The running shoe company had a good quarter with the Olympic Games in Paris. But profits fell by almost 50 percent.
Many companies have already misjudged the development of currencies.
The effects on the extremely large foreign exchange market are far too complex, meaning that something can quickly go wrong.
A plus becomes a big minus
The developments of On-Running, the well-known Swiss running shoe company, could be described in exactly the same way.
Profits fell by around half to just 30.5 million francs in the third quarter, as the company supported by tennis star Roger Federer announced on Tuesday.
The main reason for this is realized losses on the currency front, which On shows in the financial result.
In the current quarter, the sports goods manufacturer slipped into the red by almost 43 million francs. In the same period last year there was an increase of 14 million francs.
Confident for the future
However, sales increased by a high 32 percent to 636 million francs in the third quarter. At constant exchange rates, the increase in income would have been around 33 percent, it was said.
Such fluctuations in sales show that things can go wrong when hedging.
On reports in Swiss francs – but sales and costs are often incurred in other currency areas.
Despite this drop in profits, the company’s management appeared very confident at an investor call that it had a good Christmas business ahead of it.
The sales strategy with direct-to-customer transactions in particular has proven to be successful.
The Olympic Games in Paris had already led to significantly more sales and an increase in brand awareness, it was said confidently.
Optimism increases
Cumulatively over the first three quarters, the developments are actually promising, as sales rose by almost 30 percent to 1.7 billion francs.
And group profit increased by 44 percent to 153 million francs from January to September compared to the previous year.
On is now forecasting sales of 2.3 million francs for the year as a whole. In the previous year it was 1.8 billion francs.
Escape to the Swiss franc?
The sporting goods manufacturer also wants to generate more profit than before, assuming that there will be strong headwinds in the currencies against the Swiss franc in the fourth quarter, as stated in the communiqué.
But the well-known running shoe company could be wrong.
12.11.2024/kut.
