Abroad in its report "We Are Not Machines".

Points of criticism included inadequate safety conditions for workers or protecting their rights to have unions. Workers were also still being shouted at when they work too slowly, the report said. It is based on the accounts of 35 workers from four factories producing for both companies in West Java.

Image-conscious Nike and adidas have come under increasing pressure in recent years over the treatment of staff in Asian factories subcontracted to produce the bulk of their sporting shoes.