PUMA AG announces its consolidated financial results for the First Quarter of 2009

Herzogenaurach, Germany, May 07, 2009

Highlights First Quarter:
Consolidated sales up slightly by almost 1% currency neutral
Gross profit margin at 52%
Operational result before special items at € 114 million representing 16% of sales, a decline of 9%
First quarter result impacted by restructuring cost of € 110 million
EPS before restructuring at € 5.36 compared to € 5.76

Outlook 2009:
Market environment expected to remain difficult in 2009
Management takes further actions to act accordingly within the
currently difficult market environment, in order to protect
profitability and ensure profitable growth in the future

Sales and Earnings Development

Global branded sales
PUMA’s worldwide branded sales, which include consolidated and license
sales, decreased currency neutral 3.1%. In Euro terms, sales are only
slightly down 0.5% reaching € 737.7 million in a challenging
environment versus € 741.2 million in last year’s quarter.

On a
currency neutral basis, Footwear sales were down by 0.8% to € 407.1
million and Apparel 8.1% to € 237.4 million. Accessories increased by
0.6% to € 93.2 million.

Licensed business Due to
the take-over of a former licensee, the licensed business was down
41.6% on a currency neutral basis. Based on the licensed business, the
company realized a royalty and commission income of € 5.0 million in
the first quarter versus € 7.1 million in the prior year. Consolidated sales up
In the first quarter, consolidated sales were up 0.8% on a currency
neutral basis and 3.6% in Euro terms to € 697.4 million. Americas
increased by double-digit rates whereas EMEA and Asia/Pacific were
below last year. Currency adjusted, sales in Footwear were slightly
down 0.8% representing € 397.1 million. Apparel sales decreased 8.1% to
€ 222.4 million due to high comparables which resulted from replica
sales relating to the Football Euro Cup last year. Accessories were up
a strong 56.7% to € 77.9 million which stems mainly from first time
consolidation effects.

Gross profit above 52%
the first quarter, gross profit margin reached 52.1% compared to 53.4%
last year. The decline was mainly due to the regional mix. Footwear
reported 50.4% versus 53.4%, Apparel 53.7% compared to 53.4% and
Accessories 55.6% versus 53.7% last year.

Other operating expenses
Other operating expenses increased by 5.4%, rising from € 241.0 million
to € 254.1 million, or from 35.8% to 36.4% as a percentage of sales. Operating Expenses include depreciations of € 15.8 million, up 19.9% compared to last year.

Operational result
Operational result before special items amounts to € 114.0 million
versus € 125.8 million last year, a decline of 9.4%. As a percentage of
sales this relates to a margin of 16.3% versus 18.7%.

Special Items – Restructuring charge
PUMA has taken further actions to ensure long-term profitable growth in
the future given the currently challenging economic environment and an
unpredictable outlook. Management has implemented a cost reduction
program which will reduce originally planned costs annually and lead to
cost savings of up to € 150 million in FY2011. With the
resulting one-time expenses of € 110 million (net of taxes € 75.2
million) in the first quarter, PUMA will optimize its retail portfolio,
the global organizational structure and the operating processes. The
number of employees in PUMA’s global workforce is expected to remain at
previous year’s level while ensuring an even better alignment of
resources with key business opportunities. The program was initiated as
a proactive step in order to ensure an even leaner and more efficient
platform that will help PUMA to focus even stronger on the numerous
opportunities that arise in the sportlifestyle market in a challenging
market environment accordingly. After adjustment for special items, EBIT amounted to € 4.0 million compared to € 125.8 million last year.

Before restructuring costs, the company’s pre tax profit (EBT) accounts
for € 112.4 million versus € 126.8 million and net earnings to € 80.8
million versus € 90.1 million, a decline of 10.3%. This results in
earnings per share of € 5.36 compared to € 5.76. The operational tax
ratio came in at 28.5% versus 28.9% last year. Taking into
account the restructuring costs, earnings before taxes declined from
last year’s € 126.8 million to € 2.4 million this year. Net earnings
amounted to € 5.6 million versus € 90.1 and earnings per share as well
as diluted earnings per share were at € 0.37 versus € 5.76 in last
year’s quarter.

Regional Development

Marketing/Retail expenses remained unchanged to last year’s level and
totaled € 127.2 million whereas Marketing was below last year and
Retail increased due to full year effects. The cost ratio decreased
from 19.0% to 18.2% of sales. Other selling expenses increased 20.0% to
€ 84.5 million, or from 10.5% to 12.1% of sales, mainly due to first
time consolidations and currency impacts. Expenses for product
development and design were up 23.9% to € 14.6 million, or as a
percentage of sales from 1.8% to 2.1% as major development costs
occurred in US-Dollars with the US $ strengthening on a like-for-like
basis. Other general and administration expenses were down 10.5% and
totaled 27.8 million, representing 4.0% of sales versus 4.6%.
Sales in the EMEA region decreased currency adjusted by 3.0% reaching €
366.1 million versus € 391.1 million last year. Sales in last year’s
quarter were impacted positively by major sport events. The region now
represents 52.5% of consolidated sales. Gross profit margin increased
to 55.1% compared to 54.7% last year. Sales in the Americas
were up currency neutral by 11.5% to € 178.1 million. The region now
accounts for 25.5% of consolidated sales. Gross profit margin stood at
46.7% compared to 50.4% last year. In the US market, sales increased by
3.4% to $ 138.7 million in the first quarter. Asia/Pacific
sales decreased by 1.2% currency neutral but increased by 14.8% in Euro
terms to € 153.3 million. The total region accounts for 22.0% of sales.
Gross profit margin reached 51.0% versus 53.0% last year.

Net Assets and Financial Position Equity
As of March 31, 2009, total assets climbed by 16.4% to € 2,108.0
million and the equity ratio reached 56.6% after 60.4% in the previous

Working capital
Inventories grew 22.6% to €
446.7 million and accounts receivable 5.3% reaching € 533.1 million.
Adjusted by acquisitions and currencies, inventories were up 16.6% and
accounts receivables by 1.3%. Due to lower liabilities at the end of
March, working capital totaled € 596.9 million (ex acquisition € 581.2
million) compared to € 521.1 million last year.


Capex, the company spent € 11.6 million in the first quarter versus €
24.3 million in last year’s quarter. In addition, an outflow of € 54.7
million (last year: € 16.6 million) related to acquisition cost.
Due to the aforementioned investments and the higher working capital,
free cashflow amounted to € -118.0 million compared to € -49.7 million
last year. Excluding investment for acquisitions, free cashflow was €
-63.3 million versus € -33.0 million. The decline compared to last year
is mainly due to the aforementioned lower liabilities.

Cash position
Total cash end of March stood at € 267.6 versus € 357.2 million last
year. Bank debts were down from € 67.1 million to € 63.2 million. As a
result, the net cash position decreased from € 290.0 million to € 204.5
million year over year, mainly due to the aforementioned acquisitions
and a lower free cashflow in the first quarter.

Share Buyback

PUMA did not purchase own shares during the first three months. At
quarter-end, 950,000 shares were held as treasury stock in the balance
sheet, accounting for 5.9% of total share capital. Effective
April 29, 2009 all own shares were cancelled and share capital was
reduced accordingly. As of today, subscribed capital consists of
15,082,464 shares or € 38.6 million.

Outlook 2009 – Market environment remains challenging

During the first quarter, sales came in better than the order books at
the end of the fourth quarter 2008 had indicated. Due to seasonability,
the current shift in future orders to at-once business in the current
market environment, as well as the own retail business which is not
included in the order books, quarterly orders are losing significance
as an indicator of future sales. As a result, PUMA will not release
future orders as of the first quarter 2009. After 14 years of
consecutive growth, the year 2009 will be taken as a year of
consolidation with a clear focus on adjusting the cost basis in
alignment to the current business environment. First positive signs are
not expected before 2010, the year that is highlighted by the upcoming
Football World Cup in South Africa, where PUMA will once again be one
of the most dominant brands. It currently outfits eleven African
Football Federations including Egypt, the African Cup of Nations winner
2008, as well as the reigning World Champion, Italy.
Furthermore, additional focus for 2009 is on working capital
improvements to strengthen the cash position and therefore the return
on capital employed by year-end. With all the implemented measures, PUMA plans to protect its industry-leading key financial parameters.

Jochen Zeitz, CEO:

“Despite an ongoing slowdown in the global consumer’s environment, PUMA
managed to post a solid sales and earnings performance before one time
expenses in the first quarter. Due to the worldwide recession, we plan
for business to remain challenging in 2009 and have therefore decided
to implement further measures to align our cost structure with the
current market environment, ensuring a platform for profitable growth
in the future. The measures are expected to accelerate our operational
processes, make the organization even more efficient and to further
reduce time-to-market for our products. In addition to the
opportunities that arise in the different sportlifestyle segments, PUMA
will be particularly focused on the Football segment, in which we plan
to further grow our market share with the first World Cup ever played
on African soil, tapping into the significant growth opportunities
offered by the market.”