PUMA’s Chief Executive Officer and Chief Sustainability Officer of PUMA’s majority shareholder PPR Jochen Zeitz who received the award from Federal Environment Minister Dr. Norbert Röttgen at the award ceremony in Düsseldorf said: “We are very pleased that PUMA’s extensive endeavours to become not only the most desirable but also the most sustainable Sportlifestyle Company worldwide have been recognized and rewarded with the German Sustainability Award. I am convinced that it must become a given that every company has to be sustainable and I am grateful that the German Sustainability Award acknowledges sustainable business strategies and hence underpins the imperative for corporations to change their business practices for the better.”

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 has laid out ambitious targets to be achieved by 2015 as part of the company’s long-term sustainability program. Within this context, PUMA will introduce a Sustainability Index, the so-called S-Index that serves as an internal 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.

Furthermore, PUMA wants to reduce CO2, energy, water and waste in PUMA offices, stores, warehouses and direct supplier factories by 25% over the next four years. Introducing a paperless office policy will curtail paper usage by 75% and more efficient product transport solutions by our logistic partners should reduce their CO2 emissions by 25%. To monitor these objectives PUMA has also established an external Advisory Board of experts in sustainability to consult on PUMA’s mission and audit PUMA’s sustainability program.

The German Sustainability Award which runs in its third year has been established to reward role model corporations which combine business success with social responsibility and environmental protection. Special focus is on consistent sustainability management of business and brand. 560 companies had entered their application into the competition.

“We are very happy to announce the continuation of our partnership with the Cameroon Football Federation,” said Jochen Zeitz, Chairman and CEO of PUMA. “During the fourteen years we have worked with them, their forward thinking has allowed us to undertake and execute several exciting and innovative projects that simply would not be possible with other federations. They are one of our key partners in World football, and we have some great ideas that we look forward to unveiling in the coming months and years.”

“PUMA is a key partner for us, and when the previous agreement concluded there was never any question that we wouldn’t re-sign with them,” said Iya Mohammed, President of the Cameroon Football Federation. “PUMA understands implicitly what we want to achieve, and it is a privilege to work with a company with the same values and ambition. We look forward to working with them for many years to follow.”

In addition to the Cameroon national team sponsorship, PUMA also sponsors individual Cameroon players including captain and record goalscorer striker Samuel Eto’o, Benoit Assou-Ekotto, Stephane Mbia, Landry Nguemo and Mohammadou Idrissou.

In keeping with PUMA’s mission to be the most sustainable sportslifestyle brand, the Cameroon Football Federation will take a carbon neutral stance for the entirety of the partnership. Using UNEP’s carbon neutral standard, PUMA and the Cameroon Football Federation will offset the carbon footprint of the Federation through the next FIFA World Cups™.

PUMA’s commitment to Africa extends beyond team and player partnerships, as well. PUMA will continue to support a number of grass roots initiatives across the continent. Coinciding with this announcement, 10,000 durable footballs were delivered to Africa following a joint pledge in collaboration with Intersport® earlier this year, a third of which will go to football projects in Cameroon. PUMA was also the official sponsor and fanwear supplier of the 2010 African Cup of Nations in Angola.

For more information about PUMA Football, please visit www.pumafootball.com.

“The goal of our PUMA.Peace initiative is to create programs that foster a more peaceful world than the one we live in today,” said Jochen Zeitz, Chairman and CEO of PUMA. “Each of us can make a difference in this world as individuals, as corporations and through strategic partnerships. Moreover, at PUMA we feel that we are uniquely positioned to contribute to making the world a better place for generations to come. Our PUMA.Peace program recognizes the power of sport to bridge divides and unite people around the world through a common language. We are extremely honored to receive a Peace and Sport Award in support of our endeavors.”

PUMA works towards a better world for generations to come through the PUMAVision platform. Through the initiatives of PUMA.Peace, PUMA is providing real and practical expressions of this vision by strategically implementing long-term partnerships, creating initiatives and raising global awareness for these projects. PUMA.Peace works to inspire and educate individuals around the globe that peace is possible and utilizes sport as a vehicle to achieve this goal.

PUMA continues to raise awareness for the United Nations International Day of Peace; an annual day of global ceasefire and non-violence on September 21, and partners with the non-profit organization that inspired the days creation, Peace One Day. In 2008, PUMA.Peace and Peace One Day launched One Day One Goal, a global football movement that celebrates Peace Day with goodwill matches played around the world, and in many cases between communities previously in conflict. In 2010, over 3,000 One Day One Goal commemorative football matches were played around the globe on or around Peace Day in every UN Member State.

PUMA.Peace initiated a symbolic truce with adidas in 2009, after a 6-decade rivalry started by the companies founding brothers, as a commitment to Peace Day and to establish a new legacy of peace between the companies. The companies played a mixed One Day One Goal football match between employees, including CEOs Jochen Zeitz and Herbert Hainer, and in 2010 the town of Herzogenaurach where the companies are headquartered also joined in and put aside its history of conflict to play for the “Peace One Day Cup”.

In 2010, PUMA launched a long term partnership to champion independent documentary films, with Channel 4 BRITDOC Foundation. Through the establishment of the PUMA.Creative Documentary Fund, the company will dedicate financial support, creative counsel and industry recognition to international documentary filmmakers, whose creative storytelling highlights social justice, peace and environmental issues.

PUMA.Peace will continue to develop initiatives that promote and support peace across the globe. In addition to PUMA’s Award for the Best Corporate Social Responsibility (CSR) Initiative, five other Peace and Sport Awards were distributed last night including: the Grand Prix for the Peace and Sport Image of the Year, the Award for Best Peace Project from an International Sports Federation, the Award for the Sports Event for Peace of the Year, and the Award for the Sports Non-Governmental Organization of the Year. Winners were selected by a jury composed of eminent figures, invested at the highest level in activities for the promotion of peace through sport.

PUMA achieved a company score of 86 points, while the average score in the industry amounted to 54 points. The scores reflect the company’s performance across economic, environmental and social criteria compared to its industry peers and range on a scale from 0 to 100%. SAM, an investment boutique focused exclusively on Sustainability Investing, together with Dow Jones Indexes, rated PUMA’s economic dimension at 86, the environmental dimension at 100 while the social dimension was given a score of 80 in the year 2010.

Through PUMAVision, PUMA’s sustainability concept, the Sportlifestyle company has launched numerous initiatives to drive PUMA to cleaner, greener, safer and more sustainable systems and practices. 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 offsetting the company’s CO2 emissions as of 2010.

Highlights Fourth Quarter 2010

• Consolidated sales increased by 28.2% to € 623 million, posting record sales
• Gross profit margin softened to 45.4% due to shift in regional mix, hedging, and sourcing prices
• Operating result before special items increased by 2.6% to € 41.1 million
• EPS improved to € 0.93
• PUMA’s “Back on the Attack” plan presented in October outlined the company’s future growth strategy

Highlights January – December 2010

• Consolidated sales increased by 10.6% in Euro terms to more than € 2.7 billion for the first time
• Gross profit margin stood strong at 49.7%
• Operating result before special items improved by 12.7% to € 337.8 million
• EBT more than doubled to € 301.5 million
• Net earnings improved by 154.0% to € 202.2 million
• EPS increased significantly to € 13.45 from € 5.28 last year
• Balance sheet ratios and cash position remained strong

Outlook 2011

• Despite a lack of major sporting events in 2011, Management expects sales to increase by mid to high single-digits for the full year.
• Due to investments in marketing, product and process optimization that are part of our “Back on the attack” strategy, management expects the OPEX ratio to increase.
• Net Earnings expected to improve by mid single-digits assuming a modest increase in sourcing costs related to raw materials and wages.

Jochen Zeitz, CEO: “We finished the year with record sales in a strong quarter, contributing to an overall solid sales and operational performance in 2010, which clearly demonstrates the strength of our brand and company in an improving consumer environment. I am pleased to see that our sales outlook also continues to look positive and that PUMA’s organic growth is more than intact. We are well positioned to tap into PUMA’s full brand potential with our strategic five-year company growth plan. Our focus will now be to develop and grow our existing core product categories as well as PUMA’s key strategic markets, and to invest in marketing and R&D while continuing to boost our sales globally.”

The Year 2010

PUMA is back on the attack! In the past financial year 2010, PUMA posted a new record in sales and managed to increase profitability accordingly. Hence, PUMA has successfully overcome the economic crisis and has laid the foundation to achieve the growth targets defined for the coming years.

The football World Cup on the African continent, where PUMA sponsored seven of the participating teams, of which four were African teams, proved to be a particular highlight for the PUMA brand in 2010. Furthermore, the Company celebrated the extension of the sponsoring agreement with Usain Bolt, and also witnessed Sebastian Vettel being crowned as the youngest world champion in the history of Formula One. Sebastian Vettel belongs to the Red Bull racing team, which was sponsored by PUMA. In addition to these sporting highlights, PUMA set new standards in 2010 through the introduction of a revolutionary new packing system, “Clever Little Bag” which was part of a comprehensive sustainability drive that was introduced to the public with the mission of PUMA to be the most desirable and sustainable Sportlifestyle company.

In the full year 2010, global brand sales increased by 3.1% currency-adjusted, while consolidated sales rose by 3.6% currency-adjusted. In Euro terms sales increased by 10.6% to more than € 2.7 billion successfully resuming the positive sales trend that was interrupted by the financial crisis in 2009. PUMA’s gross profit margin decreased slightly to 49.7%, maintaining its position in the upper echelons of the sporting goods industry. The cost reduction, reorganization and process optimization measures that had already been initiated by Management in the year before were continued in 2010. However, one-off expenses of € 31.0 million, which are related to the discovery of fraudulent activities at a joint venture in Greece, incurred in the reporting year, which also required a restatement of the comparative figures for December 31, 2009.

Including the above-mentioned special items, the operating profit (EBIT) more than doubled to 306.8 million from € 146.4 million last year, and earnings per share stood at € 13.45, compared to € 5.28 in the previous year.

PUMA’s expansion strategy was successfully continued in 2010 by means of acquisition of the “Cobra Golf” brand, completing our product range within the golf category with clubs. Within the scope of its sustainability strategy, PUMA acquired a 20.1% stake in Wilderness Holdings Ltd., a company dedicated to responsible eco-tourism and nature conservation.

PUMA’s share price was € 248.00 at the end of the year, posting an increase of 7.0% year-on-year, which resulted in market capitalization of approximately € 3.7 billion.

Sales and Earnings Development 4th Quarter 2010

In the fourth quarter 2010 consolidated sales increased by 16.1% currency-adjusted and 28.2% in Euro terms, reaching € 623.4 million and hence record sales in the company history.
All regions contributed positively to this performance. Currency adjusted sales in EMEA were up 8.8%, Americas sales increased significantly by 27.8% and Asia/Pacific improved by 13.1%.
Footwear sales increased by 15.7% currency-adjusted and Apparel by 16.9%. Sales in Accessories increased by 15.1%, while first time consolidation effects had only a minor impact on this category in Q4.
The gross profit margin decreased to 45.4%, down 500 basis points from last year’s fourth quarter. This decline is partially attributable to the change in the regional sales mix and traditionally higher close-out sales as well as an unfavourable hedging position and higher input costs.
Operating expenses increased disproportionately compared to the growth of sales by 17.6% to € 246.9 million. As a result, the cost ratio significantly improved from 43.2% to 39.6%.
The operating profit (before special items) increased by 2.6% from € 40.0 million to € 41.1 million. Including special items, the operating profit improved significantly from € 6.7 million to € 27.9 million or from 1.4% to 4.5% as a percentage of sales.
The earnings per share amount to € 0.93 in the quarter, after a loss in the prior year.

Sales and Earnings Development January-December 2010

Global Brand Sales

Worldwide brand sales comprised of consolidated and license sales increased by 3.1% to € 2,862.1 million in financial year 2010 after currency adjustments. In reported terms (Euro), brand sales were up 9.8% compared to last year.

Consolidated Sales

Consolidated sales increased currency-adjusted by 3.6% to € 2,706.4 million in financial year 2010. In Euro terms consolidated sales rose by 10.6% and exceeded the threshold of € 2.7 billion for the first time. PUMA’s sales performance has thereby returned to the long-term growth trend of 16 years that had been halted in 2009 by the financial crisis. The Footwear segment posted a sales increase of 1.1% currency-adjusted to € 1,424.8 million. This represented a share in consolidated sales of 52.6% compared to 54.0% in the previous year. Currency-adjusted sales in the Apparel segment rose by 3.8% to € 941.3 million. The share in consolidated sales increased to 34.8% from 34.6% last year. Currency-adjusted Accessories sales grew by 14.9% to € 340.3 million, which is mainly attributable to the expansion of the consolidated group as a result of the acquisition of Cobra Golf. As a consequence, the share of the Accessories segment in consolidated sales increased to 12.6% compared to 11.4% in the previous year.

Gross Profit Margin

The gross profit margin declined by 110 basis points to 49.7% and continues to be among the upper echelons of the sporting goods industry. The margin drop derives, in particular, from the change in the regional sales mix, a slight increase in sourcing costs and unfavourable hedging positions in 2010 compared with 2009. In absolute figures, however, the gross profit margin increased from € 1,243.1 million to € 1,344.8 million or 8.2%. In terms of product segments, the gross profit margin in Footwear was at 48.9% compared to 49.8% last year. The Apparel margin decreased from 51.3% to 50.6% and Accessories decreased from 54.1% to 50.6%, which stems from the impact of the newly acquired and integrated Cobra Golf business.

Operating Expenses

Operating expenses before special items rose – disproportionately to the growth of sales – by 6.4% to € 1,026.1 million in 2010. This increase derives from currency impacts and the extension of the scope of business after Cobra Golf and the new subsidiary PUMA Spain were included. As a percentage of sales, PUMA managed to reduce the cost ratio to 37.9% after 39.4% in the previous year. This is also a direct result from the cost reduction program of 2009.
Marketing and Retail expenses remained almost unchanged at € 501.3 million. However, the corresponding cost ratio dropped significantly from 20.5% to 18.5% of sales. Owing to the rise in sales revenues and expansion of the consolidated group, other selling expenses increased by 12.6% to € 348.8 million or from 12.7% to 12.9% as a percentage of sales. Expenses for product development and design increased from € 58.1 million to € 63.6 million or decreased from 2.4% to 2.3% as a percentage of sales. Other General & Administration expenses increased by 11.9% to € 147.9 million which derives from acquisitions and currency effects. As a result, the cost ratio increased slightly from 5.4% to 5.5% of sales. Furthermore, operating income amounted to € 35.5 million after € 35.7 million last year.
Depreciation was at € 55.2 million. Compared to the previous year, this corresponds to a decrease of 8.4%, underlining PUMA’s cautious investment policy.

EBIT before special items

Operating profit before special items increased by 12.7% to € 337.8 million compared to € 299.7 million last year. As a percentage of sales, this corresponds to an improved operating margin of 12.5% versus 12.2% in 2009.

EBIT

The uncovering of irregularities at our joint venture in Greece resulted in one-off expenses of
€ 31.0 million in financial year 2010. In addition the comparative figures in the consolidated financial statements as of December 31, 2009 had to be restated (cf. Section 3 in the Notes to the consolidated financial statements). As a result, the retained earnings as of December 31, 2009 decreased by € 106.5 million. Including the special items, the operating profit (EBIT) generated in 2010 more than doubled to € 306.8 million from € 146.4 in the previous year. This corresponds to an operating margin of 11.3% as a percentage of sales after 6.0% in 2009. After reviewing and correcting this incident, Management does not expect further one-off expenses related to this matter. PUMA has asserted all claims according to criminal law against the Greek Joint Venture minority partner and members of the local Greek management. Currently, there is no new information relating to this matter.

Financial Result

Following PUMA’s acquisition of a 20.1% stake in Wilderness Holdings Ltd., a company dedicated to responsible ecotourism and nature conservation, the financial statements for 2010 include a financial result (€ 1.8 million) from an associated company. The total financial result amounted to € -5.3 million, compared to € -8.0 million in the previous year.
The financial result includes interest income amounting to € 4.4 million after € 3.8 million last year, as well as interest expenses of € 5.9 million after € 6.6 million in 2009. Furthermore, expenses relating to interest in connection with accumulated, long-term purchase price liabilities from corporate acquisitions of € 4.3 million (previous year: € 4.1 million), as well as expenses of € 1.3 million (previous year: € 1.1 million) derived from the valuation of pensions plans.

Earnings before Taxes

Compared to the previous year, earnings before taxes (EBT) rose significantly from € 138.4 million to
€ 301.5 million or from 5.7% to 11.1% as a percentage of sales. This improvement results from the increase in sales, the cost reductions generated through the restructuring program and lower one-off expenses. Tax expenses increased from € 61.1 million to € 99.3 million. The tax rate in the 2010 financial statements was 32.9% after 44.1% in 2009. In both years, one-off expenses that could not be claimed as tax-deductibles led to the high tax ratio.

Net Earnings

Consolidated net earnings increased to € 202.2 million after € 79.6 million in 2009. The net rate of return improved significantly to 7.5% compared to 3.3% in the previous year. Earnings per share increased from € 5.28 to € 13.45 while diluted earnings per share rose from € 5.27 to € 13.37.

Regional Development

Sales in the EMEA region decreased by 2.5% currency-adjusted to € 1,221.7 million. However, in Euro terms, sales increased by 1.5% compared to last year. The share of the EMEA region in consolidated sales amounted to 45.1% compared to 49.2%. In terms of product segments, currency-adjusted Footwear sales decreased 9.1%. Apparel sales, however, increased 2.1% currency-adjusted while Accessories sales rose 9.9%. The gross profit margin stood at 50.6% compared to 52.2% last year.
The Americas region posted an increase in currency-adjusted sales by 20.0% to € 855.9 million. The Latin America region contributed significantly to this performance. This resulted in an increase in the share in consolidated sales from 27.2% to 31.6%. Footwear sales were up by 16.8% currency-adjusted and Apparel sales posted a strong 21.8% increase. Accessories sales rose by 53.5% which is mainly due to the acquisition of Cobra Golf. The gross profit margin amounted to 46.6% after 48.2% in 2009.
Sales in the Asia/Pacific region decreased slightly by 2.6% currency-adjusted to € 628.8 million. However, sales increased by 8.8% in reported terms. The share in consolidated sales remained stable at 23.2% after 23.6% in 2009. Footwear sales decreased by 6.1% currency-adjusted and Apparel sales by 1.9% while Accessories sales posted a 5.4% increase. The gross profit margin improved from 50.8% to 52.0%.

Net Assets and Financial Position

Equity

Total assets as of December 31, 2010, increased by 22.9% from € 1,925.0 million to € 2,366.6 million. This results from an increase in inventories and trade receivables – both partly currency-related – and an expansion of the consolidated group. Owing to a significant rise in total assets, the equity ratio declined slightly from 58.9% to 58.6%. However, in absolute figures, shareholders’ equity increased by 22.3% to € 1,386.4 million, compared to € 1,133.3 million. As in previous years, PUMA’s financial resources remain solid.

Working Capital

Working capital increased by 25.2%, rising from € 323.2 million to € 404.5 million. This increase stems from currency-related effects and the expansion of the consolidated group. As a percentage of sales, this corresponds to a slight increase from 13.2% to 14.9%. The rise in working capital is mainly attributable to the increase in inventories of 27.7% to € 439.7 million which is necessary to accommodate our expected sales growth in 2011 and an increase in trade receivables of 28.7% to € 447.0 million resulting from the strong increase in sales in Q4 as well as currency impacts.

Cashflow/Capex

The gross cashflow rose by 28.7% to € 358.4 million in 2010, which is due to the increase in earnings before taxes (EBT). The change in net current assets reflects a net cash outflow of € 97.0 million compared to a net cash inflow of € 116.8 million reported in the previous year. This derives from increases in inventories and trade receivables. Taxes, interest and other payments remained stable at € 92.0. In summary, cash provided by operating activities stood at € 169.4 million after € 303.9 million last year.
Net cash used for investing activities increased from € 136.6 million to € 152.3 million. This major portion of the increase is attributable to the payments for acquisitions, which rose by 32.5% from € 81.8 million in the previous year to € 108.4 million and relate mainly to the purchase of Cobra and Wilderness. Also included are current investments in fixed assets (Capex) which amount to € 55.2 million after € 54.5 million. As a result, the free cashflow declined from € 167.3 million to € 17.1 million. Excluding payments made for acquisitions in 2010, the free cashflow fell from € 249.1 million to € 125.5 million. As a percentage of sales, free cashflow (before acquisitions) amounted to 4.6% after 10.2%.
Net cash used for financing activities mainly includes dividend payments of € 27.1 million and investments relating to the purchase of treasury shares of € 23.4 million.
Cash and cash equivalents remained almost unchanged at € 479.6 million.

Dividend

The Board of Management and the Supervisory Board will propose to the Annual General Meeting on April 14, 2011, that a dividend of € 1.80 per share (the same as in the previous year) to be paid for the financial year 2010 from the retained earnings of PUMA AG. The unchanged dividend corresponds to the improvement in the consolidated result, while taking the restatement of last years financial results into consideration. The dividend is to be paid out on the day after the Annual General Meeting when the profit distribution is authorized.

Share buy back

In 2010, PUMA purchased 102,219 of its own shares and held 101,593 of its own shares at the end of the year resulting in an investment of € 23.4 million.

Other Events

PUMA AG to convert into a Societas Europaea (SE)

In our ad hoc release on October 25, 2010, PUMA AG outlined its intention to adopt a new legal structure by transforming into a European Corporation, PUMA SE. As part of the transformation, PUMA intends to convert its current two-tier board structure with a management board and a supervisory board to the more flexible and international structure of a one-tier Board. Additionally, managing directors will be responsible for the general management of PUMA SE.

At the upcoming annual general meeting in April 2011, the shareholders will be asked to vote on the change of PUMA AG’s corporate structure.

Outlook 2011

In 2010 – especially in the second half – economic conditions improved compared to 2009. Despite the lack of major sporting events, we believe that the company should achieve an increase in sales in the mid to high single-digit percentage range in the next two years. At last year’s investor conference, PUMA presented its five-year company strategy “Back on the Attack 2011-2015”, which aims at achieving a significant sales increase in particular within PUMA’s core markets, fueled by investments in brand and product complemented by optimized business processes, especially in the first couple of years of our expansion strategy. As a result, the expense ratio is expected to increase compared to the previous year’s level, while gradually decreasing in the subsequent years. We expect an improvement in net earnings in the mid single-digit percentage range for 2011 and 2012 on the basis of modest increases in procurement prices.

Franz Koch is currently in charge of Global Strategy for PUMA and based in Herzogenaurach. He has been responsible for the long-term strategic group development and management of special projects such as portfolio optimization, process re-engineering as well as mergers and acquisitions. Moreover, he coordinated and helped execute the company’s restructuring program in 2009 to lay the foundation for sustainable growth following the economic crisis. Koch has also strongly contributed to PUMA’s long-term sustainability program and most recently, he was instrumental in developing – in close cooperation with Jochen Zeitz and the other members of the Board of Management – the five-year growth strategy “Back on the Attack 2011-15” with its clear mission for PUMA to become the most desirable and sustainable Sportlifestyle company.

Jochen Zeitz, Chairman and CEO of PUMA: “Having an exceptionally analytical yet most pragmatic mind, Franz Koch has been one of the key drivers of PUMA’s strategic course and strongly contributed to our 2010 record sales level. Together, we have defined the company’s five-year strategic plan which will be the catalyst to tap into PUMA’s envisaged sales potential of 4 billion Euros in 2015. I am convinced that Franz is the right person at the right time and that he is the most qualified candidate and dedicated individual to take the helm at PUMA. I will personally accompany Franz’ transition period and I look forward to continuing a close and trusting cooperation with him.”

Koch joined PUMA in 2007 as Global Strategic Planner after having worked for the international management consultancy Oliver Wyman for several years. Koch (32) graduated in Business Administration from Leipzig Graduate School of Management and holds a Masters Degree in Commerce from the University of Sydney. The appointment of Franz Koch is the result of a thorough and diligent search process, in which many external and internal candidates were reviewed.

“Franz Koch, who has been working closely with Jochen Zeitz and the Board of Management over the past years, is our candidate of choice for this position. His excellent knowledge of the company and strategic expertise will guarantee a seamless handover and continuation of the company’s growth strategy. PUMA is one of PPR’s core brands and I am confident that Franz will bring PUMA to the next level. He has our full support and confidence,” said François-Henri Pinault, Chairman of PUMA’s Supervisory Board.

As announced last year, PUMA is about to convert into a European Corporation, trading under the name of PUMA SE. The transformation is subject to approval at the company’s annual shareholder meeting on April 14, 2011. Following the conversion into an SE, PUMA’s current CEO Jochen Zeitz will become Executive Chairman of the one-tier PUMA SE Board. Additionally, Zeitz has been appointed Head of the Sport & Lifestyle Group of PPR as well as Chief Sustainability Officer.

Highlights January – March 2011

• Consolidated sales increased by 13.2% in Euro terms to a record high of € 773 million

• Gross profit margin back to a strong, sector leading 52.4%

• EBIT 2.1% above last year at € 111.0 million

• Net earnings improved by 7.1% to € 77.7 million

• EPS increased to € 5.17 from € 4.81 last year

Outlook 2011:

• Based on the success of the past quarter and the positive business development, Management targets the milestone of € 3 billion in sales for the full year 2011.

• To support business growth and the “Back on the Attack” growth strategy, investments in marketing, sales, product development as well as process optimization will continue to affect the OPEX ratio.

• Despite expected moderate price increases in sourcing costs related to raw materials and wages for the 2nd half, Management still foresees continuous improvement of net earnings by mid single-digits.

Jochen Zeitz, CEO: “The first quarter performance was a strong start to 2011 and our Back on the Attack growth plan, as PUMA managed to generate strong sales growth. We were even able to mitigate the negative impact we saw from the disastrous events in Japan last month as our Asian/ Pacific region contributed with an increase in sales to the overall solid company performance. For the full year 2011 we continue to expect an increase in net earnings in the mid single-digit percentage range with sales targeting the € 3 billion milestone for the first time. PUMA continues to execute on the Back on the Attack company growth plan and performs at levels consistent with reaching the long-term target of € 4 billion in sales by 2015. The recent approval of our shareholders to convert PUMA from the German Aktiengesellschaft PUMA AG to the European Corporation PUMA SE will provide our company with a broader international profile, helping to tap into the many opportunities the international Sportlifestyle market offers.

Sales and Earnings Development January-March 2011

Global Brand Sales

Worldwide PUMA brand sales – comprised of consolidated and license sales – rose by 12.5% in Euro terms (8.8% currency adjusted) to € 811.1 million from € 720.8 million last year.

Consolidated Sales

PUMA’s first quarter consolidated sales reached € 773.4 million, rising 9.3% in currency adjusted terms and an impressive 13.2% in Euro terms when compared to the first quarter of 2010. This represents PUMA’s best ever first quarter. All product segments showed considerable growth: Footwear up 6.8% currency adjusted at € 417.2 million, Apparel up 2.2% at € 241.8 million, and Accessories posting a superb 42.4% increase at € 114.4 million. The strong performance in the Accessories product segment was also supported by the inclusion of Cobra Golf into the consolidation.
In regional terms, sales in EMEA grew by 4.4% currency adjusted to € 374.5 million, Asia/ Pacific posted a gain of 6.9% to € 163.9 million and PUMA continued its excellent performance in the Americas with sales growing by 19.9% to € 235.1 million.

Gross Profit Margin

The gross profit margin remained at an industry leading 52.4%, which is testament to PUMA’s continuing efforts to maximize returns and efficiencies. The Footwear segment had a gross profit margin of 51.3%, up from 50.9%. Apparel stood at 53.7%, down slightly from 53.9%. Accessories were at 54.0%, also down slightly from 55.7%.

Operating Expenses

Operating expenses before special items rose by 21.6% to € 298.6 million during the first quarter of 2011. As a percentage of sales, this represents an increase from 35.9% to 38.6% compared to last year. Reasons for this rise include currency fluctuations, as well as additional investments in Marketing, Sales and Product Design to fuel our “Back on the Attack” growth plan.

EBIT

Operating profit came in as expected, improving to € 111.0 million from € 108.7 million. This represents 14.4% of consolidated sales, down slightly from a rate of 15.9% at this time last year.

Financial Result / Income from associated companies

The financial result improved from € -1.4 million to € -0.2 million, including € 0.9 million from our investment in Wilderness.

Earnings before Taxes

PUMA’s EBT rose from € 107.3 million to € 110.8 million.
Tax expenses declined from € 34.8 million to € 33.1 million and the tax rate dropped from 32.4% to a normalized tax rate of 29.9%.

Net Earnings

Consolidated net earnings increased to € 77.7 million from € 72.5 million in 2010, an increase of 7.1%. Earnings per share rose from € 4.81 to € 5.17, and diluted earnings per share rose from € 4.80 to € 5.15.

Net Assets and Financial PositionEquity

Total assets (as of 31st March 2011) increased by 11.3% from € 2.068,5 million to € 2.303,2 million. This rise stems mainly from the expansion of the consolidated group, as Cobra Golf is included this year. The equity ratio declined slightly from 61.2% to 60.6%. However, in absolute figures, shareholders’ equity increased by 10.3% to € 1.395,9 million from € 1.265,7 million. As a consequence, PUMA’s balance sheet remains very strong.

Working Capital

PUMA’s overall Working Capital went up by 13.9% to € 598.1 million. On the asset side, inventories went up by 24.9% from € 371.8 million to € 464.3 million, supporting our expected sales growth in the upcoming quarters and trade receivables also increased, up 11.0% from € 520.4 million to € 577.8 million. Considering the change in scope and the strong increase in sales during the quarter, the trade receivables developed positively.
On the liabilities side, trade liabilities rose 25.8% from € 270.4 million to € 340.2 million.

Cashflow/Capex

The Free Cashflow (before acquisitions) came in at € -113.5 million versus € -71.6 million last year. The additional outflow was caused mainly by the increase in working capital and tax payments.
The payments for acquisitions are related to the purchase of the remaining shares of PUMA China, as announced in our third quarter results last year.
For Capex, the company spent € 10.8 million versus € 7.7 million in last year’s first quarter. The increase derives from investments in the improvement of organizational processes and IT, which are necessary components of our growth strategy.

Cash Position

Total cash (as of 31st March 2011) dropped by 29.1% to € 300.8 million from € 424.2 million last year. Bank debts were reduced by 25.9% from € 52.3 million to € 38.8 million. As a result, the net cash position decreased 29.6%, from € 371.9 million to € 262.0 million.

Share buyback

PUMA continued with its share buy back program and purchased 51.720 shares for € 10.9 million during the first quarter.

Other Events

PUMA AG converts to a Societas Europaea (SE)

As previously reported, PUMA’s shareholders returned a positive vote in April’s Annual General Meeting on the conversion from a German ‘Aktiengesellschaft’, or AG, to a European ‘Societas Europaea’, or SE. The conversion is expected to be completed latest by July.

Outlook 2011

As the first quarter visibly demonstrates, PUMA’s “Back on the Attack” strategy is already taking effect, with higher investment in marketing and product being offset by significant increases in sales with a stable gross profit margin. Taking into account the risk of higher input prices in the form of raw materials and wages for the second half of the year, PUMA’s outlook for 2011 continues to be favourable. We continue to expect an improvement in net earnings in the mid single digit range for 2011 whilst targeting the € 3 billion milestone in sales.

As part of PUMA’s long-term sustainability plan, the analysis was commissioned in recognition that producing and selling PUMA products has a wide impact along the entire supply chain. By identifying the most significant environmental impacts, PUMA will develop solutions to address these issues, consequently minimizing both business risks and environmental effects. PUMA’s E P&L statement provides an unprecedented and detailed level of understanding, sets a new benchmark in corporate environmental reporting and will hopefully serve as a catalyst for others to join an industry-wide engagement.

The first results of PUMA’s E P&L have revealed that the direct ecological impact of PUMA’s operations translates to the equivalent of €7.2 million of the overall impact valuation. An additional €87.2 million falls upon four tiers along the supply chain. In total, this leads to an overall environmental impact of GHG and Water Consumption of PUMA’s operations and the supply chain of €94.4 million. By putting a monetary value on the environmental impacts, PUMA is preparing for potential future legislation such as disclosure requirements. These costs will serve as a metric for the company when aiming to mitigate the footprint of PUMA’s operations and all supply chain levels and will not affect PUMA’s net earnings.

“The E P&L statement is a milestone in PUMA’s mission to become the most desirable and sustainable Sportlifestyle company in the world. It is an essential tool and a shift in how companies can and should account for and, ultimately, integrate into business models the true costs of their reliance on ecosystem services and PPR HOME will encourage and collaborate with the industry to adopt this tool,” said Jochen Zeitz, Chairman and CEO of PUMA and Chief Sustainability Officer PPR. “Gaining a better understanding of the source of the natural goods and services PUMA relies on and the declining availability of the basic resources required for our business growth, will help PUMA build a more resilient and sustainable business model and ultimately better manage its impacts on the environment.”

PUMA chose GHG emissions and water for the first analysis in their E P&L development as they were considered to be the most significant environmental impacts. The economic valuation of these impacts (please refer to www.about.puma.com for details of methodology) by PwC (GHG emissions) and Trucost (water use), estimated a value per tonne of CO2e at €66 and an average water value of €0.81/ m3. The analysis found that:

• Including the full supply chain, the overall impact was valued at €94.4 million in total for 2010 with greenhouse gases equating to €47.0 million and water to €47.4 million.

• Of the total, PUMA’s operations accounted for 15% of the overall GHG emissions analysed, and 0.001% of water consumption. This is the equivalent to €7.2 million of the overall valuation.

• The remaining GHG and water consumption – the equivalent of €87.2 million – fell upon its entire supply chain.

“Fundamentally, this analysis is about risk management for the environment, and for business, because you cannot separate the two,” said Alan McGill, partner, PwC Sustainability and Climate Change. “This is a first for a company to measure and value the impact of its business in this way and gives PUMA a unique and challenging insight into their supply chain. It’s a game–changing development for businesses to integrate environmental issues into their current business model like this, because it provides a basis for embedding their reliance on ecosystem services into business strategy. Tackling the impacts will need concerted efforts by the businesses in their supply chain as PUMA shares a common but differentiated responsibility with other brands at the production facilities,” he continued.

Analyses of the water and GHG impacts were performed across PUMA’s value chain, including the operations of raw material and product suppliers as well as logistic services, which PUMA has limited control over.

• Tier 4: Raw material production, such as cotton farming, oil drilling, etc.

• Tier 3: The processing of raw materials, such as leather tanneries, chemical industry, oil refining

• Tier 2: Outsourced processes such as embroiders, printers, outsole production

• Tier 1: The manufacturing of its products

• PUMA core operations: Design, logistics services, warehousing, head office functions and retail

Biggest Environmental Impact Derives from Raw Material Production

The analyses have shown that the biggest environmental impacts in the value chain occur, not through PUMA’s core operations but at the level of its Tier 4 suppliers, where raw materials are derived from natural resources, such as the cultivation and harvesting of cotton, cattle ranching for leather, and natural rubber production. This part of the supply chain accounts for 36% of the total GHG (€16.7 million) and 52% of water consumption (€24.7 million); indicating that the most water intensive activity in the production of a t-shirt occurs at the initial step – the cultivation of cotton.

This analysis provides the first results of the first stage in a three-stage process to consider PUMA’s and its supply chain’s environmental, social and economic impacts, ultimately leading to the development of an all encompassing Environmental, Social and Economic Profit and Loss Account.

The final results completing Stage 1 – to be released in autumn this year – will see the inclusion of additional environmental key performance indicators such as acid rain and smog precursors, volatile organic compounds, waste and land use change, completing the valuation of the significant environmental impacts in PUMA’s value chain.

As the impacts of PUMA’s operations not only refer to the natural environment, Stage 2 will require collaboration with other corporate and civil society stakeholders in tackling the complexities of social factors in sustainability such as fair wages, safety and working conditions, enabling the development of an Environmental and Social P&L account.

Stage 3 will complete the other side of the equation, moving to the equally complex area of valuing the social and economic benefits from PUMA’s operations through the creation of jobs, tax contributions, philanthropic initiatives and other value-adding elements. These benefits will then be offset against the environmental and social costs calculated in Stages 1 and 2, hence completing PUMA’s Environmental, Social and Economic P&L statement. Stage 3 will require a strong collaborative effort to develop robust valuation methodologies and approaches. This challenge will have resonance with the corporate sector as more and more companies actively undertake similar analyses throughout their supply chains.

“Companies that understand their dependence on natural resources along the value chain are well placed to manage underlying risk from rising raw material costs and scarcity of supply issues”, said Dr. Richard Mattison, CEO of Trucost. “Companies are already facing increasing input costs as a result of rising commodity prices related to climate change and water availability. PUMA is now positioned to address these challenges in advance and we have helped provide them with management tools to minimise risk, hedge against uncertainty and identify new opportunities to optimise the sustainability of its products.”

PUMA’s Response to the Results to Minimize Risks

To reduce the impact, PUMA will start by using these findings to better direct its sustainability efforts and initiatives. PUMA’s sustainability scorecard, which was introduced in early 2010 and sets targets such as 100% sustainable packaging and 25% reductions of carbon, energy, water for 2015, has already begun to address the environmental impacts at PUMA’s operations and Tier 1 supplier levels. PUMA will examine how to adjust the targets set in its current sustainability scorecard and look for solutions along the entire supply chain.

In order to target solutions that address the levels of the greatest impact from tier two to four, PUMA and PPR HOME will look to play a catalytic role in raising awareness that the current business model is outdated and needs decisive reforms, forging partnerships and collaborations to explore new and innovative ways to differentially attribute the responsibilities and equitably share the costs of these, while building capacity at suppliers’ factories and developing new materials and products.

Raising Awareness

PUMA and PPR HOME are sharing the results of the E P&L with other industry players and corporations to leverage adopting a new business model that takes the costs of using natural resources within business operations into account.

This analysis will also help to better assess the relative environmental impacts of sourcing from different countries and regions. Down the line it will allow PUMA to improve supply chain management and reduce supply chain risks.

Developing synergies and partnerships

PUMA’s majority shareholder, PPR, has recently joined the World Business Council for Sustainable Development (WBCSD), which could provide an appropriate platform for constructive debate on the issue of differentiated responsibility and equitable sharing of the costs of environmental impacts while exploring new business models to help reduce these costs in future. For many years, PUMA has been engaging with other global initiatives, industry dialogues and corporate alliances to address sustainability challenges such as: the UN Global Compact, the Fair Labor Association, the Carbon Disclosure Project and, most recently, the 2 Degree Initiative and PPR’s luxury brands have been long-term members of organizations such as the Sustainable Luxury working group (set up by the Business for Social Responsibility) and the RJC (Responsible Jewellery Council).

PUMA will soon join the Sustainable Apparel Coalition, an industry-wide group of leading apparel and footwear brands, manufacturers, experts and the United States Environmental Protection Agency to reduce the environmental and social impacts of apparel and footwear products. This underpins PUMA’s effort to increase collaborations with its industry peers to address the environmental impacts occurring at all shared levels of the supply chain.

Building Capacity to Create Snowball Effect

PUMA will focus even more attention on capacity building projects in collaboration with other industry players to help Tier 1 supplier management identify weak points in their operations by offering training programs and by enabling them to make improvements, independently. For more than six years, PUMA has carried out capacity building projects together with other industry brands to improve environmental and social conditions at Tier 1 supplier factories.

Over the past decade PUMA has ensured that Tier 1 suppliers are committed to adhere to PUMA’s environmental and social standards. The company will now require Tier 1 suppliers to guarantee that all of their suppliers in the next tier down follow the same guidelines. Through this it is hoped that over time all suppliers will comply with PUMA’s Code of Conduct and Environmental, Social and Health & Safety standards.

Innovating for the Development of Sustainable Materials and Products

By 2015, 50% of PUMA’s international collections will be manufactured according to PUMA’s internal sustainability standard, PUMA S-Index, using more sustainable materials such as recycled polyester, that take into account the enormous environmental impact of raw material production. PUMA will investigate the opportunity to address the impact of Tier 1 to Tier 4 suppliers through the innovative development of more sustainable materials and products.

Nina Nix, PUMA’s Global Director Accessories & Licensing, has been appointed as the new General Manager of Dobotex. She will take up her new position on the 1st of January 2012. “PUMA and Dobotex have a long and successful history and we are proud that Dobotex will be 100% part of the PUMA group,” said Nina Nix. “Dobotex is a true product expert and offers a leading service proposition in its field of activity. Whilst further fostering synergies, especially in the global expansion of sales and distribution, Dobotex remains an independent company. I very much look forward to working with the Dobotex team and to contribute to the continued growth of Dobotex.”

Current Dobotex’ managing director Jeroen van Dooren said: “PUMA taking over the remaining shares as of January 1st 2012 and Nina Nix taking over the reins of the company could not have come at a better time, and is coupled with a well prepared management team looking to execute Dobotex’ ambitions for market expansion.”

Dobotex, which is located in s’Hertogenbosch in the Netherlands, was founded in 1979 and signed the first license agreement with PUMA for socks in 1997. As of January 1, 2009, PUMA became a majority shareholder of Dobotex and hence the market leader in the sports socks category in Europe.

The new PUMA South Africa kit was also launched in Johannesburg today, by South African captain Stephen Pienaar along with Siphiwe Tshabalala, Renielwe Letsholonyane, Kagisho Dikgacoi, Darren Keet and Katlego Mphela. Featuring the very latest innovations of PUMA technology, the kit incorporates performance enhancing fabric through moisture wicking properties, mesh inserts on the side for improved ventilation and embossed fabric to enhance the optical appearance. The shirt will also feature both the Protea and SAFA badges. In line with PUMA’s CSR commitment to Africa, all proceeds from replica home shirts sales will be donated to the SOS Children Villages in South Africa, a cause designated by the South African Football Association.

Christian Voigt, Senior Head of Global Sports Marketing at PUMA said “We are delighted to enter into this new partnership with the South African Football Association. PUMA has a longstanding commitment to Africa and African football, and this new relationship further underlines our continuing investment in the continent. In partnering with the South African Football Association, we are proud to have added another great asset to our sports marketing portfolio, and we look forward to a long and successful relationship.”

Kirsten Nematandani, President of the South African Football Association said, “To announce this new commercial relationship with PUMA is a great privilege for us, and we are very happy to have secured this deal. PUMA’s presence in African football really speaks for itself, and they were the most desirable company for us to align ourselves with. Their technical innovation and excellence is of course important, but more so is the heritage and support they have demonstrated for this continent over a number of years. They are the perfect partner as we strive to grow the profile of football in South Africa in the years to come.”

South Africa will become the twelfth current African international team to be currently outfitted by PUMA, the German company is also supplying the Orange African Cup of Nations champions Egypt, Ghana, Ivory Coast, Cameroon, Algeria, Senegal, Morocco, Togo, Burkina Faso, Malawi and Namibia.

As part of the brand’s commitment to Africa, PUMA continues to support a number of grass roots and charitable initiatives across the continent. In 2010, the sportlifestyle brand launched the Africa Unity kit – the official FIFA sanctioned third kit of all PUMA sponsored African national football teams, with proceeds from global sales supporting biodiversity causes in Africa. Later the same year, 10,000 durable footballs were delivered to various football projects across a number of West African countries. PUMA was also the official sponsor and fanwear supplier of the 2010 Orange African Cup of Nations in Angola. In 2009, PUMA incorporated the use of sustainable cotton sources from Africa into its product ranges, supporting the Aid by Trade Foundation’s ‘Cotton Made in Africa’ initiative, developed to improve the living conditions of African cotton farmers and promote environmentally responsible farming practices.

PUMA is the sport-lifestyle brand with the longest heritage in motorsport, and its development of fire retardant technology has revolutionized driver racewear by dramatically reducing weight while maintaining the optimal performance of safety and comfort. PUMA will continue to supply Scuderia Ferrari with the latest technological innovations in team and racewear, enabling Fernando Alonso and Felipe Massa to compete for the coveted Drivers’ and Constructors’ Championships in one of the lightest and safest race suits in Formula One.

Luca di Montezemolo, Chairman of Ferrari S.p.A., said: “We have enjoyed a very successful relationship with PUMA over the past six years, and we are very happy that this will continue long term. Their commitment to product design, development and racewear technology is unrivalled in the industry, and they continue to impress us on all counts. Clearly licensed apparel and footwear is a key business area for us, and it could not be in better hands. We look forward to continue working with PUMA for many years to come.”

Jochen Zeitz, Chairman and CEO of PUMA AG, said: “We are delighted to continue and deepen our partnership with Ferrari. To extend a relationship with the most prestigious brand in the automotive industry and the most popular and successful team in Formula One is of great benefit to us both commercially and reputationally. The Ferrari licensed product development we have undertaken so far has been very successful, and the plans we have for the coming years are equally exciting. They are an ideal motorsport partner for us in every respect.”

The verdict was reached on 14 June 2011. This outcome is a direct consequence of PUMA’s successful appeal against the arbitration ruling, which previously required remittance of said funds to the former Spanish licensee and holder of the remaining rights Estudio 2000 S.A. to vest the remaining trademark rights in Spain.

“The ruling by the District Court of Madrid is totally in line with what we had anticipated and frees us from the payment of 98 million Euros for the vesting of PUMA trademark rights,” said Jochen Zeitz, Chairman and CEO of PUMA AG. “We will now make full use of all the options available to us to secure all PUMA trademark rights in Spain.”

PUMA will continue its efforts in uniting all Spanish PUMA trademarks.