PUMA will reduce its carbon footprint by converting to green energy such as solar power and other renewable sources, optimizing travel and logistics to reduce transport-related emissions and leasing more fuel-efficient cars for its company fleet, among other measures. The plan covers the breadth of PUMA’s worldwide operations, from direct emissions from PUMA’s offices, stores and warehouses to staff business travel and the shipping of goods.
Achim Steiner, UN Under-Secretary-General and UNEP Executive Director, said: “By becoming the first global sport brand to join the Climate Neutral Network, PUMA is showing how sport can play a powerful green role in a low-carbon world. Sport has the unique ability to catalyze action among millions of people around the world – we look forward to working with PUMA to green mass sporting events and to engage sports men and women and fans around the world on the environmental challenges facing this generation.”
Jochen Zeitz, CEO of PUMA, said: “We at PUMA constantly strive to make our contribution to environmental protection and mitigate PUMA’s negative impact on our planet. Most scientists agree that the continued unlimited emission of greenhouse gases will lead to irreversible damages to our climate and ecosystem. PUMA’s strategy to reduce its carbon footprint is a significant milestone within our sustainability concept PUMAVision that looks ahead to a world that is safer, more peaceful and more creative for the generations to come.”
The company’s Head Office in Germany already uses renewable energy including concrete core temperature control and solar power for electricity and water heating. Similarly, its Boston office has a large-scale solar power station.
PUMA also helps its suppliers to work actively to reduce their own emissions – its South African supplier, Impahla Clothing, became the first Carbon Neutral apparel supplier on the African continent. In addition, the company says it will work with industry peers to develop a common industry framework and share best practice.
“As a supporter of the UN Global Compact, PUMA endorses the Seal the Deal! Campaign supporting the signing of a binding international agreement on Climate Change following the Kyoto Protocol,” the company says in its carbon neutral strategy.
The International Year of Biodiversity (IYB) is a global initiative launched by the United Nations for 2010 to help raise awareness on the importance of biodiversity and to encourage worldwide action to conserve plants and animals and the environments in which they live. The ‘Play for Life’ campaign focuses on Africa, a continent that hosts exceptional biodiversity including two of the five most important wilderness areas on Earth – the Congo Basin, and Miombo-Mopane Woodlands and Savannas of Southern Africa. Nine of the planet’s 35 Biodiversity hotspots, the richest and most threatened reservoirs of plant and animal life on Earth, are also in Africa.
The ‘Play for Life’ campaign focuses on Africa, a continent that hosts exceptional biodiversity including two of the five most important wilderness areas on Earth – the Congo Basin, and Miombo-Mopane Woodlands and Savannas of Southern Africa. Nine of the planet’s 35 Biodiversity hotspots, the richest and most threatened reservoirs of plant and animal life on Earth, are also in Africa.
According to the Convention on Biological Diversity (CBD), biodiversity is under threat around the planet – we are creating the greatest extinction crisis since the natural disaster that wiped out the dinosaurs 65 million years ago. Species have been disappearing at up to 1,000 times the natural rate, and this is predicted to rise dramatically. Based on current trends, an estimated 34,000 plant and 5,200 animal species – including one in eight of the world’s bird species – face extinction.
At their ‘Play for Life’ press conference held today in Nairobi, Kenya, PUMA unveiled their key fundraising lever, the revolutionary new Africa Unity Kit –the world’s first ‘continental football kit’ designed to be worn by the 12 African football national teams that PUMA sponsors. These include the World Cup qualified teams Ghana, Cameroon, Ivory Coast and Algeria who are headed to the Africa Cup of Nations’ with hosts Angola and the national teams of Egypt, Mozambique, Togo and Tunisia, as well as non-qualified federations of Senegal, Morocco and Namibia. Puma also sponsors some of the continent’s best players — Samuel Eto’o, Emmanuel Eboué and John Mensah.
The Africa Unity Kit has been approved by FIFA who have officially recognised it as the Official 3rd kit* to be worn by those PUMA-sponsored African teams.
With all eyes on Africa during the 2010 football season– the Africa Unity Kit makes a compelling global statement. By supporting the Africa Unity Kit, African teams are not only uniting as a powerful force in world football, but also raising awareness of the importance of environmental issues. PUMA’s profits from sales of the replica fanwear for the Unity Kits will help fund biodiversity programs in Africa, and in particular endangered species on the continent such as lions, elephants, gorillas and the desert fox.
The sportlifestyle company has a host of other gear designed to generate additional funds to support biodiversity, including PUMA Unity t-shirts and PUMA Lacelets, collectable shoe laces featuring patterns from world-renowned artist Kehinde Wiley. These products all bear the PUMA Yellow “life” Label, which gives consumers an easy way to identify products that benefit projects supported by PUMAVision, PUMA’s Corporate Social Responsibility Program. A portion of the profits from the Yellow “life” label products will also go to fund the biodiversity programmes.
“In 2010, Africa will be at the centre of the footballing world. The ‘Play for Life’ campaign and the release of the Africa Unity Kit is a powerful statement for PUMA. PUMA is creating a unique kit embracing the diversity of African Nations teams while valuing the unity of players and supporters towards a common goal,” said Jochen Zeitz, Chairman and CEO, PUMA AG who helped launch the Africa Unity Kit. “Biodiversity and therefore valuing and protecting all life on our planet is a huge issue, not only in Africa, but around the world – and we are proud to partner with UNEP to raise both awareness and funds through the sale of our Unity products.”
“As the whole planet comes together for the World Cup, 2010 marks the year when people around the world will unite to conserve the planet’s almost priceless natural resource – its biodiversity. UNEP is delighted to partner with PUMA to bring this important message to millions of fans,” said Angela Cropper, UNEP’s Deputy Executive Director, at the press conference today.
“The planet’s living organisms are the building blocks of the multi-trillion dollar services– from freshwater to agricultural nutrients–that underpin all life on Earth including its economic, social and sporting life. Bringing together the public’s global passion for football with its global passion for animals, plants and other life-forms surely makes a match-winning team,” she added.
Cameroon’s captain Samuel Eto’o, flanked by fellow squad members at the unveiling in Nairobi, commented: “The new Africa Unity Kit has inspired me and my teammates. Not only are we very proud to wear a shirt that helps bring the continent of Africa together but to do so for such an important cause is truly an honour. Supporting the Africa Unity Kit sends out a positive message for Africa – we are a uniting as a continent to help life and the planet.”
The UNEP-PUMA ‘Play for Life’ campaign will support the International Year of Biodiversity by:
- Raising awareness worldwide about biodiversity and the International Year of Biodiversity among football fans and the general public during football events including the African Nations Cup and international friendly games
- Raising awareness through Public Service Announcements featuring football stars
- Encouraging the public to take action to conserve biodiversity
- Raising funds through the Africa Unity Kit and other PUMA Unity football products under the Yellow “life” label to support biodiversity projects in Africa.
NOTES TO EDITORS:
*Football teams have standard home and away kits. The third kit is traditionally worn when both the home and away kits clash. PUMA has given a new twist to the third kit, by launching the Africa Unity Kit, creating the world’s first ‘continental’ kit. This third kit will be worn by PUMA-sponsored African teams in 2010 in matches yet to be finalized.
Photo Credits: Conné/ PUMAHighlights Fourth Quarter:
- Consolidated sales down 10.1% currency-adjusted
- Gross profit margin at 51.0%, up 430 basis points versus last year
- Operating result up 21.3% to € 45 million
- Special items of € 18 million impact net earnings
- EPS up 80% at € 1.08 after € 0.60 last year
Highlights January – December:
- Consolidated sales decreased 3.7% currency-adjusted
- Gross profit margin at 51.3% versus 51.8% last year
- Operating result at € 320 million or 13.0% of sales
- EBIT including special items at € 192 million
- EPS at € 8.50 versus € 15.15 last year
- Free cashflow before acquisitions at €256 million up 130% and 2nd best result in history
Outlook 2010:
- Despite a continuously tense global economy the currency-adjusted sales volume in 2010 is expected to at least reach last year’s level.
- A comparable gross profit margin will be targeted in spite of a lower currency hedging position and higher proportion of team sport product sales.
Increased marketing expenses are to be expected during the World Cup year, whereas the 2009 cost reduction program should provide for cost savings and increases in efficiency, which should at least compensate the one-off expenses.
Jochen Zeitz, CEO: “Despite the global financial crisis and only a few major sports events, PUMA remained firm in a difficult market environment, posting an only moderate decline in annual sales along with the second best cashflow development in the history of the company. The comprehensive restructuring and reengineering program that we implemented during the year enabled us to become an even more efficient and focused company that is aligned to today’s economic realities. PUMA had an excellent and successful start into the football year by winning the African Cup of Nations with Egypt. We will turn the Football World Cup in South Africa into a home game and are determined to make use of and invest in all opportunities that offer further growth to strengthen the brand’s and company’s desirability in the long run.”
The Year 2009
As a result of the financial crisis and its impact on the global economy, 2009 proved to be very challenging for all market participants. Despite the global recession and only a few major sporting events, PUMA succeeded in standing its ground in the difficult market environment. The performance of Usain Bolt at the World Athletics Championships in Berlin, where he broke the 100m and 200m world records, was, among others, a particular highlight for the PUMA brand.
As early signs of the economic deceleration appeared, PUMA pro-actively implemented measures starting in Q4 of 2008. During 2009, management continued to install a comprehensive restructuring and re-engineering program to optimize the retail portfolio, the global organizational structure and operational processes. This resulted in one-off expenses in the amount of € 127.8 million
Currency-adjusted, global brand sales decreased by 6.4% to remain above € 2.6 billion. Currency-adjusted consolidated sales declined by only 3.7% to approximately € 2.5 billion. Despite the difficult market environment, the gross profit margin stood at a robust 51.3%, which means that PUMA continues to maintain its position at the upper echelon of the sporting goods industry. The operating profit before special items totaled € 320.2 million or 13.0% of sales, compared to 13.9% in the previous year. Including special items, earnings per share amounted to € 8.50 compared to € 15.15 in the previous year. Working capital decreased by 9.9% to € 397.8 million. This strongly supported the free cashflow before acquisitions, which more than doubled from € 110.7 million to € 255.8 million, yielding the second best result in the company’s history.
The price of the PUMA share stood at € 231.84 at the end of the year and increased by 65.2% year-on-year, which resulted in a market capitalization of approximately € 3.5 billion.
Sales and Earnings Development 4th Quarter 2009
Consolidated sales decreased currency-adjusted as expected by 10.1% in the fourth quarter 2009 and totaled € 489.5 million. In the fourth quarter which traditionally is the weakest, sales were effected by the significantly reduced inventory leading to less close out sales.
Currency adjusted sales in EMEA were down 10.9%, Americas sales decreased 2.6% and Asia/Pacific 16.2%. Footwear sales decreased 16.8% and Apparel 10.9%. Sales in Accessories increased 39.4%, mainly from first time consolidation effects.
The gross profit margin increased to 51%, up 430 basis points from last year. All regions and product segments contributed positively.
While operating expenses decreased by 9.2% to € 209.7 million, the cost ratio increased to 42.8% versus 41.1% last year due to the lower sales basis in Q4 2009. Operating profit (before special items) improved by 21.3% from € 37.2 million to € 45.1 million or from 6.6% to 9.2% as a percentage of sales. Including special items, earnings per share were at € 1.08 compared to € 0.60 in the previous year.
Further cost saving potential has been identified, leading to additional € 17.8 million one-off expenses.
Sales and Earnings Development January-December 2009
Global Brand Sales
Worldwide PUMA brand sales, comprised of licensed and consolidated sales, dropped by 6.4% currency-adjusted to just above € 2.6 billion. In Euro terms, this corresponds to a 5.3% decrease.
Consolidated Sales
Currency-adjusted sales decreased by 3.7% to € 2,460.7 million in 2009 which corresponds to a 2.5% decrease in Euros.
The Footwear segment posted a decrease in currency-adjusted sales by 7.8% to € 1,327.8 million. The share in consolidated sales stood at 54.0%, compared to 56.8% in the previous year.
Currency-adjusted sales in the Apparel segment dropped by 7.4% to € 852.9 million, representing a 34.7% share in consolidated sales, compared to 35.6% in the previous year.
Currency-adjusted sales in the Accessories segment increased by 44.0% to € 280.1 million, which is primarily due to first time consolidation effects. The share in consolidated sales increased to 11.4%, compared to 7.6% in the previous year.
Gross Profit Margin
As a result of the promotional environment and a change in the regional mix, the gross profit margin decreased by 50 basis points to 51.3%, which is still in the upper echelon of the sporting goods industry. In absolute figures, the gross profit margin decreased by 3.4% from € 1,306.6 million to € 1,262.4 million
The gross profit margin for Footwear was 50.2%, compared to 51.7% in the previous year. The gross profit margin for Apparel increased from 51.9% to 52.1% while Accessories recorded a significant increase in the gross profit margin, rising from 51.7% to 54.3%.
Operating Expenses/Result
As a result of the cost reduction measures, operating expenses before special items decreased from € 982.0 million to € 962.8 million, or by 2.0%. As a percentage of sales, the cost ratio stood at 39.1%, compared to 38.9% in the previous year.
Within selling expenses, expenses relating to marketing/retail declined from € 528.6 million to € 494.1 million, corresponding to a cost ratio decrease from 20.9% to 20.1% of sales. However, previous year’s expenses include costs related to the Olympic Games and the 2008 European Football Championship.
Other selling expenses increased by 4.7% to € 309.8 million, or from 11.7% to 12.6% of sales. Expenses for product development and design increased from € 55.1 million to € 58.1 million, or from 2.2% to 2.4% of sales. Administration and general expenses decreased from € 102.4 million to € 100.9 million, with the cost ratio remaining unchanged at 4.1% of sales.
The total depreciation amounted to € 60.2 million, which reflects an increase of 7.7% compared to the previous year, mainly attributable to first time consolidation and full year effects of last year’s expansion of the company’s own retail operations.
Operating profit before special items was € 320.2 million, compared to € 350.4 million in the previous year. As a percentage of sales, this corresponds to an operating margin of 13.0%, compared to 13.9% last year.
Special Items – Reengineering and Restructuring Program
In light of the difficult market environment, PUMA implemented further measures in the first quarter of 2009 to ensure long-term and profitable growth. The management installed a rigorous reengineering and cost reduction program that will reduce the initially planned costs on an annual basis. The originally required one-off expenses of € 110 Mio have increased to € 127.8 million. The one-off expenses relate to the optimization of the retail store portfolio, the global organizational structure and the re-engineering of some key operational processes. Considering non-cash impacting depreciation, € 84.5 million of the one-off expenses will become cash relevant. The cost reduction program will help to further reduce the planned costs and provide for cost savings beyond our original target of up to € 150 million.
Including the special items, the operating profit (EBIT) amounted to € 192.4 million, or 7.8% of sales.
Financial Result
The financial result was € -8.3 million, compared to € 1.1 million in the previous year. Significantly lower interest rates and the higher interest portion relating to purchase price liabilities have had a negative impact on the financial result.
The financial result includes interest income in the amount of € 3.8 million (vs. € 11.9 million in the previous year), as well as interest expenses in the amount of € 6.6 million (previous year: € 6.7 million). The financial result also includes expenses relating to accumulated, long-term purchase price liabilities from corporate acquisitions in the amount of € 4.4 million (previous year: € 3.1 million), as well as expenses in the amount of € 1.1 million (previous year: € 1.0 million) stemming from the valuation of pension plans.
Earnings before Taxes
Earnings before taxes (EBT) decreased from € 326.4 million to € 184.1 million, or from 12.9% to 7.5% as a percentage of sales. This reduction is primarily due to the special items. Tax expenses decreased from € 94.8 million to € 58.2 million. The tax rate stood at 31.6%, up from 29.0% in the previous year. This was mainly attributable to the recognition of one-off expenses for tax purposes in the respective countries.
Net Earnings
Net earnings in the 2009 financial year amounted to € 128.2 million, compared to € 232.8 million last year. The net rate of return was 5.2%, compared to 9.2% in the previous year. Earnings per share and diluted earnings per share amounted to € 8.50, compared to € 15.15 in the previous year.
Regional Development
Currency-adjusted sales in the EMEA region declined by 4.0% to € 1,217.6 million. The share of the EMEA region in consolidated sales amounted to 49.5%, compared to 51.5% in the previous year.
By product segments, currency-adjusted Footwear sales decreased by 13.1%, and Apparel sales declined by 9.5%. As a result of the acquisition of a former licensee, Accessories sales nearly doubled with an increase of 98.7%.
The gross profit margin stood at 53.3%, compared to 53.5% in the previous year.
The Americas region posted an increase in currency-adjusted sales of 0.6% to € 665.2 million. The share in consolidated sales stood at 27.0%, compared to 25.8% in the previous year.
Currency-adjusted Footwear sales were up by 1.2%, and Apparel sales recorded a 0.1% increase. Accessories sales decreased by 4.3%.
The gross profit margin stood at 48.2%, compared to 49.2% in the previous year.
Currency-adjusted sales in the US market, which is the region’s largest market, decreased by 0.9% to
USD 533.5 million.
Currency-adjusted sales in the Asia/Pacific region decreased by 7.7% to € 578.0 million. The share in consolidated sales increased to 23.5%, compared to 22.7% in the previous year.
Currency-adjusted Footwear sales decreased by 10.4%, Apparel sales by 7.4% and Accessories sales remained unchanged at the previous year’s level.
The gross profit margin remained unchanged at the previous year’s level of 50.8%.
Net Assets and Financial Position
Equity
Total assets as of December 31, 2009 increased by 6.1%, rising from € 1,898.7 million to € 2,014.1 million, particularly due to the strong increase in cash and cash equivalents. The equity ratio stood at 61.6%, compared to 62.0% in the previous year. In absolute terms, shareholders’ equity increased by 5.3% to € 1,239.8 million, compared to € 1,177.2 million in the previous year. Despite the global economic conditions, PUMA continues to have extremely solid capital resources.
Working Capital
Due to a strong working capital management, the company succeeded in reducing working capital by 9.9%, or from € 436.4 million to € 393.1 million. As a percentage of sales, this corresponds to an improvement from 17.3% to 16.0%. The working capital improvement was mainly attributable to a significant 19.1% reduction in inventories to € 348.5 million. Trade receivables were up slightly by 0.3% to € 397.8 million, while trade payables decreased by 2.6% to € 262.1 million.
Cashflow
The strong working capital management enabled the Company to achieve its second best free cashflow (before acquisitions) in its history, nearly matching 2004’s record result.
Net cash used for investing activities increased from € 133.3 million to € 139.2 million. Other investing activities include the purchase of fixed assets in the amount of € 54.5 million, compared to € 119.2 million in the previous year, as well as € 84.4 million for purchase price liabilities in connection with corporate acquisitions, compared to € 24.9 million in the previous year.
As a result, the free cashflow improved significantly from € 85.8 million to € 171.4 million. Excluding payments for acquisitions, the free cashflow more than doubled from € 110.7 million to € 255.8 million. As a percentage of sales, free cashflow (before acquisitions) stood at 10.4%, compared to 4.4% in the previous year.
Cash and cash equivalents reported as of December 31, 2009 increased from € 375.0 million to € 485.6 million.
Dividend
The Board of Management and the Supervisory Board will propose a dividend in the amount of € 1.80 per share (previous year: € 2.75) be paid out for the financial year 2009 from the retained earnings of PUMA AG. As a percentage of consolidated net earnings, the dividend pay-out rate increased from 17.8% to 21.2%. The dividend is to be paid out on the day following the Annual General Meeting, where the profit distribution is authorized.
Outlook 2010
In light of the ongoing restrictive consumer environment and the overall global economic volatility, continued restrained consumer behavior is to be expected. A quantitative estimate for 2010 is therefore difficult to make, despite the current positive impetus from the Football World Cup. However, we expect that currency-adjusted sales in 2010 will at least reach last year’s level. PUMA will strive for a gross profit margin comparable to the previous year, despite the present currency hedging position and a higher proportion of team sport products with lower contribution margin.
Increased marketing expenses are to be expected during the World Cup year, whereas the cost reduction program should provide for efficiency increases and cost savings to ensure the company’s sustained earnings power.
A clear improvement in net earnings will be achieved, as no special items are expected for 2010. Under consideration of these planning parameters and omitting the special items, we strive to achieve an improvement of our net results.
This document contains forward-looking information about the Company’s financial status and strategic initiatives. Such information is subject to a certain level of risk and uncertainty that could cause the Company’s actual results to differ significantly from the information discussed in this document. The forward-looking information is based on the current expectations and prognosis of the management team. Therefore, this document is further subject to the risk that such expectations or prognosis, or the premise of such underlying expectations or prognosis, become erroneous. Circumstances that could alter the Company’s actual results and procure such results to differ significantly from those contained in forward-looking statements made by or on behalf of the Company include, but are not limited to those discussed be above.
“Through the acquisition of Cobra Golf, we reinforce PUMA’s commitment to our sports performance business by strengthening our growing and successful Golf category,” said Jochen Zeitz, Chairman and Chief Executive of PUMA. “Cobra Golf has a history of innovative performance products fused with an edge and is therefore a perfect fit for PUMA, reinforcing our overall mission of becoming the most desirable Sportlifestyle company. With Cobra Golf, PUMA will capitalize on the many opportunities in the Golf category and upside potential ahead of us.”
Based in Carlsbad, California, Cobra Golf was founded in 1973 and produced one of the first utility clubs, the Baffler, long before use of such clubs became popular, manifesting Cobra Golf’s hybrid leadership. This leadership and innovation continues today with recent releases such as the new ZL and S2 Drivers, as well as the Baffler Rail Hybrid. In 1996, Cobra Golf was acquired by American Brands Inc. (later renamed Fortune Brands) and has since then been managed together under the Acushnet Company umbrella with its other golf brands.
With this acquisition the combination of Cobra and PUMA Golf provides a competitive full range offering to become a better resource to its account base, being now in the position to provide Golf equipment next to footwear, apparel and accessories.
Pending regulatory approval, the effective date of the acquisition of Cobra Golf is expected to be in the second quarter of 2010. Financial terms of the transaction will not be disclosed.
Further information will be provided with the release of the first quarter results 2010.
“We are proud of PUMA Ocean Racing’s success in the last Volvo Ocean Race and look forward to the adventures this next race will bring,” said Jochen Zeitz, PUMA AG Chairman and CEO. “Both the team and the company hope to leverage the key lessons from the last VOR campaign in order to continue spreading the good will of the program and PUMA worldwide. The Volvo Ocean Race is one of the world’s iconic sporting events. It proved to be an extremely successful marketing tool for us and an important launch pad for the sailing product category. We look forward to building the sailing category even more throughout the next race, as well as expanding into other forms of outdoor lifestyle ventures.”
For the 2011-2012 race, PUMA Ocean Racing has proudly partnered with BERG Propulsion, one of the world’s leading designers and producers of Controllable Pitch Propellers for commercial shipping. BERG Propulsion products are designed and engineered with the reduction of adverse environmental impact in mind, striving to bring fuel savings and environmental benefits to every product. This commitment to sustainability and strive for high performance makes them a perfect partner for PUMA. The team will be known as PUMA Ocean Racing, powered by BERG Propulsion.
“This is a key addition to our campaign,” stated Antonio Bertone, Chief Marketing Officer, PUMA AG. “BERG CEO Hakan Svensson and his entire company are a perfect fit with our operation. As a life-long competitive sailor himself, Hakan understands the sport, the race and how BERG can utilize the race to help build and market their global company.”
Hakan Svensson, Berg Propulsion Chairman and CEO stated “Our company is very excited to be a part of the VOR this year and we are especially proud to have the opportunity to partner with PUMA. We view the race as a perfect symbol for what Berg Propulsion represents: global perspective and reach, an emphasis on quality, reliability and a desire for excellence achieved through a strong TEAM spirit. Very much like the shipping industry, the Volvo Ocean Race is about performance on a global arena and this is directly applicable to our customer’s situation, who are also out there 24/7 under very tough conditions. We will do our absolute best to support Ken Read and his talented crew in their efforts to be the fastest around the world.”
Team selection efforts are already underway and will likely include a number of sailors from PUMA’s 2008-2009 team, plus a mix of new and veteran talent from the professional racing world. Training will begin onboard PUMA’s il mostro in Spring 2010 at the team’s homebase in Newport, Rhode Island.
Skipper Ken Read, considered to be one of the world’s most accomplished racers, was in charge of PUMA Ocean Racing and at the helm of PUMA’s il mostro throughout the entire Volvo Ocean Race 2008-2009. The U.S.-born Read has twice helmed America’s Cup programs in 2000 and 2003 and was named “United States Rolex Yachtsman of the Year” twice and has 46 World, North American and National Championships to his credit.
“This last race was an amazing journey for me personally and for our start-up company PUMA Ocean Racing,” said Ken Read. “To have the opportunity to continue where we left off is a dream come true. For PUMA to want to come back to this adventure is a testament to the event itself and to the entire PUMA Ocean Racing team past and present. We look forward to the challenges that lie ahead both organizationally as well as competitively.”
PUMA is committed to working across the globe in sustainable, creative and innovative ways to lessen the impact on the environment and to give back what it takes from the planet by seeking to reduce its carbon footprint in all areas of business. The sportlifestyle brand’s entry into the Volvo Ocean Race is compatible with this mission, as sailing is considered a ‘clean sport’, using only the wind to harness the power needed to race across the world over the course of nine months.
The entry into competitive sailing extends PUMA’s focus into premium lifestyle sports – a category PUMA has forged through its Formula 1 partnerships and other Motorsports collaborations such as Ducati and Ferrari, and the launch of a sportlifestyle Golf collection in 2006.
PUMA has been collecting E-KPIs (Environmental Key Performance Indicators) from all its offices and stores worldwide for the last five years and identified several key areas that need to be dealt with in order to further reduce PUMA’s “paw print”. To address these issues, PUMA is launching its next phase of puma.safe initiatives in the company’s long-term sustainability program laying out ambitious targets to be achieved by 2015. The major objectives PUMA has set out to achieve in this period include:
- 25% reduction of CO2, energy, water and waste in PUMA offices, stores, warehouses and direct supplier factories.
- Paperless office policy through a 75% reduction and offsetting initiatives for the remaining paper usage such as tree planting initiatives.
- 25% CO2 reduction through more efficient product transport solutions by our logistic partners.
- Begin collaborating with our strategic suppliers and logistic service providers to offset their own footprints in the long-term.
- Introduction of the PUMA Sustainability-Index (S-Index) standard that serves as a benchmark for sustainable products and communicates the products’ sustainable features to consumers.
- 50% of PUMA’s international collections will be manufactured according to the PUMA S-Index standard by 2015, using sustainable materials such as organic cotton, Cotton Made in Africa or recycled polyester as well as applying best practice production processes.
To monitor these objectives PUMA is also establishing an external Advisory Board of experts in sustainability to consult on PUMA’s mission and audit PUMA’s sustainability program.
“For a long time our mission has been to become the most desirable Sportlifestyle company. With this next phase of our sustainability program we have evolved our mission to be the most desirable and sustainable Sportlifestyle company in the world,” said Jochen Zeitz, Chairman and CEO of PUMA. “Through PUMAVision and our puma.safe program we have already started to reduce our carbon emissions, curtail wasteful transportation, recycle and reuse available materials, use water sparingly and become paperless.”
Through PUMAVision, our vision of a better world, initiatives fall under the three pillars of puma.safe, puma.peace, and puma.creative to drive the company to cleaner, greener, safer and more sustainable systems and practices contributing to peace as well as promoting creativity and the arts. Under the puma.safe program, PUMA’s ultimate objective is to give back to the environment what it has taken. PUMA’s longstanding work and efforts to improve social, labour and environmental standards throughout its operations date back to 1999. From that time, the company has continuously incorporated environmentally-friendly practices to reduce its impact on the planet and realized several successful large-scale initiatives such as sourcing of raw materials through the Cotton made in Africa campaign to building the capacity of its suppliers as well as the opening of the industry’s first carbon neutral head office — the PUMAVision Headquarters in Herzogenaurach, Germany — last year after joining the UN Climate Neutral Network
The next milestone in PUMA’s mission to be the most desirable and sustainable Sportlifestyle company in the world is the introduction of an innovative packaging and distribution system for PUMA products that will reduce the paper used for shoeboxes by 65% and carbon emissions by 10k tons per year — the remaining packaging materials used will be fully sustainable by 2015. PUMA partnered with designer Yves Béhar, of San Francisco based fuseproject, to rethink the way the millions of pairs of shoes that it sells each year are packaged — less packaging means fewer raw materials, less use of water and energy to produce, and less weight to ship and to be disposed of. Béhar designed a “Clever Little Bag” to replace the cardboard shoebox with a re-usable shoe bag, that protects each pair of shoes from damage from the point it leaves the factory until the consumer takes it home — thus generating savings on the production side due to less material used, reducing weight during transport and eliminating the need for extra plastic carrier bags. As a result of the 65% paper reduction through the “Clever Little Bag” concept PUMA will reduce water, energy and diesel consumption on the manufacturing level by more than 60% per year. In other words: approximately 8,500 tons less paper will be consumed, 20 million Megajoules of electricity saved, 1 million litres less of fuel oil used and 1 million litres of water saved. During transport 500,000 litres of diesel is saved and lastly, due to the replacement of traditional shopping bags with the lighter built-in bag the difference in weight can save up to 275 tons of plastic.
“I was excited to partner with PUMA and contribute to such a game changing project,” said Yves Béhar. “PUMA’s initiative to look closely at one of the most challenging issues facing the retail industry in regards to sustainability and environmental harm was inspirational. In changing the packaging and distribution life cycle from the ground up, we hope our new design and comprehensive solution encourages other retail companies to follow suit.”
PUMA’s apparel collections will be bagged using sustainable material, replacing traditional polyethylene bags. This means that 720 tons of polyethylene bags can be avoided per year, which equals a saving of 29 million plastic bags — enough to cover an area the size of 1000 football pitches. Furthermore, PUMA T-shirts will be folded one more time to reduce the packaging size and thus saving CO2 emissions and costs during transport.
By switching out current plastic and paper shopping bags in PUMA stores and replacing them with sustainable biodegradable bags the sportlifestyle company is looking to save another 192 tons of plastic and 293 tons of paper annually.
The roll out of the new packaging and distribution system is planned as of the second half of 2011.
PUMA’s long-term sustainability program, however, will not stop with the accomplishment of the ambitions outlined above. The company takes responsibility to further reduce harm, working towards closed-loop systems and recycling programs. PUMA will continue to find innovative solutions that no longer deplete resources and will offset its “paw print” where further mitigation is not possible.
PUMA will make its next significant announcement on sustainability in the framework of the United Nations conference “The Business for the Environment Summit (B4E) in Seoul on 22 – 23 April, 2010.
“To be the first carbon neutral Sportlifestyle company is the next logical step in our mission to become the most desirable and sustainable Sportlifestyle company in the world,” said Jochen Zeitz, Chairman and CEO of PUMA. “We also took UNEP’s challenge to offset our football teams’ international travels to South Africa very seriously. Our commitment to the environment partnered with our long-standing collaboration with African football made it a foregone conclusion to support their initiative, and we hope in doing so that we inspire other stakeholders in the FIFA World Cup 2010 to follow suit.“
PUMA will compensate the company’s direct and indirect CO2 emissions through offsetting projects in Africa that also take the needs of local communities and the conservation of biodiversity and CSR programs into account. The portfolio of offsetting projects in Africa is being verified by an internationally recognized auditing company according to internationally accepted standards such as the Clean Development Mechanism (CDM), the Gold Standard and Voluntary Emission Reduction standards. PUMA’s total carbon footprint is externally verified utilizing similar methodology applied to the company’s carbon neutral headquarters.
Due to PUMA’s target of its long-term sustainability program to reduce its energy and water consumption, waste and CO2 emissions by 25% by 2015; the amount of CO2 emissions to be offset will decline on an annual basis. However, more than only saving energy, PUMA will require its local offices, stores and warehouses to switch to electricity from renewable sources wherever feasible – in line with its PUMAVision Headquarters in Germany. Thus significantly reducing the building’s carbon footprint. To offset the headquarter’s remaining CO2 emissions, PUMA actively supports a wind farm in Turkey as an offsetting project. Through this, PUMAVision Headquarters became the first carbon neutral company head office in the sportlifestyle and sporting goods industry.
PUMA has started to deeply embed its long-term sustainability program into the company’s operations and product cycle, making it an integral part of PUMA’s DNA. With football being a core business of the sportlifestyle company, it is only natural that PUMA responded to the United Nations Environment Programme’s (UNEP) petition that all Football Federations participating in the FIFA World Cup 2010 in South Africa offset their teams’ international travels. Therefore, PUMA will offset the carbon footprint of its football teams – a total of 336 players and officials. The PUMA teams that qualified for the World Cup include: Algeria, Cameroon, Ivory Coast, Ghana, Italy, Switzerland, and Uruguay. To further illustrate the importance of UNEP’s ‘call to action’, PUMA has decided to go one step beyond and offset all local travel and accommodation as well.
PUMA has been collecting E-KPIs (Environmental Key Performance Indicators) from all its offices, warehouses and stores worldwide for the last five years to determine the company’s total carbon footprint on an annual basis. PUMA’s global emissions are classified in accordance to the Greenhouse Gas Protocol including direct emissions generated through gas, fuel and car fleets as well as indirect emissions generated through electricity and steam from offices, shops and warehouses and further indirect emissions deriving from business travels. PUMA’s carbon offsetting does not include CO2 emissions through transportation of PUMA products. However, PUMA requested its business partners to initiate reduction of their own CO2 footprint.
Furthermore, PUMA will support the offsetting of its employees’ carbon footprints by subsidizing those emissions generated on the way to and from work by 50%. PUMA CEO Jochen Zeitz will also offset his personal carbon footprint, including direct and indirect CO2 emissions, on his own account.
Further information on PUMA’s sustainability program and current initiatives can be found in PUMA’s sustainability report. http://ir2.flife.de/data/puma_csr/igb_html/index.php?bericht_id=1000001
Notes to Editors:
Many carbon emissions [outlined above] are not part of the Kyoto Protocol and hence PUMA’s actions are entirely voluntary. PUMA’s carbon offsetting does not include carbon emissions through transport and manufacturing of PUMA products.
Highlights January-March:
- Consolidated sales down by 2.1%
- Gross profit margin at a strong, sector-leading 52.2%, slightly above last year’s level
- Strong improvements in cost structure as a result of the cost reduction program
- Operating result jumps € 115 million versus last year
- EPS increase to € 5.51 after € 0.37
- Further improvement in equity ratio to 64%
Outlook 2010:
- Management expects sales growth in the low to mid single-digits
- Cost reduction program shall provide cost savings as planned
- Pre-tax profit is expected to improve by at least 70%
Jochen Zeitz, CEO: “We had a good start into the new year from a bottom line perspective which highlights the effectiveness of our comprehensive restructuring and reengineering efforts. Assuming a continuous improvement of the economic outlook and a planned increase of supplier orders, we anticipate low to mid single digit growth for the full year, while net earnings should jump significantly to complete the expected earnings rebound. We are now looking forward to the upcoming World Cup and to a successful integration of our newly acquired Cobra Golf business.”
Sales and Earnings Development January-March 2010
Global Brand Sales
Worldwide PUMA brand sales, which include consolidated and license sales, decreased by 2.3% to € 720.6 million.
Footwear sales were down by 6.0% to € 382.8 million and Accessories by 3.1% to € 90.3 million. Apparel sales increased by 4.3% to € 247.5 million.
Consolidated Sales
PUMA’s consolidated sales in the first quarter were down by 2.7% currency-neutral and 2.1% in Euro terms to € 683.1 million. This development should be seen in the context of last year’s sales increase of 3.6%, which was mainly driven by closeout sales in order to reduce inventories. In addition, supplier orders for the first half of 2010 were placed with caution. Excluding the previous year’s inventory clearance, sales were slightly above last year. Sales in Footwear declined currency-neutral by 5.1% to € 378.8 million and Accessories decreased by 1.6% to € 77.5 million. Apparel sales rose by 1.2% to € 226.8 million due to a positive development in PUMA’s teamsport business. In regional terms, sales in EMEA were down currency-neutral by 6.2% to € 351.8 million (share: 51.5%) and Asia/Pacific declined by 8.4% to € 141.0 million (share: 20.6%). Sales in the Americas region significantly improved by 9.8% to € 190.4 million (share: 27.9%) with both regions – North America and Latin America – positively contributing to this strong performance.
Gross Profit Margin
In the first quarter, PUMA’s gross profit margin reached a strong, sector-leading 52.2% compared to 52.1% last year. The Footwear segment reported 50.7% versus 50.4%, Apparel was at 53.5% compared to 53.7% and Accessories remained unchanged to last year at 55.6%. In terms of region, the gross profit margin in EMEA softened to 54.3% after 55.1%, Americas rose to 47.4% from 46.7% – driven by Latin America – and Asia/Pacific improved to 53.4% from 51.0% last year.
Operating Expenses
Operating expenses decreased by 4.6% from € 254.1 million to € 242.3 million. As a percentage of sales, the cost ratio improved from 36.4% last year to 35.5% because of the cost reduction program introduced last year. Expenses in marketing/retail and depreciation decreased due to the improvement to the overall retail store portfolio.
EBIT
PUMA’s EBIT before special items increased by 4.4% to € 119.0 million versus € 114.0 million last year. As a percentage of sales the EBIT margin improved from 16.3% last year to an excellent 17.4%. Taking last year’s special items into account, EBIT increased from € 4.0 million to € 119.0 million.
Financial Result
The financial result was at € -1.2 million after € -1.6 million last year, as the net cash position improved significantly and led to lower interest expenses due to reduced bank debts.
Net Earnings
The pre-tax profit (EBT) jumped from € 2.4 million to € 117.8 million. Net earnings increased to € 83.1 million from € 5.6 million based on a tax rate of 29.5% versus an operational tax rate of 28.5% last year.
Earnings per share rose to € 5.51 from € 0.37 and diluted earnings per share were at € 5.50 compared to
€ 0.37 last year.
Net Assets and Financial Position
Equity
As of March 31, 2010, total assets increased by 2.4% to € 2,159.3 million while PUMA’s equity ratio improved significantly from 56.6% to 64.0% this year.
Working Capital
Inventories declined by 15.9% to € 375.7 million and accounts receivable went up by 6.7% to € 568.6 million. Accounts payables increased by 7.2% to € 265.5 million. Working capital remained stable at € 595.6 million compared to € 596.9 million last year.
Capex/Cashflow
Capital investment amounted to € 7.7 million in the first quarter after € 11.6 million in the previous year.
The free cashflow came in at € -73.4 million compared to € -118.0 million last year.
Cash Position
Total cash by the end of March jumped 59.5% to € 426.8 million after € 267.6 million last year. Bank debts were reduced by 41.8% from € 63.2 million to € 36.8 million. As a result, the net cash position improved significantly by 90.7% from € 204.5 million to € 390.0 million.
Outlook 2010
Assuming a further improvement in the overall economic outlook, sales for the full year 2010 should strengthen accordingly throughout the year. The company’s pre-tax profit is expected to improve by at least 70% in 2010 while sales should post an increase in the low to mid single digits.
This document contains forward-looking information about the Company’s financial status and strategic initiatives. Such information is subject to a certain level of risk and uncertainty that could cause the Company’s actual results to differ significantly from the information discussed in this document. The forward-looking information is based on the current expectations and prognosis of the management team. Therefore, this document is further subject to the risk that such expectations or prognosis, or the premise of such underlying expectations or prognosis, become erroneous. Circumstances that could alter the Company’s actual results and procure such results to differ significantly from those contained in forward-looking statements made by or on behalf of the Company include, but are not limited to those discussed be above.
Twenty strategic PUMA suppliers based in China, Vietnam, Cambodia and other countries – which produce together more than two thirds of all PUMA products consumed – will receive GRI certified training on transparent measurement and reporting on their sustainability performance using the GRI G3 Guidelines – the world’s most widely-used framework for sustainability reporting. The training within the Global Action Network for Transparency in the Supply Chain program (GANTSCh) will be conducted by GRI Certified Training Partners. During the reporting process, scheduled to start in 2010, the suppliers will be supported by regional sustainability consultants and the first sustainability reports are expected to be released in 2011/2012.
“Supply chain sustainability reporting is a key part of PUMA’s overall sustainability strategy,” said Dr. Reiner Hengstmann, Global Director of puma.safe supply chain. “Without sustainable suppliers, we will not be able to produce sustainable products or credibly report about PUMA’s own sustainability initiatives. The GANTSCh project helps to ensure that our suppliers fully embrace the concept of sustainability and introduce respective programs in their companies.”
PUMA originally joined the GRI-GTZ pilot project “Transparency in the Supply Chain” which was launched in 2006 in which three PUMA suppliers in South Africa were trained and consulted on issuing sustainability reports. According to the participants, the project helped them to understand sustainability concepts through direct training from experts in the field, to learn how to measure sustainability performance by using key performance indicators, to become more transparent and learn how to report on energy consumption, waste production, work accidents and many other issues. They expanded their understanding of customers’ needs regarding sustainability issues and improved their competitive advantage and reputation.
“Some companies show consequent commitment in building a sustainable future. Puma is one of these companies,“ said Dr. Nelmara Arbex, Learning Services Director, GRI. “PUMA is not only committed to measure and manage their own impacts but they also understand that these practices have to be implemented around its business. GRI is very pleased that PUMA, which has participated in the GRI/GTZ project from the beginning, has decided to extend the GRI reporting practice to all its strategic suppliers.“ One of the participants in the pilot project, Impahla Clothing, a PUMA apparel manufacturer in Cape Town, received the ACCA Award (Association of Chartered Certified Accountants) for its maiden sustainability reports. Impahla also became the first carbon neutral garment supplier on the African continent in 2009, after the factory management was introduced to the benefits of sustainability through the project. Only recently, Impahla issued its third sustainability report. https://safe.puma.com/us/en/
The second phase of the project is currently in progress under the GANTSCh program with ten suppliers in six countries (Bangladesh, China, India, Pakistan, Portugal and Turkey) participating. Including Impahla, three suppliers already released their new sustainability reports while the remaining factories will publish their reports later in the Football World Cup year 2010.
PUMA’s mission is to become the most desirable and sustainable sportlifestyle company and it has implemented a long-term sustainability program throughout all its operations. Increasing sustainability in its supply chain through sustainability reporting is therefore an important element in PUMA’s overall sustainability strategy.
Proactively responding to accusations of low labour standards in its supplier factories by non-governmental organizations in the past, PUMA endeavours to increase transparency in its supply chain. Especially in countries such as China, India or Bangladesh, where working and living conditions differ from standards in developed countries, transparent social and working conditions play an important role in PUMA’s sustainability approach. PUMA continues to improve working and social standards through factory audits and capacity building projects over time and PUMA aims to work with the best suppliers in these countries. Sustainability reporting of the suppliers provides the opportunity to reveal what has already been achieved and where more work is necessary.
GRI’s engagement with PUMA commenced in 2006 with the generous support of the Gesellschaft für Technische Zusammenarbeit (GTZ) in the joint GRI-GTZ Transparency in the Supply Chain Pilot Project. GTZ is a federally owned, international cooperation enterprise for sustainable development with worldwide operations which supports the German Government in achieving its development policy objectives.
“Sound reporting is an important catalyst for change towards more sustainable business practices.” said Jörg Hartmann, Executive Director, Centre for Co-operation with the Private Sector/ PPP, GTZ. “I am very pleased that the pioneering „Transparency in the Supply Chain“ project set up by the GRI and the German Government four years ago is now established as a Global Action Network. I am convinced that many SMEs in emerging markets can benefit from the GANTSCh program“.
For further information on PUMA’s sustainability program, please refer to the latest PUMAVision Sustainability Report 2007/ 2008: https://ir2.flife.de/data/puma_csr/igb_html/index.php?bericht_id=1000001
For further information on GRI’s GANTSCh program, please refer to: www.globalreporting.org/CurrentPriorities/SupplyChain/GlobalActionNetwork/GAN.htm
“FLA accreditation speaks to the integrity of a company compliance programme,” said Auret van Heerden, President and CEO of the Fair Labor Association. “We review the affiliated company’s compliance activities from HQ all the way down to the factory level to ensure that they are meeting the ten Obligations of Companies set out in the FLA Charter. PUMA has met or exceeded those standards and has taken many additional steps to enhance its programme.”
PUMA has been an FLA member since 2004, when the company opened operations to external monitoring with the goal of demonstrating more transparency throughout its supply chain. PUMA received full FLA accreditation in 2007, and has just been reaccredited for its continued adherence to fair labor standards.
To earn accreditation, a company must undergo an extensive performance review. Since 2004, PUMA’s suppliers have been monitored through unannounced audits by a third party organization accredited by the FLA. Up to three percent of PUMA suppliers are externally audited by FLA approved auditors each year, with over 60 external audits conducted since PUMA joined the Fair Labor Association.
These come in addition to over 3000 internal puma.safe audits since 2001. Results from the external audits are published online on the FLA website in accordance with puma.safe’s aim of transparency. A list of PUMA suppliers is publicly available via the FLA, and a formal third party complaint procedure is also available to NGOs, unions and other interested partied via the organization.