Adidas Forecasts €1.7-1.8B Profit for 2025, Below Estimates, but Outpaces Nike with Strong Q4 Growth

Local Market Commentary

The Top 40 index gained 1.2% to 80,406.5 points, while the All Share index rose 1.14% to 87,717.6 points. February’s PMI survey signalled continued economic contraction, though at a slower pace. Investors are now focused on South Africa’s delayed national budget, postponed due to coalition disagreements over VAT hikes. Meanwhile, Transnet revised its wage offer to unions, proposing CPI +1% in year one (4.5%) and CPI +0.5% (5% increases) in years two and three, covering salaries, bonuses, and benefits.

European Market Commentary

European markets rebounded on Wednesday, led by German stocks, after Germany’s leaders agreed to a €500 billion infrastructure fund and borrowing rule reforms to support defence and growth. The ECB is expected to cut interest rates today, though future policy remains uncertain amid geopolitical and economic shifts. Swiss inflation dropped to a nearly four-year low of 0.3% in February, raising expectations of a Swiss central bank rate cut later this month.

U.S. Market Commentary

Wall Street closed higher on Wednesday amid optimism over a potential delay in U.S. auto tariffs on Canada and Mexico, easing trade tensions. Stocks gained further after a White House confirmation of the tariff postponement. Economic data was mixed, with the ISM services index showing unexpected growth, while ADP data indicated the slowest private payrolls increase in seven months. Investors now await Friday’s key payrolls report.

Asia Market Commentary

Asia-Pacific markets traded mostly higher, tracking Wall Street’s gains after U.S. President Trump postponed auto tariffs. South Korea’s inflation eased to 2.0% in February, down from 2.2% in January, offering policymakers room for further easing. Taiwan’s Foxconn reported a 56.43% year-on-year surge in February revenue, driven by strong electronics demand.

Currency Market Commentary

The South African rand strengthened as the U.S. dollar faced pressure following policy shifts by the Trump administration. The pound weakened against the euro as investors favoured the common currency after Germany’s proposed €500 billion infrastructure fund and debt rule changes, though it gained against the dollar. The euro extended its four-month high against the greenback, which remained near a multi-month low after the U.S. delayed auto import tariffs on Canada and Mexico.

Commodity Market Commentary

Gold edged higher as the U.S. dollar weakened, with investors awaiting non-farm payrolls data for Fed rate guidance. Oil prices steadied after four days of declines, as U.S. tariffs on Canadian crude may ease, though concerns remain over Mexico and rising global output. U.S. crude inventories surged by 3.6 million barrels last week, surpassing expectations, while gasoline and distillate stocks fell on higher exports. expectations in a Reuters poll for a 341,000-barrel rise.

Cashbuild (CSB) -3.13%
Cashbuild, southern Africa’s leading retailer of building materials, reported a 5% revenue increase, driven by a 4% rise in pre-existing store sales and a 1% contribution from new stores. Selling price inflation stood at 1.5%, while gross profit margins declined slightly to 24.3%. Operating profit (excluding prior impairments) fell by 7%, but basic earnings per share more than doubled due to prior-year goodwill impairments. Cash reserves grew by 20% to R1.91 billion, and stock levels declined slightly. The company opened three new stores, closed seven, and continues its controlled expansion strategy. Revenue for the first seven weeks post half-year-end rose by 6%, though management anticipates ongoing market challenges.

Woolworths Holdings (WHL) -6.31%
Woolworths Holdings reported a 5.7% increase in Group turnover, with strong performance in its Food segment offset by challenges in Fashion, Beauty, Home (FBH) and Country Road Group (CRG). Woolworths Food grew sales by 11.4%, driven by innovation and market share gains, while FBH turnover rose by 2.5%, impacted by supply chain disruptions and increased promotional activity. CRG saw a 6.2% sales decline amid restructuring and a tough Australian retail environment. Group adjusted EBIT fell by 13.7% to R2.8 billion, and headline earnings per share dropped 24.8%. The sale of a Melbourne property boosted earnings per share by 20.9%. Despite economic uncertainties, management remains confident in its strategic direction.

Quilter plc (QLT) +5.71%
Quilter plc reported a 17% rise in adjusted profit to £196 million, with operating margin improving to 29%. Assets under Management and Administration grew by 12% to £119.4 billion, supported by £4.8 billion in net inflows. Revenue increased by 7% to £670 million, while cost control limited expense growth to 3%. Adjusted diluted earnings per share rose by 13% to 10.6p, and the full-year dividend was increased by 13% to 5.9p per share. The company’s simplification programme has achieved £35 million in savings, with the remaining £15 million expected by the end of 2025. Despite an IFRS loss of £34 million, Quilter remains confident in its momentum heading into 2025

Spur Corporation (SUR) 3.53%
Spur reported a 10.0% increase in franchised restaurant turnovers to R5.9 billion, driving revenue up 13.8% to R2.0 billion. Profit before income tax rose by 12.9% to R216.6 million, while headline earnings per share increased by 11.8% to 178.35 cents. Cash generated from operations nearly doubled to R179.5 million. The group expanded its restaurant footprint to 726 outlets across 15 countries, adding 21 new locations in South Africa and 12 internationally. An interim dividend of 106 cents per share was declared, reflecting an 11.6% increase. Despite economic pressures, Spur continues to attract customers with its strong value proposition and loyal customer base.

Growthpoint Properties Limited (GRT) +3.69%
Growthpoint anticipates DIPS growth of 3% to 4% for the six months ended 31 December 2024, compared to the same period in 2023. Full-year DIPS growth guidance has been revised upwards to between 1% and 3% for the financial year ending 30 June 2025. Further details will be provided in the interim results release on 12 March 2025. These figures are not an earnings forecast and have not been audited.

Logitech International (LOGN) +2.61%

Logitech International has announced a $2 billion share repurchase programme over the next three years, increasing its existing buyback by $600 million. The company reaffirmed its FY2025 outlook and projected FY2026 sales of $4.53 billion to $4.71 billion, reflecting 1%-3% growth in USD terms. Following a strong pre-holiday quarter, Logitech raised its full-year forecast in January. At its investor day in San Jose, the company outlined long-term targets, including 7%-10% annual sales growth, a non-GAAP gross margin above 40%, and an operating margin of 15%-18%.

Adidas AG (ADS) +0.13%

Adidas forecasted a lower-than-expected 2025 operating profit of €1.7 billion to €1.8 billion, below analysts' €2.1 billion estimate, citing slowing sales growth and increased volatility from U.S. tariffs. Despite conservative guidance, CEO Bjorn Gulden expressed a more ambitious outlook, with Adidas continuing to outperform expectations and gain market share over Nike. The company saw strong Q4 2024 sales growth, including 15% in North America, 25% in Europe, and 31% in Latin America. For 2025, Adidas expects sales in North America and Greater China to grow over 10%, with high single-digit growth in Europe.

The Campbell's Company (CPB) -2.85%

Campbell’s lowered its fiscal 2025 sales growth forecast to 6%-8% (previously 9%-11%) and adjusted EPS guidance to $2.95-$3.05 (from $3.12-$3.22), citing weaker snack demand and competition from private-label brands. Q2 net sales rose 9% to $2.69 billion, missing the $2.74 billion analyst estimate, while adjusted EPS of $0.74 exceeded forecasts of $0.72. Shares fell 4% following the announcement.

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