Rinaldo Sagramola, Palermo Football Club CEO confimed the new agreement by saying, “We are proud to be entering into this partnership with PUMA, and look forward to working with them from the 2012/13 season in prospect. PUMA has such credibility in the development of high quality performance football apparel, and the sales and distribution of licensed products, this new partnership is one that will significantly benefit Palermo for years to come.”

PUMA currently partners with several International football federations including Italy, Czech Republic, Switzerland, Uruguay, Chiles, South Africa, Cameroon, Ghana, Ivory Coast, Algeria. The sportlifestyle brand also has a strong player portfolio in football that includes Gigi Buffon, Giorgio Chiellini, Samuel Eto’o, Cesc Fabregas, Sergio ‘Kun’ Aguero, Radamel Falcao, Yaya Toure,Thierry Henry, Nemanja Vidic, Mario Gomez and Marco Reus.

The new Palermo Club Football Kit will be launched by PUMA in advance of the 2012/13 football season.

This new partnership, effective from 1 February 2012, will see PUMA benefit from prominent branding locations on all BMW Motorsport racing cars and all Race and Teamwear for BMW Motorsport technical staff. With BMW re-entering the DTM racing class in 2012 following an illustrious history in GT car racing, PUMA will outfit drivers Martin Tomczyk, Bruno Spengler, Andy Priaulx, Augusto Farfus, Dirk Werne and Joey Hand with the latest innovations in fireproof technology.

In 2004, PUMA first partnered with BMW Motorsport, through its involvement with the BMW Williams Formula One team. This relationship continued when BMW acquired Sauber F1 to become BMW Sauber F1, and after BMW ceased its Formula One activities in 2009 to reorganise its activities, PUMA and BMW Motorsport have once again joined forces with this new deal.

PUMA will also develop BMW Motorsport licensed products for global sales and distribution. While existing motorsport markets in Europe are a key focus for this distribution, a strong emphasis will be placed on expanding sales performance of BMW Motorsport products in emerging markets, particularly in Asia Pacific and the Americas.

“It is great to have such a well-known and reliable partner as PUMA on board again at such an exciting time for us,” said BMW Motorsport Director Jens Marquardt. “The link between BMW Motorsport and this successful company has grown over the years and goes as far back as the 2004 season. It is hard to imagine our team and driver apparel without the characteristic PUMA logo. As a strong partner in the field of licensed products, PUMA will play a major role in ensuring that our fans around the world enjoy the products from the BMW Motorsport collections.”

Christian Voigt, Senior Head of Global Sports Marketing at PUMA said: “PUMA is delighted to once again be working with BMW Motorsport, following the successes we enjoyed with them through their tenure in Formula One. Their heritage in competitive motorsport and automotive engineering is so impressive, and their global profile derived from this makes them another strong partner for PUMA in motorsport. Through our experience in licensed product development and distribution we are fully confident this will be a successful partnership for both parties, and we hope to grow it in the years to come.”

Dr. Thomas Goerdt, Head of Lifestyle Collections in the BMW Group, added: “From 2012, BMW will be even more active and prominent in motorsport than it has been in recent years. For this reason, securing this partnership with PUMA was a priority for BMW Lifestyle right from the start. As leading sport lifestyle brand, PUMA boasts a unique wealth of expertise and proficiency in developing and distributing licensed products on a global scale. Bearing in mind the great success we have enjoyed together in the past, we are looking forward to continuing this partnership.”

2011 Fourth Quarter Highlights

• Consolidated sales totaled in excess of € 720 million, a currency adjusted increase of 15.8%
• Gross profit margin improved to 46.7% despite continuing input price pressure
• EBIT rose by over 72% to € 48.1 million
• Net earnings more than doubled to € 33.1 million
• Consequently, EPS leapt from € 0.93 to € 2.21
• Long-term sponsorship agreement signed with German football champions Borussia Dortmund
• Multi-year sponsorship of Mercedes GP Formula 1 team announced
  
  

2011 Full Year Highlights

• PUMA delivers on its € 3 billion sales target for 2011
• Gross profit margin continues to be in the upper echelons of the industry at 49.6%
• EBIT rose by 8.6% to € 333.2 million
• Net earnings rose by nearly 14% to just over € 230 million
• EPS increased from € 13.45 to € 15.36
  
  

Outlook for the Financial Year 2012

• Management is targeting high single digit sales growth in 2012.
• PUMA enters the second year of its “Back on the Attack” strategy, continuing with the execution of selective investments into the growth drivers.
• Management foresees an improvement of net earnings in mid single-digits for the full year.
  
  

“I am pleased to see that our sales and earnings performance in the financial year 2011 bear testament to the fact that PUMA is “Back on The Attack”, and that our 5-year growth plan is already having a positive impact”, said Franz Koch, CEO of PUMA SE. “We managed to surpass our sales target this year, eclipsing € 3 billion in sales for the first time, while PUMA’s net earnings also beat management’s expectations. With the support of a strong sports marketing portfolio we are well on track to explore the opportunities of the sports year 2012 as well as achieve our 2015 goal of € 4 billion in sales. We expect a sales increase in the high single digits for this year.”

Americas region drives sales growth in the fourth quarter

PUMA’s fourth-quarter consolidated sales rose strongly to over € 720 million, up 15.8% currency adjusted and 15.6% in Euro terms when compared to last year, and surpassing all of PUMA’s previous fourth quarter results. This exceptional performance was once again underpinned by all regions, despite the continued economic uncertainty stemming from the Euro-zone debt crisis, which continued unabated during the last three months of 2011.

PUMA excelled again in the Americas, where sales grew by 27.8% currency adjusted to € 271 million. The Latin American market continued to be a significant growth driver for PUMA, and Motorsport remains the top performing category in the region. The situation in the US improved, and sales accelerated during the fourth quarter, while PUMA’s lifestyle products in particular resonated well with consumers.

Despite reluctant consumer behavior amid the Euro-zone debt crisis, EMEA sales rose by 8.3% currency adjusted to € 237 million. The UK and France performed well, while Russia was at the forefront of improved performance in Eastern Europe. Lifestyle products in particular continued to perform well, while our participation in the Volvo Ocean Race boosted sales in PUMA’s Sailing category. Fitness also posted significant growth rates.

Sales in Asia/Pacific improved by 11% currency adjusted to € 212 million. PUMA’s football shoes and lightweight running products, especially our FAAS range, continued to stand out, while growing demand came from outdoor products in the region. Results in Japan, India and Korea remained very strong while China grew at the expected rate.

PUMA’s performance in terms of segments mirrors that of the regions, in that all of them contributed strongly to the impressive performance. Footwear sales came in at € 339 million, an increase of 11.4% currency adjusted. Apparel grew by 12.7% currency adjusted to € 275 million and Accessories, including the consolidation of Cobra Golf, performed very well, up 43.6% currency adjusted to € 107 million.

Gross Profit Margin improves

In the fourth quarter, PUMA’s gross profit margin was 46.7%, up from 45.4% last year. The gross profit margin for footwear increased from 43.4% to 46.6%. Apparel retreated from 47.0% to 45.9%, whereas Accessories rose to 49.0% from 48.4%. This increase stems from the overall product mix and an acceptance of the selective price rises indicated previously by PUMA and implemented in the fourth quarter of 2011.

Fourth quarter operating expenses rose in line with our growth strategy, by 18.4% to € 292.3 million, and was equivalent to 40.6% of sales, up from 39.6% for the same period last year. This increase derives from the further investments under the aegis of our “Back on the Attack” strategic growth plan. Additional funding in IT, the supply chain, marketing and product has grown as planned, as we continue to aim for the targets set out at the end of 2010.

EBIT was up 72.6% in the fourth quarter, at € 48.1 million. This represents 6.7% of consolidated sales and is above last year’s ratio of 4.5%.

The financial result declined from € -1.2 million to € -8.9 million, largely as a result of foreign exchange impacts relating to financing activities.

EBT in the fourth quarter was up 47%, from € 26.7 million to € 39.3 million.

Net Earnings excel with a 137% improvement

Net earnings rose by € 19 million to € 33.1 million, a notable increase of 137%, meaning that earnings per share followed suit, up to € 2.21 from € 0.93 (diluted earnings € 2.21 per share versus € 0.92 last year)

PUMA achieves its goal of € 3 billion in sales for the Full Year 2011

“Back on the Attack” growth plan already having a positive impact

Much of PUMA’s success in 2011 can be attributed to its long-term strategic growth plan “Back on the Attack,” launched in autumn 2010 and implemented from the beginning of last year. PUMA’s annual results attest that this roadmap, which aims to unlock our long-term brand potential of € 4 billion in sales by 2015, has already had a positive impact on the company’s performance during 2011. One aspect of this strategy is increasing PUMA’s brand desirability by differentiating PUMA’s Performance and Lifestyle categories.

In 2011, we strengthened PUMA’s roots in performance, particularly in football, by significantly expanding the sports marketing portfolio of brand ambassadors. PUMA signed Sergio ‘Kun’ Agüero and Yaya Touré of Manchester City, Radamel Falcao of Atlético Madrid and Cesc Fàbregas of Barcelona. They will all feature as central figures in our global marketing campaigns in the coming years. PUMA signed up the reigning German football champions, Borussia Dortmund, to a new partnership as well as the South African Football Federation, the host of the next African Cup of Nations. With a portfolio of 12 African teams, we remain the leading football sponsor on the African continent. All these strategic moves underline our ambition to be the clear number 3 brand in the world of football.

Record sales increase to more than € 3 billion

Consolidated sales for the Full Year climbed 12.1% currency adjusted (11.2% in Euro terms) to just over € 3 billion. With this record result, PUMA has achieved its sales target for the full year.

Regions

Once again, all regions contributed to this excellent performance. Sales in EMEA rose by 7.7% currency adjusted to over € 1.31 billion. EMEA therefore accounted for 43.6% of total sales compared to the 2010 number of 45.1%. In the Americas, sales increased by 17.7% currency adjusted, equal to € 967 million and equal to 32.1% of total sales. Sales figures improved in every country in the region. Asia/ Pacific also recorded a double digit increase, with sales topping € 730 million, a currency adjusted increase of 13.3%. This was equivalent to 24.3% of total sales.

Segments

In terms of segments, Footwear continued to thrive, growing 9.9% currency adjusted to € 1.54 billion. Apparel rose at the same rate, surpassing the 1 billion Euro mark for the first time.

Accessories posted an impressive 27.3% currency adjusted increase, up to € 434 million, after Cobra Golf had been integrated for a full year for the first time in the financial year 2011.

Retail sales rise by € 45 million

Of the total consolidated number, retail sales were € 515 million or 17.1%. This is an increase in absolute terms of € 45 million, but a slight decrease from 17.4% of total sales in 2010. As part of our growth strategy, we are still aiming for 20% of sales to be recorded in our own retail.

Gross profit margin remains stable

For the full year, gross profit margin is stable at 49.6% (prior year: 49.7%). This was achieved in the face of higher wage pressures and increasingly volatile commodity price movements. The Footwear margin rose slightly from 48.9% to 49.1%, Apparel dropped a percentage point to 49.6% and Accessories moved up one percentage point, to 51.6%.

Operating expenses

Full year operating expenses were up, by 14.8% to € 1,178 million, in line with the “Back on the Attack” growth strategy. Marketing & Retail rose by 9.8% to € 550.7 million, but dropped slightly as a percentage of sales to 18.3%. Other Selling Expenses rose in line with sales to € 387.1 million. As envisioned under the plan, RD&D expenses rose by 21.0% to € 77.0 million, and General and Administrative expenses rose by 31.8% to € 195.3 million, due to continued investments in infrastructure and systems to build the platform for future growth. This caused the expense ratio to rise from 5.5% to 6.5%. In addition, the Company reported other operating income of € 32.2 million, compared to € 35.5 million in 2010.

Earnings

EBIT rose by 8.6% to € 333.2 million. As a percentage of sales, EBIT was 11.1% for 2011, as compared to 11.3% for 2010.

The financial result for 2011 came in at € -12.8 million versus € -5.3 million in 2010. Interest income rose by € 0.8 million to € 5.2 million, while foreign exchange rate fluctuations related to financing activities led to a negative result of € 6.9 million which did not occur in 2010. Other financial expense related items increased by € 1.4 million this year.

Full year EBT rose, by 6.3% from € 301.5 million to € 320.4 million. Tax expenses declined for the full year, by 9.4% to € 90.0 million. The tax ratio was therefore at a normalized rate of 28.1%, compared to 32.9% in 2010.

For the full year of 2011, net earnings jumped 13.8% to € 230.1 million, from € 202.2 million last year. EPS increased strongly, by 14.2% to € 15.36.

Net Assets and Financial Position

Equity

Total assets (as of December 31, 2011) stood at € 2,581.8, an increase of 9.1% from last year’s € 2,366.6 million. Inventories and trade receivables were the main contributors. The equity ratio rose from 58.6% to 62.2%, which indicates continued improvement in our capital base. In absolute figures, shareholders’ equity increased by 15.8% from € 1,386.4 million to € 1,605.2 million.

Working Capital

PUMA’s overall Working Capital increased by 32.0% to € 534.0 million. Inventories rose by 22.1% from € 439.7 million to € 536.8 million, which was necessary to accommodate our planned sales growth, and also a consequence of higher procurement prices which, amongst other things, led to this increase. Trade receivables also increased, up 19.3% from € 447.0 million to € 533.1 million as a result of our strong sales performance, particularly in the fourth quarter. Trade payables also rose strongly by 25.3% to € 431.4 million, partly balancing the increase in Working Capital.

Cashflow/ Capex

Free Cashflow for the full year dropped slightly to € 16.8 million versus € 17.1 million in 2010. With regards to our Capex, PUMA’s outgoings increased by 28.9% to € 71.1 million. As already discussed, this increase is almost entirely derived from investments in line with our growth strategy, into supply chain improvement, IT systems and the ongoing expansion of our retail store portfolio. Payments for acquisitions fell by almost 60% to € 44.2 million, as the 2010 number included PUMA’s purchase of Cobra Golf. The purchase of the outstanding stake in our China business from our joint venture partner accounted for the majority of acquisition payments made in 2011.

Cash Position

Total cash (as of December 31, 2011) fell by 6.5% to € 448.2 million. Bank debts were reduced by 18.0% to € 35.1 million. The net cash position decreased 5.4%, from € 436.8 million to € 413.1 million.

Dividend

The Administrative Board will propose to the Annual General Meeting on April 24, 2012, that an increased dividend of € 2.00 per share (€ 1.80 in the previous year) be paid for the financial year 2011, due to the improvement in net earnings and in spite of a flat free cash flow.

Share buyback

PUMA did not activate its share buyback program during the fourth quarter of 2011.
As of the balance sheet date, PUMA owned 147.831 of its own shares, equal to € 32.6 million.

Outlook

Management believes that PUMA can achieve increases in sales in the upper single-digit range in each of the next two years. This growth will be fuelled by further investments into marketing, product design and development, structure in emerging markets as well as the optimization of processes, organization and systems. Assuming moderate input cost inflation, combined with necessary operating expense increases, net earnings are expected to improve in the mid-single digit range for both years.

PUMA can also confirm that its supplier Kaoway Sports Ltd. had agreed last Friday – prior to the unrest taking place outside the premises of Kaoway Sports Ltd. – to meet the collective demands of workers in this Cambodian region. According to this agreement, Kaoway Sports Ltd. will provide a monthly transportation subsidy of USD 10 and a daily subsidy of USD 0.50, effective March 1, 2012.

PUMA is currently in the process of hosting several meetings with other non-governmental organizations and trade unions this week to discuss solutions for the ongoing conflict in the country so that the safety and well-being of the employees in its supplier factories is ensured and working conditions meet PUMA’s mandatory standards.

Kaoway Sports Ltd. will resume work on Friday after all personnel have been evacuated from the compound to ensure the employee’s safety and workers were sent home.

Building on a successful nine year relationship, PUMA has significantly deepened its contractual involvement with the FIGC to place a global emphasis on expanding the profile and commercial potential of the FIGC brand driven by its newly established international sports licensing division. This evolution sees the FIGC partnership become the most comprehensive in the global PUMA football portfolio, and gives PUMA the scope to substantially increase its licensing opportunities that exist through one of the most prominent and successful federations in world football.

Franz Koch, CEO of PUMA said, “We have enjoyed a highly successful relationship with the FIGC over the past nine years, and as such we are delighted to have reached this new agreement and considerably expand our partnership with them. It underlines PUMA’s reinforced commitment to further strengthen its position as one of the top 3 football brands because the Italian National Team, more than any other national team property in world football, perfectly embodies PUMA’s unique Sportlifestyle positioning. Holding the Master License of the FIGC enables us to elevate our work with them to a truly global level; this is a new venture for PUMA, and one that we are fully confident will be successful.”

Today in Genoa, PUMA also launched the new Italy away kit. Part of the Power 12 range of PUMA playing kits that includes Uruguay, Chile, Czech Republic, Switzerland and Austria. The FIGC Italia Away shirt has a regular fit with a classic look, re-introducing the horizontal blue stripe for the first time since 1974 – a signature feature that stretches across the chest enhancing the breathable performance of the shirt. The V neck has a double layer in mesh fabric and contrast colour inside, while the underarm range of movement mesh allows both a better fit and a more comfortable arm movement. The deep cuffs in shell fabric add to the classic look of the shirt, and the number and lettering features the PUMA Gaffer font-type.

Giancarlo Abete, President of the FIGC commented, “PUMA has been a great partner for us, and we are very happy to not only continue but also deepen our relationship with them. Their licensing expertise, ideas and commitment to expanding the commercial potential of this partnership are impressive, and have led us to create this new contract. PUMA’s proficiency in design, marketing and global sales distribution is among the best in the industry, which gives us great confidence for the future.”

In addition to the Italian Football Federation, PUMA signed a new partnership with the South African Football Association (SAFA) last year and extended its partnership with the Swiss Football Association (SFV). The global Sportlifestyle brand continues to partner with Italian internationals Gianluigi Buffon and Giorgio Chiellini, and recently added Cesc Fabregas, Sergio Aguero, Radamel Falcao, and Yaya Toure amongst others to its portfolio.

Paul Gautier, PUMA Czech and Slovak Republic General Manager said; “We are excited to work with the Slovak Football Association. The Slovak Republic has a rich football history and we believe a strong future. We are confident that this new partnership with the Slovak Football Association will contribute to the continued positive development of the PUMA brand in Slovakia.

Slovak Football Association president Ján Kováčik added: “This partnership agreement with PUMA is very important to us. PUMA has such a strong global reputation and expertise in developing technical apparel and distributing licensed product, and we are very happy to confirm this partnership. ”

Alongside the partnership announcement, PUMA unveiled the new Slovak National Home and Away kits. These new kits are part of the PUMA Power12 collection which also includes the PowerCat 1.12 football boots. The kits are based around the Slovak National flag colours; the Home shirt is designed in white with blue details and the Away shirt is blue with white details. Both kits include the Slovak National Emblem on the left chest side and PUMA branding. The design of the kit reflects the dynamic and modern character of the Slovak National Team.

The Kit´s POWER technology was developed using 3D motion analysis, a scientific method for detection and quantification of human movement. Details of this analysis are incorporated into the design of the outfits and ensure that the player moves with minimum power and energy.

The press conference was held in the EXIsport store in Eurovea Galleria, Bratislava before the Slovak Footballer of the Year declaration. The new kits were presented by Slovak National Football team players – Kamil Kopúnek, Juraj Kucka and Michal Brezanik. The press conference was also attended by Ján Kováčik (Slovak Football Association president) and Paul Gautier (PUMA Czech and Slovak Republic General Manager).

To reduce waste and keep products out of landfills, the Sportlifestyle company PUMA has installed recycling bins in PUMA Stores and outlets in Germany for customers to return used shoes, clothing and accessories of any brand.

The PUMA “Bring Me Back” program, which is run in cooperation with global recycling company I:CO, aims at encouraging the recycling and re-usability of sportlifestyle products among consumers by providing a convenient and simple process: Consumers bring used shoes, clothing and accessories from any manufacturer to a PUMA Store and deposit them in the designated Bring Me Back bins. The used products are then sent off to be re-used or recycled. This means they are either broken down and re-used to create raw materials, or they will be re-used in case they are still in a suitable condition, or they will be recycled into new products. With this new initiative PUMA helps to protect the environment, aspiring to eliminate waste by recycling used products to create new ones. This effort is one more step forward toward the long-term goal of transitioning to a closed cycle loop for materials usage.
“On our mission to become the most desirable and sustainable Sportlifestyle company in the world, we areconstantly working on solutions that aim at reducing the environmental impact that PUMA as a company leaves behind on our planet,” said Franz Koch, CEO of PUMA. “With our Bring Me Back-Program, we are pleased to target for the first time ever the massive amounts of waste sportlifestyle products leave behind at their end-of-life phase when consumers dispose them and they end up on landfills or in waste incineration plants.”

PUMA has implemented several initiatives and programs within its long-term sustainability program that foresees a reduction of 25% of carbon emissions, energy, water and waste in PUMA offices, stores, warehouses and direct supplier factories by 2015. With the innovative packaging system Clever Little Bag, that PUMA introduced in 2010 and that replaced traditional shoeboxes, the company already reached a milestone in reducing PUMA’s – and its consumers’ – environmental footprint significantly by saving more than 60% of paper and water annually.

In 2011, PUMA published the first-ever Environmental Profit and Loss Account that assessed and valued the environmental impacts of the company’s core operations (PUMA offices, stores and warehouses) and along its entire supply chain of production factories – from the level of raw material production to the final manufacturing of PUMA products. This analysis helped PUMA to determine the impacts that arise from the point of cotton or leather production to the point where PUMA products are sold in a PUMA store. However, a considerable part of PUMA’s environmental footprint comes about through the consumer disposal phase. The Bring Me Back program now addresses PUMA’s impact at that level, reducing the waste generation of sportlifestyle products.

The program furthermore sets the foundation for an initiative on products which are designed for recycling as PUMA is currently looking into solutions to develop recyclable or decompostable products. PUMA’s entire team is also working on achieving the company’s goal of having 50% of the international collections made of more sustainable materials by 2015. In 2011, about 16% of PUMA’s total apparel products were made of more sustainable materials such as recycled polyester, organic cotton and Cotton Made in Africa, proving that the company is right on track to reach this target.

Bring Me Back launches in PUMA Stores and Outlets across Germany from the 17 April 2012. PUMA Stores and Outlets include among others Berlin, Düsseldorf, Munich, Hamburg, Augsburg and Herzogenaurach. The program will roll out to a handful of additional markets in October 2012, with a full global roll-out slated for January 2013.

More information can be obtained on the soon to be launched website www.puma.com/bringmeback.

Notes to the Editors:

I:CO is a global recycling company that works in conjunction with retailers to house collection bins and give consumers a place where they can return old gear and help give valuable resources another life.

For further information and to find the nearest collection bin, visit puma.com/bringmeback (launched soon).

PROFITABILITY AFFECTED BY SLOW-DOWN IN EUROPE

Highlights First Quarter 2012

• Consolidated sales increase by 6.1% to € 820.9 million.
• Gross profit margin falls by 120 basis points to 51.2%.
• EBIT decline by 8.1% to € 102 million.
• Net earnings decrease slightly, by 4.9% to € 74 million.
• EPS decline from € 5.17 to € 4.92.
• Long-term contractual partnership with the Italian Football Federation extended.

Outlook for the Financial Year 2012

• Management reiterates full-year sales target of high single-digit growth for 2012.
• Management continues to see net earnings increasing in the mid-single digit range for 2012.

“After a strong finish in 2011, PUMA’s first-quarter sales growth could not keep pace with that of recent quarters, translating into weaker bottom line results, said Franz Koch, CEO of PUMA SE. “Our first quarter sales performance indicates that we are facing challenges in Europe. As a consequence, we have begun to respond to these challenges, optimizing the efficiency of our business model in the EMEA region. In addition, I am confident that the product innovations we have in the pipelines will contribute to achieving our full-year sales and earnings targets against the background of this extraordinary sports year.”

 

Sales Performance By Region

EMEA sales decline in a challenging consumer environment

With consumer spending remaining sluggish within the Eurozone, Sportlifestyle company PUMA’s first-quarter sales increased by 6.1% in Euro terms and 4.2% currency adjusted to € 820.9 million compared to last year.

Sales in the EMEA region softened by 1.4% currency adjusted to € 368 million, as restrained consumer spending in the wake of the financial crisis in the Eurozone continued to impact demand. In addition to the challenging overall business climate, the late arrival of winter in Europe dampened sales at wholesale accounts and retailers, which slowed the in-take of spring collections and therefore had an effect on PUMA’s first-quarter sales.

As a consequence, PUMA has begun to respond to these challenges, optimizing the efficiency of its business model in the EMEA region. To this end Sergio Bucher, formerly PUMA’s Head of Global Retail, was appointed the new General Manager for Europe. In line with the transformation outlined in the “Back on the Attack” growth strategy, the company is currently in the process of streamlining the country organizations and centralizing some of the back-office functions on a regional level.

A strong sales performance in Asia/Pacific and the Americas counterbalanced the softening sales in the EMEA region. Fuelled by growth in India, Korea and Japan, which all saw significant demand for PUMA’s Motorsport, Running and Lifestyle products, Asian sales climbed 10.2% currency adjusted to € 192.1 million.

Sales in the Americas improved by 8.5% currency adjusted to € 260.8 million. Within the Latin American region, Mexico, Argentina and Brazil in particular posted strong, double-digit growth rates. North America was up, supported by the new joint ventures Wheat Accessories and Janed socks and bodywear.

 

Sales Performance By Segment

Footwear sales soften primarily in mature markets
 

Footwear sales declined 2.1% currency adjusted to € 414.6 million in the first quarter. However, PUMA has seen promising results of some of its major recent footwear product launches.

For example, the ARCHIVE LITE, an ultralight shoe with a contemporary look, is generating a double-digit sell-through in key leading doors in various countries in Europe and Asia. These styles have a distinct unique selling point, are bold, young and colorful and are the proof that PUMA is heading in the right direction. PUMA has extended its Lightweight Concept, incorporating further styles for the fourth quarter to fully capitalize on this opportunity.

The relevance of the Lightweight concept also applies to PUMA’s Performance categories. In 2012, PUMA’s Year of Speed, the company will be launching a new performance collection at the end of May that for the first time encompasses all of PUMA’s sport categories. Inspired by Usain Bolt, the collection answers every athlete’s need for speed by taking performance technology and innovations, and incorporating them in footwear and apparel developed for various sports.

Sales in the Apparel segment climbed 8% currency adjusted to € 267.6 million. The Lifestyle and Performance collections resonated well with consumers in all markets. Running, Lifestyle and Golf apparel products in particular were in demand. PUMA further expects an increase in Apparel sales on the back of UEFA Euro 2012.

Accessories jumped 19% currency adjusted to € 138.7 million, where Cobra PUMA Golf continues to deliver an outstanding performance, while the new joint venture for socks and bodywear in the North American market follows suit.

PUMA’s Teamsport category was further strengthened in the first quarter by the signing of a long-term sponsorship contract with the Slovak Football Association, and the confirmation of a new long-term contractual partnership with the Italian Football Federation that sees PUMA now actively managing the entire licensing portfolio of the Federation’s assets on a global basis. PUMA also expanded its international club portfolio by signing the Brazilian Club Botafogo from Rio de Janeiro and the Italian Serie A club US Palermo. In addition, PUMA extended its partnership with French football club Girondins de Bordeaux. The Teamsport business is expected to benefit not only from these new acquisitions, but also from the UEFA Euro 2012 in Poland/ Ukraine in June.

PUMA Running was driven by the light-weight PUMA Faas range, which includes the ongoing best-seller PUMA Faas 300. The Running category will receive a further support in the second quarter with the unveiling of Olympic performance and lifestyle collections of the Jamaican athletics team designed by Cedella Marley, daughter of Reggae legend Bob Marley, at the beginning of June.

Motorsport remained active during the first quarter. PUMA boosted its Formula 1 portfolio by signing new contracts with Mercedes GP Petronas. Nico Rosberg then provided the perfect start to this partnership, scoring his maiden F1 victory in his Mercedes AMG Petronas car at the Chinese Grand Prix in Shanghai two weeks ago.

Sales in Sailing also continued to increase as the marketing activities around the Volvo Ocean Race and the press coverage of PUMA’s most recent success in this ocean marathon have been positive. In the current America’s Cup World Series PUMA, who serves as the exclusive licensee for the America’s Cup Event Authority and the PUMA-sponsored Team ORACLE Racing, are getting prepared for the next exciting regattas in Venice in May and Newport, Rhode Island in June.

Expenses and Profitability

Gross Profit Margin softens to 51.2% in the first quarter of 2012
 

Input price pressures were mainly responsible for the drop of the gross profit margin in the first quarter, which comprised 51.2% of group sales, down from 52.4% at the same point last year. Hedging also had a negative effect, as did the product and regional mix.

As a consequence, Footwear fell back from 51.3% to 49.5%, Apparel dropped slightly from 53.7% to 53.5% and Accessories declined from 54.0% to 51.9% which is mainly due to the first time inclusion of the newly added US sock and bodywear business, which carries lower margins.

 

Satisfying retail performance

Retail sales constituted € 122 million, or 14.9% of total sales, in the first three months of 2012, an improvement of 15.2% year on year, underlined by positive comparable sales in the current store portfolio and newly opened stores in 2012.

 

Operating Expenses rise as growth strategy is implemented

Operating expenses rose by 8.0% to € 322 million in the first quarter of 2012, as the “Back on the Attack” growth strategy continues to be implemented. This represents 39.3% of group sales compared to 38.6% in 2011. This increase was mostly due to rising marketing, research, design and development expenditures. Another component of the increase is the expansion of the retail store portfolio over the past twelve months.

 

Operating Result (EBIT) impacted by drop in gross profit margin

Operating profit declined in the first three months of 2012 from € 111.0 million to € 102.0 million, caused mainly by the drop in gross profit margin. The moderate increase in operating expenses was in line with PUMA’s plans. As a consequence, the EBIT ratio decreased from 14.4% last year to 12.4% this year.

 

Financial Result / Income from associated companies improves

The financial result improved from € -0.2 million to € 1.1 million in the first quarter due to positive currency developments.

Earnings before Taxes (EBT) lower

PUMA’s first-quarter EBT was lower at € 103.1 million in 2012 compared to € 110.8 million in 2011, representing 12.6% of group sales compared to 14.3% at this time last year. Tax expenses also fell from € 33.1 million to € 27.9 million, representing a tax rate of 27.1% versus 29.9% for the comparable period in 2011.

Net Earnings drop slightly

Consolidated net earnings dropped slightly by 4.9% from € 77.7 million to € 73.9 million. Earnings per share therefore also fell back from € 5.17 in 2011 to € 4.92 in the first quarter of 2012.


 

Net Assets and Financial Position

Equity rises
 

Total assets as of March 31st rose by 7.9% from € 2,303 million to € 2,486 million due to increases in both inventories and trade receivables. The equity ratio moved up from 60.6% to 66.4% when compared to the first quarter of 2011, once again strengthening the capital base. Shareholder’s equity is now equivalent to € 1,652 million, up from € 1,396 million.

 

Working Capital increases

PUMA’s overall Working Capital increased by 21.0% to € 723.7 million. Looking at assets, inventories rose by 26.4% to € 587.1 million. This is mainly due to anticipated sales growth in the upcoming quarters, continuous expansion of our retail store network and higher average prices per unit. Trade receivables also increased by 7.4% to € 620.5 million, broadly in line with sales growth.

 

Cashflow (before acquisitions) remains constant

The Free Cashflow (before acquisitions) remained constant at € -111.5 million. Outflows consisted mostly of working capital increases. The payments for acquisitions relate to the purchase of the outstanding Dobotex shares, effected on the 1st of January 2012.

Capex continued to increase by 28.1% to € -13.8 million and went mainly into Retail stores, supply chain initiatives and IT projects as “Back on the Attack” investments continued.

 

Cash Position reduced

The Total cash position was reduced by 18.3% from € 300.8 million to € 245.8 million, caused by the purchase of the remaining Dobotex shares. Including stable bank debts, the net cash position finished at € 203.2 million.

Outlook for the Financial Year 2012

PUMA’s management has taken actions to improve the company’s cost structure and strengthen product desirability to foster sales growth and profitability. PUMA is confident of achieving the full year targets as outlined in the 2011 annual report. Management continues to foresee sales increases in the high single-digit range and an increase in net earnings in the mid-single digit range for the full year.

Christian Voigt, Senior Head of Global Sports Marketing for PUMA commented: “This new relationship with RCD Espanyol is another positive move for PUMA, as we are actively working to expand our brand presence in Spain. La Liga also is considerably important within the global football market and a key focus for PUMA as we continue to grow our performance sport category portfolio in line with our ‘Back on the Attack’ strategy. This partnership with RCD Espanyol is a further step in asserting our position as the clear number three football brand.”

PUMA Spain General Manager Javier Ortega said; “PUMA and RCD Espanyol have a similar brand ethos and share many of the same values. RCD Espanyol defines itself by the strength of emotion (La Força Dún) a sentiment also embodied within PUMA through our brand values of joy, enthusiasm and passion. We are excited about this new partnership and the prospects it holds. RCD Espanyol will be a prominent focus in our marketing activations for the 2012/13 season and beyond.”

Joan Collet, CEO of RCD Espanyol added, “PUMA will supply all our teams, including the juniors, womens and veterans, enabling Espanyol to strengthen the licensing and merchandising opportunities that can only come from working with a world leading brand. As a club, we are very proud to have formed this partnership with PUMA”.

August Newton, RCD Espanyol Marketing and Communication Vice President further stated, “There is a great satisfaction within the Board of Directors, led by President Ramon Condal, to have confirmed this partnership with PUMA. We are confident it will be very fruitful. The ‘Perico’ fans have always shown great appreciation for PUMA and will welcome PUMA into their home, the home of those with a passion for football.