PUMA AG announces its consolidated financial results for the 2nd Quarter and First Half-Year of 2005

Highlights Q2:

• Strong performance from top to bottom
• Consolidated sales with 13% increase better than expected
• Gross profit margin above 53%
• EBIT margin at 21%
• EPS increase from 3.28 € to 3.64 €

Highlights H1:

• Global brand sales reached almost €1.2 billion
• Consolidated sales total €892
• Gross profit margin with 53% at record level
• EBIT margin at 24%
• EPS jumps from 8.28 € to 9.32 €

Outlook 2005:

• Future orders increase by 7% to €772 million marking the 38th consecutive quarter of order increase
• Management raises sales guidance from mid to high single digit growth to up to 10%
• 5th consecutive year of record earnings expected for 2005

Sales and Earnings Development

Global brand sales reach almost €1.2 billion in six months

PUMA’s worldwide branded sales, including consolidated and license sales, totaled €529 million during Q2 thus marking a 14.3% increase on a currency-neutral basis or 13.9% in Euro. During the first six months branded sales grew 16.4% currency-neutral. In Euro terms, growth was 15.2% to €1,168 million. Footwear sales rose currency-neutral by 16.3% (in Euro 14.5%) to €676 million, Apparel by 14.5% (12.7%) to €393 million and Accessories by 34.4% (32.6%) to €99 million.

Consolidated sales better than expected

In Q2, consolidated sales grew 13.2% currency-neutral or 12.3% in Euro reaching €395 million and well ahead of expectation. Within the segments Footwear rose by 16.7% currency-neutral (in Euro 15.7%), Apparel increased 1.7% (1.6%) and Accessories jumped 23% (22.5%). Currency-neutral sales for the first six months grew by 13.4%, also significantly better than expected. In Euro terms, sales increased 12.1% to €892 million. Footwear was up 14.1% currency-neutral (in Euro 12.8%) to €603 million, Apparel 7.3% (6.7%) to €224 million and Accessories 27.9% (26.4%) to €65 million.

Gross profit margin on a record level

In Q2, gross profit margin reached strong 53.2% compared to 51% last year, representing a further margin improvement of 220 basis points. Thus, the gross profit margin remained on a record high for the first six months, jumping from 51.4% to 53.3%. By segments, the Footwear margin increased from 52.8% to 53.6%. The strongest performance was in Apparel where margin was up 460 basis points to 53.4%. Accessories also showed impressive margin growth from 46.9% to 50.3%.

Strong performance in licensed business

The licensed business grew a strong 19.1% to €134 million in Q2, and 26.7% after six months to €276 million. A particularly strong performance in the Asian region contributed to the high double-digit growth. As a consequence, royalty and commission income was up 28.7% to €13.8 million in Q2 and 20.5% to €26.3 million in the first half.

SG&A increase due to extension of own retail business

Total SG&A expenses increased in the second quarter from €112 million to €137 million or from 31.7% to 34.5% of sales. In the first six months, total expenses increased by 19.9% to €278 million. As a percentage of sales, SG&A went up from 29.1% to 31.1%. The increase was mainly due to the extension of the own retail business. In the first half, Marketing/Retail expenditures accounted for €128 million or 14.4% of sales versus 12.5% last year. Product development and design expenses rose by 8.8% to €19 million, or 2.1% of sales. Other selling, general and administrative expenses were up 14.1% to €130 million, or from 14.3% to 14.6% as a percentage of sales. Due to the higher investments in retail operations, depreciation increased by 31.1% to €6 million in Q2 and by 27.2% to €11 million respectively.

High profitability continues

EBIT climbed from €74 million to €82 million in Q2 and from €191 million to €213 million in H1 leading to an EBIT margin of 20.7% and 23.9% respectively. In Q2, pre-tax profit increased stronger than expected by 10.5% to €84 million and by 12.3% to €216 million in H1. The tax rate declined from 30.9% to 29.3% this year. As a result, net earnings rose from €52 million to €59 million in Q2 and from €132 million to €150 million in H1. This yields in a net margin of 14.9% similar to last years second quarter and to 16.8% versus 16.6% after six months.

Earnings per share During the second quarter, earnings per share jumped 11% to €3.64 or €3.61 diluted. Year-to-date earnings per share rose by 12.6% to €9.32 and to €9.24 diluted.

Net Assets and Financial Position

Equity ratio greater 60%

The capital structure improved once again. Despite the 36.6% increase in the balance sheet total to €1,187 million, equity ratio was up to a new record level of 63.2%. This development underscores the strong financial position of the PUMA Group.

Net cash position increased

Cash and cash equivalents jumped from €225 million to €370 million and bank debts increased from €14 million to €37 million. Therefore, net cash position rose with a strong double-digit growth of 58.2% from €210 million to €332 million.

Regional expansion affected working capital

Inventories increased by 15% to €242 million and receivables were up by 26.2% to €319 million. Total working capital at the end of June increased 57% and amounted to €320 million compared with €204 million last year. The increase was mainly due to the regional expansion during the first half of 2005.

Capex/Cashflow

Capex increased as anticipated from €16 million to €38 million. Tax payments rose from €28 million to €65 million. Due to these effects as well as the inventory shift from December to January cash-outflow was €8 million in first half of 2005. At the end of June, PUMA held 685,000 own shares or 4.1% of total share capital.

Regional Development

From a regional perspective sales in the EMEA-region (Europe, Middle East, Africa) reached €240 million in Q2, a slight increase versus last year but significantly better than the order books at end of Q1. Year to date, sales increased by 5.5% (in Euro terms 5.8%) to €598 million. This represents 67% of total consolidated sales. The gross profit margin increased further by 210 basis points and reached very strong 55.3% compared to 53.2% last year. Orders on hand at the end of June accounted for €486 million, a decline of 7.9% compared with last year, which can be attributed to higher than expected sales in Q2 as well as a delayed order income due to Spring/Summer sales meetings in some key countries taking place one month later than last year. Adjusted by these effects, the order book would stand at around –3%.

The Americas reported sales of €108 million in Q2, a currency-neutral growth of an impressive 55.1% (in Euro 51.2%). This represents a further acceleration since the beginning of the year as well as since Q1. First six months sales increased currency-neutral 46.3% (40.2%) to €203 million. The region now accounts for 23% of consolidated sales. The gross profit margin in this region improved by 160 basis points during the first six months and reached 48.2% compared with 46.6% last year. Orders on hand increased significantly and reached €205 million with a currency neutral growth of 63.1% or 66.3% in Euro terms. The US market achieved a remarkable sales growth of 42.4% in Q2 and 36.3% in H1. The order backlog improved significantly by the end of June, reaching US$ 211 million or an outstanding growth rate of 60.8%.

In Q2, the Asia/Pacific region increased sales currency-neutral by strong 16.2% and by 14.3% in Euro terms to €47 million. After six months the sales growth was currency-neutral 9.7% (in Euro 6.1%) and reached in total €91 million. This region contributed 10% to consolidated sales. The gross profit margin improved significantly from 47.6% to 51.3%. Like-for-like, orders on hand were up 3.9% (in Euro 1.6%) totaling €81 million.

Outlook 2005

Total orders on hand as of June 30, 2005 increased currency-neutral by 6.2% marking the 38th consecutive quarter of order increase. In Euro terms, total orders were up by 6.7% to €772 million. The orders are mainly for delivery in the second half of 2005.

By segment, Footwear orders were up by 6.9% currency-neutral (in Euro 7.4%) to €536 million. Apparel orders increased to €195 million, an increase of 4.6% (5.1%) and Accessories totaled €40 with a growth of 5% (4.8%).

Based on the strong results achieved so far this year as well as the order outlook, management raises sales guidance from previously mid to high single digit growth to up to 10%. Gross profit margin is also expected to reach the higher end of the guidance between 51% and 52%, or even possibly above. SG&A expenses are forecasted slightly above 31% on sales and EBIT margin should be clearly above 20%. With a tax rate of approximately 29%, management expects net earnings to come in between €264 million and €274 million. This translates to significantly above €16 per share or a mid to high single digit increase on a like for like basis. All in all 2005 should once again set new records in sales as well as become the 5th consecutive year with record earnings.

Due to the expected results for 2005, PUMA will close Phase III one year ahead of the original plan as all set targets should be significantly surpassed. Since the beginning of the long-term oriented business phases in 1993 this would add up to sales growing eleven years in a row as well as nine years delivering double digit growth and record earnings.

Jochen Zeitz, CEO: “We are very pleased with the first half of 2005. PUMA continues to record strong growth and shows an acceleration in our order book versus last quarter, while our expanding gross margins reflect the strong desirability of the PUMA brand. With this momentum we are now able to successfully conclude our current Phase III one year ahead of schedule and turn our focus to Phase IV of the company development.”

The aim of this partnership is to jointly explore the tremendous potential of the PUMA brand with its high brand awareness in the critical China market as well as to further enhance its already solid position in Hong Kong.

Jochen Zeitz, CEO and Chairman of PUMA AG: “Swire Pacific has successfully gained initial traction for PUMA in its markets and they possess very valuable market know-how that, combined with our knowledge, will allow us to further accelerate our rapid expansion in this highly important area. Our goal is to at least quadruple sales in the next 5 years and to firmly establish PUMA in the top 3 of the industry’s global brands in China.”

Christopher Pratt, Executive Director of Swire Pacific’s Trading and Industrial Division: “This is a very exciting development. PUMA is a leading edge Sportlifestyle brand which has seen remarkable global growth in the past years. The new venture has set ambitious targets for growth in the China market in the coming years and I have every confidence they will be achieved.”

The J.Lindeberg Future Sports Golf Shoe signals a revolutionary new design approach in golf shoes. The design ethos of the Future Sports Golf Shoe follows that of the J.Lindeberg Golf apparel, combining high performance functionality with modern, contemporary design. Key design elements include a squared toe, sculptured heel, the “JL bridge logo” branding on the kiltie, PUMA’s signature formstripe, and of course, bright, bold colors. The shoe also offers an exclusive breathable waterproof barrier to keep the feet dry and comfortable in any condition.

Jesper Parnevik, the undisputed style icon of modern golf and the pioneer of the J.Lindeberg Future Sports Golf collection admits, “For years, there has not been much in the way of modern developments in golf shoes. Now, finally there is a shoe that is truly modern and stylish.” American Hank Kuehne, who possesses the longest drive on the PGA said, “I love the fact that the shoe is extremely comfortable and is definitely high performance while looking great.” Cool new golfer James Heath volunteers, “The look of the J.Lindeberg Future Sports Golf Shoe is a perfect complement for the J.Lindeberg clothing, that is perfect for the modern movement in golf right now.”

The shoe will be available to consumers in a limited edition release this holiday season, followed by a larger distribution of two colorways (white/black and white/fluorescent orange) in February 2006. Parnevik, Kuehne and Heath will introduce exciting new promotional colors throughout the remainder of the year.

Creative Director Johan Lindeberg says, “Golf has been so much a part of my life, and my business, that creating a new golf shoe was a natural extension of what I have already done in golfwear. The design process took 18 months, but I really wanted to find the perfect balance between a dimensional and modern design and full performance features. I am proud to have these three great ambassadors – Parvenik, Kuehne and Heath – thoroughly endorse the shoe.“

About J.Lindeberg
Established in 1996 by Johan Lindeberg in New York and Stockholm – J.Lindeberg includes J.Lindeberg Concept, Progressive Tailoring, j.lindeberg.denim and Future Sports. With 10 flagship stores and distribution in over 25 countries, Johan’s vision to create THE 21st Century lifestyle brand for the modern consumer is fast becoming a reality.

The Weltklasse Zurich meeting belongs to the six meetings of the IAAF Golden League and is known for its unique atmosphere and well-informed audience. The IAAF-Meeting-Evaluation has voted Weltklasse Zurich as the best track in the world 12 times since 1988. Last year, the meeting was televised in more than 150 countries.

“We are very excited about the partnership with the best track meeting in the world,” said Pascal Rolling, PUMA’s International Running Marketing Manager. “We will not only strengthen our brand’s positioning with this sponsorship, we will enlarge it.”

“We welcome PUMA as a new sponsor to our meeting”, says meeting director Hansjörg Wirz. “We are delighted to collaborate with a company that will bring new ideas and promote the meeting to a broader audience.”

Over the years several PUMA athletes have made their mark in Zurich like Americans Renaldo Nehemiah and Evelyn Ashford along side Jamaican Merlene Ottey – with 17 participations in the meeting and overall eight victories, she is one of the darlings of the public. To date there have been 23 world records state in Zurich.

PUMA AG announces its consolidated financial results for the 3rd Quarter and First Nine Months of 2005

Highlights Q3:

• Another record quarter in sales and earnings
• Branded sales rise more than 18% and consolidated sales more than 16%
• Gross profit margin above 52%
• Strong EBIT margin remains above 24%
• Net earnings increases by almost 12% and EPS reaches 5.70 € versus 5.14 €

Highlights First Nine Months:

• Global brand sales strongly up by over 16%
• Growth in consolidated sales accelerates to almost 14%
• Gross profit margin remains around 53%
• EBIT margin at 24%
• >EPS jumps from 13.42 € to 15.02 €

Outlook 2005:

• Future orders up by more than 10% marking the 39th consecutive quarter of order increase
• Management now expects double-digit sales growth and confirms the 5th consecutive year of record earnings for 2005

For his second Italian National Team kit design, Barrett’s signature styling of clean lines, slim tailoring and layered garments come to the forefront. A deep v-neck revealing the new FIGC badge on an azzuri blue underlay creates a statement look for the team. The distinctive styling of the white v-neck creates a sophisticated, yet understated feel. This deep v-neck technique also hints at the team’s new 2006 home kit to be released on March 1st.

“Launched under the tag ‘Italians Look Better,’ the kit embodies the charisma of the team,” said Filip Trulsson, PUMA Teamsport Business Unit Manager. “Italians are known for their inherent style and we think it’s a necessity to maintain this essence of fashion when creating the football kit for the team. Through Barrett’s vision and our internal design talent, we are continually able to deliver a performance kit with unique visual interest and appeal.”

Over the past two years, Neil Barrett has worked closely with PUMA’s design team merging the brand’s technical sport integrity with his fashion sensibility. All of the garments, from the playing kit to the team apparel, utilize proven functional materials and cut lines to provide optimum performance. The shirt introduces a new groundbreaking woven rip-stop fabric, specially developed for PUMA in close co-operation with Toray Textiles and Manchester Metropolitan University.The woven fabric is extremely lightweight, carries outstanding wicking properties and has limited stretch to prevent shirt pulling.

In addition to the playing kit and selected team wear, a new FIFA-approved ball will be launched for the Italian National team – the v1.06. Introducing a new-patented panel concept based on a verified geometrical approach, this construction secures the roundest, most technically advanced ball on the market. Continuing with PUMA’s patented dimple technology, the new v1.06 ball delivers more speed, more distance and improved trajectory.

About Neil Barrett
Of British descent, Neil Barrett’s professional history is thoroughly Italian, including five years as Senior Menswear Designer at Gucci, four years as Design Director of Prada Menswear and launching his own brand name collection in 1999 produced by among others, the Prada Group and Allegri. For further information, please visit www.neilbarrett.com

“The announcement of the long-term strategic partnership with the Italian Football Association underlines PUMA’s reinforced commitment to further strengthen its position as one of the leading football brands,” said Jochen Zeitz, CEO and Chairman of PUMA AG, and continued: “The Italian National Team, more than any other national team property in world football, perfectly embodies PUMA’s unique sportlifestyle positioning and we are delighted about the extension of this already successful collaboration.”

This announcement coincides with the introduction of the new 2006 Italy National Team away kit designed by PUMA in collaboration with Neil Barrett. The away kit will make its debut in a friendly against Holland in Amsterdam on November 12th and will also be worn by Gli Azzurri in a friendly game against fellow PUMA team Ivory Coast on November 16th in Geneva.

Italy, whose honors include three FIFA World Cup titles (1934, 1938 & 1982), a UEFA European Championship title (1968) and one Olympic Gold medal (1936), has qualified for the 2006 FIFA World Cup in Germany securing first place ahead of Group 5 qualification contenders Norway, Scotland, Slovenia, Belarus and Moldova.

“The co-operation with the Saudi Arabian Football Association clearly underlines PUMA’s commitment to the middle east region,” said Oliver Wirth, Managing Director of PUMA’s newly founded subsidiary PUMA Middle East, and continued: “Having qualified for the last four football world championships is a record that speaks for itself. Clearly, it is a great statement for PUMA to be associated with the region’s most successful national team.”

Saudi Arabia will be endorsing PUMA’s new v1.06 statement product concept come 2006.

The Saudi Arabian Football Association was founded in 1959 and has been an affiliated AFC and FIFA member since the year it was founded. The Saudi national team is currently ranked 31st in the FIFA World Ranking and its major honors include three AFC Asian Cup titles (1984, 1988 and 1996) and two Gulf Cup winners’ medals (1994 and 2002). Saudi Arabia became the first AFC affiliated national team to win international honors when they won the FIFA U17 World Cup in 1989.

The Saudi Arabia national team has qualified for four successive football world championships. The team coached by former Argentine international Gabriel Calderon secured its ticket for Germany 2006, having won all six games against Stage 2 qualification contenders Turkmenistan, Indonesia and Sri Lanka before getting the upper hand on Stage 3 qualification opposition South Korea, Uzbekistan and Kuwait, maintaining their undefeated record with four wins and two draws.

With the play-offs now completed, the following PUMA contracted National Teams are confirmed for participation in next year’s major sporting event:

• Czech Republic
• Ghana
• Iran
• Italy
• Ivory Coast
• Paraguay
• Poland
• Saudi Arabia
• Switzerland
• Togo
• Tunisia

“This is a tremendous statement for PUMA and once again underlines our commitment to football with the aim of further strengthening PUMA as one of the leading football brands,” said Jochen Zeitz, CEO & Chairman of PUMA, and continued: “We take great pride in being the brand with most national teams at next year’s event and would like to congratulate all eleven Federations for their wonderful achievement as well as those PUMA associated Federations that battled hard throughout the qualification.”

All associated PUMA National Teams will be endorsing the brand’s new v1.06 statement product concept come 2006. The v1.06 statement product concept will be launched at the African Cup of Nations where PUMA again is the dominating brand with six national teams confirmed including: Cameroon, Ghana, Ivory Coast, Senegal, Togo and titleholders Tunisia.

Three of the African teams above, i.e. Ghana, Ivory Coast, Togo, make their debut at the World Cupä with Tunisia making their fourth appearance. For Saudi Arabia this has been the fourth successive successful qualification campaign with Iran bound to appear for the third time. For Paraguay and Poland, the upcoming finals represent their seventh appearance. Czech Republic and Switzerland will both be making the trip for the eighth time with Italy further enhancing their impressive record of sixteen appearances in total.

“The co-operation with the Angolan Football Federation is final confirmation of PUMA’s unparalleled involvement in African football,” said Jochen Zeitz, Chairman & CEO of PUMA A.G., and continued: “Needless to say, we are delighted to be the official supplier to all five African national teams for next year’s tournament in Germany, let alone the fact that we are the dominant kit supplier with a total of twelve teams come June next year.”

Angola will be endorsing PUMA’s new v1.06 statement product concept to be introduced in January, coinciding with the start of the 2006 CAF African Cup of Nations in Egypt.

Tournament debutants Angola successfully qualified for the 2006 FIFA World Cup having overcome Nigeria, Zimbabwe, Gabon, Algeria and Rwanda in Group 4 of the CAF qualification group stages. Angola, nicknamed ‘Palancas Negras’ (Black Antelopes), recorded this historic milestone following a 1-0 away win in Rwanda on the last day of qualifying to oust Nigeria at the top of the table, thereby putting an end to 21 years of longing.