Herzogenaurach, germany - February 12, 2018
PUMA EXCEEDS 4 BILLION EURO SALES MARK FOR THE FIRST TIME

2017 Fourth Quarter Facts

  • Sales increase by 14.5% currency adjusted to € 1,040 million (+8.6% reported) with double-digit growth in all regions and footwear being the main growth driver
  • Gross profit margin improves by 250 basis points to 47.1%
  • Operating expenses (OPEX) increase by 11.7%, mainly driven by higher marketing and retail expenses
  • Operating result (EBIT) more than doubles from € 14 million last year to € 30 million
  • Together with Lewis Hamilton we launched 24/7 training campaign featuring new the IGNITE Flash shoe
  • PUMA wins “Marketer of the Year” Award in the US by Footwear News magazine

2017 Full Year Facts

  • Full-year sales increase by 15.9% currency adjusted to € 4,136 million (+14.0% reported), passing the 4 billion sales mark for the first time, all regions with doubledigit growth
  • Gross profit margin up 160 basis points at 47.3%
  • Improved operating leverage with operating expenses (OPEX) increasing by only 11.7%
  • Operating result (EBIT) improves significantly from € 128 million to € 245 million
  • Net earnings more than double from € 62 million to € 136 million and EPS increase from € 4.17 to € 9.09
  • Free Cashflow improves strongly from € 50 million to € 117 million
  • One-off total dividend of € 12.50 per share for 2017 to be proposed
  • New lacing technology NETFIT introduced for performance and sportstyle footwear
  • PUMA Future Football boot with NETFIT technology launched for customizable fit Women’s busines
BJØRN GULDEN

Chief Executive Officer of PUMA SE:

“2017 was a great year for us at PUMA. We grew 16% and achieved for the first time in the history sales above € 4 billion. We almost doubled our EBIT to € 245 million and showed progress in almost all areas. This momentum together with positive feedback from consumers and our retail partners makes us look positive into 2018. We expect to increase our sales around 10% in constant currencies in 2018 and we expect to increase our EBIT to between € 305 million to € 325 million (€ 245 million in 2017). We are also pleased by Kering’s proposal to reduce their ownership in PUMA by a distribution of dividend in kind to its shareholders. PUMA will then be a public independent company with a much higher free float (55%) and with two strong anchor shareholders – Kering (16%) and Artemis (29%). This will allow us to continue our positive development and make PUMA the fastest sports brand in the world.”

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Fourth Quarter 2017

Sales

PUMA's sales growth continued in the fourth quarter of 2017. Sales increased by 14.5% currency-adjusted to € 1,040.2 million (+8.6% reported), compared to € 958.2 million in the previous year. All regions supported the sales growth with a double-digit increase. The Footwear segment continued to be the main growth driver.

Gross Profit Margin and Operating Expenses

The gross profit margin grew by 250 basis points from 44.6% to 47.1% in the fourth quarter. The increase was due to further improvements in sourcing, higher sales of new products with a higher margin, a higher share of own retail sales and selective price adjustments.

Operating expenses (OPEX) rose by 11.7% to € 465.3 million in the fourth quarter, mainly caused by higher marketing investments to fuel both brand heat and sell-through. In addition, higher retail investments for new store openings and the modernization of existing stores supported the increase. 

Operating Result and Net Earnings

The operating result (EBIT) more than doubled from € 14.1 million to € 29.8 million in the fourth quarter 2017. The improvement in profitability was due to strong sales growth combined with an improved gross profit margin.

Net earnings in the fourth quarter improved to € 2.2 million (last year: € -4.6 million) and earnings per share increased correspondingly from € -0.31 last year to € 0.14.

Full Year 2017

Sales

In the financial year 2017, PUMA’s sales increased by 15.9% currency adjusted to € 4,135.9 million (+14.0% reported), surpassing the 4 billion Euro sales mark for the first time in the company’s history. As a consequence, PUMA exceeded the initial net sales guidance for 2017, which had anticipated a high-single digit increase.

Growth was particularly strong in the EMEA region, where sales rose by 19.5% currency adjusted to € 1,646.2 million (+19.1% reported). France, the DACH region (Germany, Austria and Switzerland) and the United Kingdom as well as Russia and South Africa delivered double-digit sales growth.

Sales in the Americas region went up by 14.3% currency adjusted to € 1,494.8 million (+11.6% reported), with both North and Latin America contributing with double-digit growth rates.

In the Asia/Pacific (APAC) region, sales rose by 12.7% currency adjusted to € 994.9 million (+10.0% reported). The main drivers of growth in the region were China followed by Australia, both with double-digit sales growth.

Footwear continued to be the product segment with the strongest growth rate, showing an improvement of sales for the fourteenth quarter in a row. Sales were up 23.5% currency adjusted to € 1,974.5 million (+21.4% reported). Running and Training as well as Sportstyle were the categories with the strongest growth rates.

In the Apparel segment, sales rose by 10.0% currency adjusted to € 1,441.4 million (+8.1% reported). The Sportstyle category, and especially Women’s products, contributed to this increase.

Sales in Accessories grew by 9.2% currency adjusted to € 719.9 million (+8.0% reported). This increase is mainly driven by socks, underwear, headwear as well as bags and backpacks, while PUMA’s Golf hardware business remained stable.

Including eCommerce, PUMA's own and operated retail sales rose by 22.9% currency adjusted to € 961.0 million. This represents a share of 23.2% of total sales in 2017 (21.9% in 2016). The reasons for this rise are a strong like-for-like sales growth in our retail stores, the extension of our retail store network and a strongly growing eCommerce business.

Gross Profit Margin and Operating Expenses

The gross profit margin improved by 160 basis points from 45.7% to 47.3% in 2017. This increase - despite negative currency impacts - was driven by further improvements in sourcing, higher sales share of new products with a higher margin, a higher share of own retail sales and selective price adjustments. This is particularly reflected in the Footwear segment, where margins increased from 42.5% to 45.5%. In addition, Apparel margins grew from 48.4% to 49.0% and the Accessories margins went up from 47.9% to 48.5% in 2017.

<Operating expenses (OPEX) rose by 11.7% and amounted to € 1,725.6 million in 2017. This is mainly because of intensified marketing activities and investments in our own retail store network. The OPEX ratio in percentage of total net sales decreased from 42.6% to 41.7% in 2017, reflecting an improvement of operating leverage.

Operating Result and Net Earnings

The operating result (EBIT) improved by 91.7% from € 127.6 million to € 244.6 million in 2017, which is at the upper end of the revised EBIT guidance of € 235 million to € 245 million. This result is significantly above our initial EBIT guidance for 2017, which had anticipated a range between € 170 million and € 190 million and reflects major improvements in PUMA’s operating performance and profitability, gross profit margin and operating leverage.

The financial result decreased from € -8.7 million to € -13.4 million due to higher financial expenses related to currency derivatives, while the income from associated companies increased slightly.

The tax rate for the full year 2017 came in at a normalized rate of 27.4% compared to 25.7% the year before, while the total tax expense went up to € 63.3 million in 2017 (2016: € 30.5 million).

Net earnings for the full year 2017 more than doubled to € 135.8 million (2016: € 62.4 million). This translates into earnings per share of € 9.09 compared to € 4.17 last year.

 

Working Capital

Our continued focus on working capital management and currency effects led to a decrease of 7.9% to € 493.9 million. Inventories grew only by 8.3% to € 778.5 million and trade receivables rose only slightly by 0.9% to € 503.7 million. Trade payables were up 11.3% to € 646.1 million.

 

Cashflow

The free cash flow improved significantly from € 49.7 million in 2016 to € 116.9 million in 2017. This achievement is a result of considerably higher earnings before taxes (EBT) combined with an improved working capital development in spite of the extended business volume and higher investments in fixed assets. As of December 31, 2017, PUMA’s cash position amounted to € 415.0 million compared to € 326.7 million at the balance sheet date last year.

 

Proposal of one-off total Dividend of € 12.50

Based on PUMA’s positive business development with a significant improvement of profitability and cash flow, the Managing Directors and the Administrative Board will propose a one-off total dividend of € 12.50 per share for the financial year 2017 at the Annual General Meeting. In the previous year, PUMA paid € 0.75 per share as a regular dividend.

Brand and Strategy Update

2017 was a good year both for our athletes and for our business. Since we implemented our turnaround strategy in 2014, our sales have grown almost 40%. For the first time in our company’s history, we managed to exceed the four billion Euro mark in sales. Product sellthrough, both in our retail stores and those of our key retail partners has improved. We have received very positive feedback on our product ranges, particularly from our retail partners. All this proves that we are heading in the right direction.

Our strategy has continued to focus on five priorities: increased brand heat, a competitive product range, a leading offer for women, improved quality of distribution, and organizational speed.

In 2017, PUMA’s credibility as a sports brand was strengthened by capitalizing upon partnerships with world-class athletes and teams. Our Teamsports business was marked by our partnered teams winning some of the world’s most prestigious titles: BVB Borussia Dortmund claimed the German DFB Cup, Arsenal F.C. won the FA Cup and Mexico’s Chivas secured the 2017 Liga MX Clausura title, while Argentina’s iconic team Independiente Buenos Aires celebrated the victory of the Copa Sudamericana. Our roster of individua players also showed exceptional performances: Arsenal’s Olivier Giroud won the FIFA Puskas Award for “Goal of the Year” of 2017 and Sergio Agüero broke the goal scoring record for his club Manchester City. On the product side, we launched two completely new football footwear franchises, PUMA ONE and PUMA FUTURE, solidifying our status as a leading sports performance brand.

A major highlight in our Running category was the 2017 IAAF World Championships and Usain Bolt’s final race. The competition put the spotlight on other PUMA athletes such as Frenchman Pierre-Ambroise Bosse, who won the gold medal in the 800 meters. We also delivered notable product innovations, such as the revolutionary NETFIT footwear range, whose unique customizable lacing system offers infinite performance and style options in one shoe. We also surprised with our brand-new JAMMING technology, whose e-TPU beads provide high comfort and energy return.

Motorsport celebrated another fantastic Formula 1 season, with our three partnered teams MERCEDES AMG PETRONAS, Scuderia FERRARI and RED BULL RACING dominating the Constructors’ Championship and PUMA brand ambassador Lewis Hamilton winning the fourth F1 champion title in his career. We also extended our long-term partnership with MERCEDES AMG PETRONAS as official licensing partner for MERCEDES AMG PETRONAS products and supplier of its F1 team.

2017 was also a successful year for PUMA’s Golf business, where we continued to deliver stylish, performance-ready golf apparel, footwear and accessories to the market, while Cobra Golf introduced technology-rich, game-changing equipment. A real breakthrough was the launch of KING F7 & F7+, smart drivers with an embedded sensor, allowing golfers to track automatically the distance and accuracy of each drive. Rickie Fowler captured a win at the Honda Classic, and landed a record-breaking win at the 2017 Hero World Challenge, while Lexi Thompson won two LPGA tournaments together with the Vare Trophy for best scoring average and the season-long Race to the Globe.

Our Women’s business, another focus of our strategy, was one of the best performers in the industry last year. Together with powerful ambassadors like Cara Delevingne and the New York City Ballet, we opened another chapter of our “Do You” campaign, which aims to inspire confidence in women around the world. Our Women’s Creative Director Rihanna presented two exquisite seasonal collections of her “FENTY PUMA by Rihanna” line, which has established itself amongst the most anticipated shows of the Paris and New York Fashion Weeks. And just recently, singer, actress and producer Selena Gomez presented the PHENOM and EN POINTE fitness footwear lines, that received positive media echo and already delivered promising results in retail.

PUMA has continued to improve the quality of its distribution and expanded its presence in key Sports Performance and Sportstyle accounts around the world. We have further strengthened our relationships with key retailers and proven to be a reliable partner and one that maximizes the brand’s contribution to their business. It is our clear objective to create win-win situations for our partners and ourselves, enabling our retail partners to make money with PUMA’s products. Through improved sell-through, PUMA gained more shelf space in retail stores in 2017. Furthermore, we continued to upgrade our owned-andoperated retail store network with further openings and refurbishments. We relaunched our eCommerce presence ‘www.puma.com’ into a more modern and mobile-friendly format, which went initially live in Europe in June.

We have continued to speed up our operational processes and systems by further enhancing PUMA’s International Trading Organization, which manages global order and invoice flows centrally, the roll-out of new product development tools, further standardization of ERP systems and improvements to the overall IT infrastructure.

Our achievements on and off the pitch last year have laid solid foundations for a successful year to come.

Our global marketing activities will again be centered around our brand ambassadors and fastest athletes, including sprinters André de Grasse, Jimmy Vicaut and Asafa Powell, star footballers like Sergio Agüero, Antoine Griezmann and Marco Reus, Formula One Champion Lewis Hamilton, Golfstars Rickie Fowler and Lexi Thompson. Key ambassadors featured on the entertainment side will be Rihanna, top model Cara Delevingne, the R&B star and style icon “The Weeknd” and the newest addition to our roster, singer, actress and producer Selena Gomez.

We are looking forward to the upcoming World Cup in Russia, where three of our sponsored national teams – Switzerland, Uruguay and Senegal – along with many individual players, will make sure that the brand will be very visible on the pitch. Not to forget two new clubs, that will join PUMA starting the 2018/19 season: Olympique de Marseille and Borussia Mönchengladbach. Both teams are great assets to strengthen our position in the French Ligue 1 and the German Bundesliga.

We are also excited that we have just announced an official long-term partnership with one of the most legendary and iconic football clubs in the world: AC MILAN. Effective July 1, 2018, PUMA will become the global technical supplier and official licensing partner of AC MILAN. Through its 119- year-old heritage, AC MILAN won 18 officially recognised UEFATM and FIFATM titles, including 7 UEFA European Cup / Champions LeagueTM titles. AC MILAN is the most successful Italian club at international level and one of the best in the Football history.

In 2018, we will also continue to work very closely with our retail partners. Our improved product offering includes recently launched lines such as the NETFIT, TSUGI, MUSE and PHENOM as well as our key 2018 launches HYBRID, DEFY, MANTRA and RS-0.

The year 2018 will also mark two important anniversaries: 70 years of PUMA and 50 years of its iconic Suede sneaker. The latter will be celebrated through unique drops representing the varied cultures of which the iconic sneaker has been a significant part such as music, fashion, street and pop culture.

Outlook 2018

Based on the positive business development in 2017 with strong sales growth and a significant improvement in profitability, the management is confident that 2018 will be another positive year for the company and that PUMA is well positioned to carry forward the brand’s momentum.

For the full year 2018, we expect that currency-adjusted net sales will increase by approximately 10%. The gross profit margin is forecasted to improve slightly (2017: 47.3%). Operating expenses (OPEX) are expected to increase at a mid to high single-digit rate, as PUMA will continue to invest in marketing, retail and IT.

At the current exchange rate levels, PUMA’s management expects that the operating result (EBIT) in 2018 will improve significantly due to higher sales and a slightly improved gross profit margin. The EBIT is therefore expected to come in between € 305 million and € 325 million (2017: € 244.6 million). Net earnings will also continue to improve significantly in 2018.

Planned Proposal to distribute in kind PUMA shares to Kering shareholders

On January 11th, Kering Board of Directors unanimously proposed to its shareholders to distribute in kind around 70% of PUMA shares outstanding, out of the 86.3% currently owned by Kering.

Post transaction, Kering would retain approximately 16% of PUMA shares outstanding. Artémis, which holds 40.9% of Kering’s shares, would become a long-term strategic shareholder of PUMA with an ownership of about 29%. PUMA’s free float would be increased to approximately 55%.

PUMA Capital Markets Day

PUMA will hold a Capital Markets Day on March 20th, 2018 in London. At this occasion, PUMA intends to provide further details on its future strategy.

 

Financial Calendar FY 2018:

February 12, 2018Financial Results FY 2017
April 12, 2018Annual General Meeting
July 26, 2018Quarterly Statement Q1 2018
July 26, 2018Interim Report Q2 2018
October 23, 2018Quarterly Statement Q3 2018

 

Photo Credits: Conné/ PUMA

Copyright-PUMA
HERZOGENAURACH, GERMANY, FEBRUARY 14, 2013
PUMA’S 2012 SALES MEET EXPECTATIONS TRANSFORMATION AND COST REDUCTION PROGRAM IMPACT PROFITABILITY

2012 FOURTH QUARTER HIGHLIGHTS

  • PUMA’s consolidated sales climb by 11.7% in Euro terms to € 804.7 million.
  • Gross profit margin declines to 44.6% due to inventory clearance.
  • EBIT before special items falls slightly to € 42.8 million.
  • Special items of € 98.2 million booked in the quarter.
  • Net earnings come in at € -42.6 million, impacted by special items.

2012 FULL YEAR HIGHLIGHTS

  • PUMA’s full year consolidated sales rise by 8.7% in Euro terms to just under € 3.3 billion.
  • Gross profit margin abates to 48.3%.
  • EBIT before special items softens by 12.8% to € 290.7 million.
  • Special items of € 177.5 million caused by Transformation and Cost Reduction Program, Spain Arbitration and restructuring of businesses in Greece, Cyprus and Bulgaria.
  • EBIT including special items totals € 113.2 million.
  • EPS amount to € 4.69 after € 15.36 last year.
     

OUTLOOK FOR THE FINANCIAL YEAR 2013

  • Transition Period defined within our strategy extended into 2013
  • Launch of “The Nature of Performance” brand platform and new product innovations to revitalize Performance categories
  • Management expects 2013 sales unchanged from the 2012 level
  • Management envisages an increase in EBIT before special items of low- to mid-single digits and a significant improvement of net earnings

“Despite a continuously challenging market environment, particularly in Europe, PUMA delivered a strong sales performance in the fourth quarter, enabling us to meet our sales projections for the full year of 2012,” said Franz Koch, CEO of PUMA SE. “We have completed defining the scope of PUMA’s Transformation and Cost Reduction Program, and will continue with the implementation of all measures throughout 2013 to improve the company’s profitability. I want to reiterate that it is not our priority to push for sales growth at any cost, but instead focus on improving desirability for the PUMA brand.”
 

STRONG PERFORMANCES IN ASIA AND NORTH AMERICA GIVE IMPETUS TO PUMA’S FOURTH QUARTER SALES GROWTH

PUMA delivered a strong sales performance in the fourth quarter of 2012. Boosted by double-digit sales growth in Asia and North America, PUMA’s consolidated sales increased by nearly 12% in Euro terms or 8.7% currency adjusted to € 804.7 million from October 1 to December 31. The numbers were supported by the performance of Cobra PUMA Golf, with its products resonating exceptionally well with consumers.

SALES PERFORMANCE BY SEGMENT

All of PUMA’s product segments grew in the fourth quarter of 2012. Footwear was up by 8.6% in Euro terms to € 367.9 million. On the Performance side, PUMA’s Faas footwear family continued to appeal to consumers while the PUMA Suede range fuelled sales in PUMA’s Lifestyle footwear business.

Apparel climbed by 15.2% in Euro terms to € 316.6 million after increasing demand for Fitness & Training gear. Accessories rose by 12.3% in reported terms to € 120.1 million driven by our US joint ventures Janed and Wheat as well as our Cobra PUMA Golf business.

SALES PERFORMANCE BY REGION

While PUMA’s sales increased in all regions, performance in the Asia/Pacific region was exceptionally satisfactory during the fourth quarter. Sales rose by 16.2% to € 246.7 million while PUMA expanded in virtually all markets. Japan and India in particular excelled on the back of demand for evoSPEED Apparel products. Seasonal factors also played a part, with winter collections gaining traction with consumers, especially PUMA branded duffel coats and parka collections in Korea, China and Japan.

PUMA was also able to reverse the slight declines from previous quarters in the EMEA region, with sales rising by 7.0% in Euro terms to € 253.4 million. This performance was supported by strong growth in Germany, Sweden and Switzerland delivering satisfying growth rates. PUMA’s Lifestyle footwear ranges sold well, especially the PUMA Suede in developed countries as well as our Motorsport collections in emerging markets.

In the Americas, PUMA continued to increase sales at a favorable rate, improving by 12.2% in reported terms to € 304.5 million. This growth was driven mainly by the Cobra PUMA Golf business as well as by undiminished demand for Fitness, Lifestyle and Motorsport products.

SALES PERFORMANCE RETAIL

PUMA’s retail business increased by a significant 23.0%, with the company operating 60 additional stores when compared to the fourth quarter of last year. As in the three previous quarters, our comparable store sales developed positively, while E-commerce sales rose by 23.4% over the same period.

MARGIN, EXPENSES AND PROFITABILITY

PUMA’s fourth quarter gross profit margin declined from 46.7% to 44.6%. The Footwear margin fell sharply from 46.6% to 41.8%, due to inventory clearances during the quarter and unfavorable hedging rates as well as a shift in the regional mix. The gross profit margin for Apparel, however, improved from 45.9% to 46.6% and Accessories declined from 49.0% to 48.0%.

Operating expenses in the fourth quarter continued to rise, by 10.0% from € 292.3 million to € 321.5 million. This was equivalent to 40.0% of sales and an OPEX ratio improvement from 40.6% in 2011. The absolute increase in operating expenses is mostly attributable to higher marketing and retail expenses on the back of our increased retail portfolio as well as continuing IT and supply chain infrastructure improvements.

The EBIT before special items fell by 11.2% to € 42.8 million in the fourth quarter from last year’s € 48.1 million and also as a percentage of sales, from 6.7% to 5.3%.

In addition to the special items of € 79.3 million reported in the third quarter, PUMA recorded a further € 98.2 million in special items for the last three months of 2012. These additional items consist of the arbitral award in December related to the trademark rights in Spain, the restructuring of our distribution set-up and the closure of our subsidiaries in Greece, Cyprus and Bulgaria, as well as the streamlining of our product and endorsement portfolio.

The fourth quarter financial result further improved from € -8.9 million to neutral, largely as a result of a decline of foreign exchange impacts.

EBT in the fourth quarter fell from € 39.3 million to € -55.4 million. Net earnings consequently also declined from € 33.1 million to a loss of € -42.6 million in the quarter and Earnings per share followed suit, reduced from € 2.21 to € -2.85. These drops all stem from the special items booked in the quarter.

PUMA REACHES 2012 FULL YEAR SALES TARGET

2012 was an exceptional year for PUMA in many ways. The Football Euro Cup in June, the conclusion of PUMA’s second Volvo Ocean Race in July and the Summer Olympics in August turned 2012 into a year full of major sports highlights. These events provided the perfect platform for PUMA to generate global brand visibility and desirability.

In terms of product, 2013 will be a pioneering year for PUMA, as the company re-energizes its Performance positioning through the introduction of a new cross-category brand platform: The Nature of Performance. The Nature of Performance unifies all of PUMA’s performance categories with a consistent voice, look and feel and serves as the inspiration for a collection of innovative new products in the Football, Running, Training, Fitness and Golf categories.

PUMA’s management began to implement the company’s Transformation and Cost Reduction Program throughout the second half of 2012, laying the groundwork for substantial financial improvements going forward. The program entails the set up of a new business model in Europe by reducing the number of reporting entities from 23 countries to seven areas as well as a strong European management paradigm. The areas DACH (Germany, Austria, Switzerland), IBERIA (Spain, Portugal), UKIB (UK, Ireland and Benelux), SCANDINAVIA (Denmark, Finland, Norway, Sweden), EASTERN EUROPE (Estonia, Latvia, Lithuania, Poland and Slovakia, Czech Republic, Hungary), FRANCE and ITALY have all been implemented.

The Transformation and Cost Reduction Program includes the closure of approximately 90 unprofitable stores, mostly in established markets, which has also begun. However, PUMA will continue to open new stores in selected profitable locations throughout 2013, primarily in emerging markets. PUMA expects to be operating 540 stores at the end of 2013 compared with 590 stores at the end of 2012.

PUMA has also assessed its sponsorship portfolio and terminated endorsement contracts that are either unprofitable or are no longer part of PUMA’s core categories going forward. Within this context, PUMA has decided to focus its activities in the Sailing category on endorsing the America’s Cup and ORACLE TEAM USA for 2013. Beyond 2013, PUMA will cease the production of Sailing products, and focus instead on its Outdoor business, for which Sailing has served as the perfect springboard. PUMA has also decided to exit all European Rugby activities, including the endorsement of the Irish Rugby Football Union beyond the 2013/14 season.

FULL YEAR SALES INCREASE TO ALMOST € 3.3 BILLION

Consolidated sales for the Full Year climbed 8.7% in Euro terms or 4.6% currency adjusted to € 3,270.7 million. With this record result, PUMA achieved its sales target for the full year.

SALES PERFORMANCE BY REGION

While sales in EMEA softened by 0.8% in Euro terms to € 1.3 billion due to a weaker performance in Western Europe, there were strong performances in Germany, Russia and Turkey in 2012. The Americas delivered a satisfying performance, including North America, Mexico and Argentina, increasing in Euro terms by 16.6% to € 1.13 billion. Asia/Pacific was equally strong, rising by 15.3% to € 841.7 million, supported by good numbers in Japan and India in particular.

SALES PERFORMANCE BY SEGMENT

In terms of segments, Footwear grew 3.6% in Euro terms to € 1.6 billion. Apparel rose by 11.2% to € 1.15 billion, while Accessories posted an impressive 20.7% increase to € 523.6 million also bolstered by consolidation effects of the new joint ventures.

RETAIL SALES CLIMB BY € 109.0 MILLION

Sales in our owned and operated retail outlets rose by 21.2% in 2012 to € 623.9 million, an increase of € 109.0 million from 2011. This is due in part to the expansion of our retail base compared to the end of 2011. As a percentage of total turnover, retail sales rose from 17.9% to 19.1%. E-commerce also posted a gain, up 16.5% for the year.

GROSS PROFIT MARGIN EASES TO 48.3%

For the full year, PUMA’s gross profit margin moved down from 49.6% to 48.3% in 2012. This was due to a combination of factors, most notably inventory clearance, the regional mix and also continued input cost pressure in the form of wage inflation in the Far East. The Footwear margin declined from 49.1% to 46.5%. Apparel rose slightly, from 49.6% to 49.8% whereas Accessories fell, from 51.6% to 50.5%.

OPERATING EXPENSES

PUMA’s full year operating expenses rose by 11.0% in 2012, from € 1,177.8 million to € 1,307.5 million, slightly ahead of and equal to 40.0% of sales. Marketing and Retail rose by 10.7% to € 609.3 million, and also slightly as a percentage of sales to 18.6% after 18.3% last year, caused by supporting a double event year and the increasing number of stores operated by PUMA. Other Selling Expenses rose 11.4% to € 431.1 million. Similarly, Research, Design and Development costs rose 10.3% to € 84.9 million as PUMA continues to emphasize its product pipeline. General and Administrative Expenses were up 5.0% to € 205.0 million. Despite this, the expense ratio declined from 6.5% to 6.3% in 2012 due to cost saving measures. The Company reported other operating income of € 22.9 million compared to € 32.2 million in 2011.

EARNINGS BEFORE SPECIAL ITEMS

EBIT before special items declined 12.8% to € 290.7 million as a result of higher costs and lower than expected margins. As a percentage of sales this is equal to 8.9% for the year compared to last year’s 11.1%.

SPECIAL ITEMS

PUMA recorded € 124.9 million in special items that are related to the Transformation and Cost Reduction Program. These have been incurred mainly by restructuring the European region, optimizing the retail portfolio, adjusting the product and endorsement portfolio, and reorganizing our global functions and local subsidiaries.

As announced on 20 December 2012, the former Spanish distributor and license holder Estudio 2000 S.A., who owned several PUMA trademark rights in Spain, was obliged to vest these to PUMA in accordance with the award of the arbitration panel. According to this ruling, the transfer of the trademark rights is subject to a one-time payment of € 42.2 million to Estudio 2000 S.A., which led to a one-off expense of € 24.6 million in 2012.

For Greece, Cyprus and Bulgaria, PUMA has appointed Sportswind, a local distributor, to take over PUMA’s business activities in these countries, as PUMA wants to focus its efforts, initiatives and investments on its key strategic markets. The distribution agreement should reduce PUMA’s business risks in these markets substantially while at the same time improve its sales. PUMA will close its own operations in due course in these three markets. The restructuring of the aforementioned distribution and operations resulted in additional one-time costs of € 28.0 million.

OPERATIONAL RESULT AFTER SPECIAL ITEMS

The EBIT after special items for 2012 was € 113.2 million, or 3.5% as a percentage of sales.

The financial result for 2012 improved significantly and was € -0.9 million compared to € -12.8 million in 2011 due to lower foreign exchange impacts in PUMA’s financing activities.

Full year EBT was therefore € 112.3 million, or 3.4% of sales, while the tax ratio remained stable at 28.9%.

As a result of our Transformation and Cost Reduction Program in 2012, net earnings for the financial year 2012 were € 70.2 million, compared to € 230.1 million last year and EPS was therefore equal to € 4.69 and down from last year’s € 15.36.

NET ASSETS AND FINANCIAL POSITION

EQUITY

The equity ratio rose from 62.2% to 63.1%, which indicates continued improvement in our capital base, despite the lower net earnings in 2012.

WORKING CAPITAL

PUMA’s overall Working Capital increased by 16.8% to € 623.7 million, due in particular to a decline of working capital related liabilities at the balance sheet date. On the asset side, testament to PUMAs strict management, Inventories rose only slightly, by 2.9% to € 552.5 million and Trade receivables actually decreased despite the rise in sales, down 4.9% to € 507.0 million.

CASHFLOW / CAPEX / CASH POSITION

Free cashflow before acquisitions for the full year improved by 37.1% from € 61.0 million to € 83.5 million in 2012 mainly due to lower tax payments. With regards to our Capex, PUMA’s outgoings increased by 14.1% to € 81.2 million related to store openings and IT investments. Payments for acquisitions more than doubled to € 91.7 million, consisting for the most part of PUMA’s purchase of all outstanding Dobotex shares at the beginning of the year. As a consequence, the net cash position decreased by 12.1% to € 363.2 million.

DIVIDEND

The Administrative Board will propose at the Annual General Meeting on May 7, 2013, that a dividend of € 0.50 per share (€ 2.00 in the previous year) be paid for the financial year 2012. This is a result of the reduced earnings caused by the special items undertaken under the Transformation and Cost Reduction Program, the restructuring of the distribution in southern east European countries and the Arbitration ruling in Spain.

SHARE BUYBACK

The company did not buy back any of its own shares throughout the year, including the fourth quarter of 2012. As of the balance sheet date, PUMA owned 143.185 of its own shares, equal to € 32.2 million.

OUTLOOK

Management expects that PUMA’s sales in 2013 will remain at a level consistent with that of 2012. This is due to the fact that the implementation of the Transformation and Cost Reduction Program will continue throughout 2013, making it a transitional year before PUMA will once again generate desirable, profitable sales growth. However, as PUMA’s Transformation and Cost Reduction Program is geared towards improving the company’s profitability, management envisages an increase in EBIT before special items in the low- to mid-single digits while net earnings should improve significantly.

Herzogenaurach, Germany, April 26, 2004
Increase of Branded Sales and Consolidated Sales

PUMA AG ANNOUNCES ITS CONSOLIDATED FINANCIAL RESULTS FOR THE 1ST QUARTER OF 2004

 

Financial Highlights 1st Quarter:

  • Branded sales increase 22%
  • Consolidated sales achieve strong growth of nearly 30% – Apparel sales up 39%
  • Gross profit margin reaches record level of 51.7%
  • Profitability exceeds expectations – EBT 62.6% above last year
  • Improvement in EPS – €5.02 versus €3.08 in Q 1

Outlook

  • Future orders up by more than 20% or 24% on a currency neutral basis
  • Management increases full year guidance – sales growth between 15% and 20% and earnings growth of more than 30% expected

Sales and earnings review

Consolidated sales up nearly 30%

2004 started very positively with Q1 consolidated sales growth of 29.3%, translating to sales of €443.8 million versus €343.2 million last year. On a currency neutral basis, sales were up 33.2%. Excluding the first-time consolidation of PUMA Japan (initial consolidation started April 1, 2003), total organic growth of 21% (currency adjusted 24.9%) was realized.

As expected, Apparel momentum continued on a very high level and sales recorded organic growth of 39.1% (currency adjusted 42.3%) reaching €111.2 million. Footwear sales grew by 22.7% (currency adjusted 26.1%) to €305.9 million and Accessories increased 90.9% (currency adjusted 93.6%) to €26.7 million. Excluding the first-time consolidation, Footwear was up 18.3% and Accessories 30.6% (currency adjusted).

All regions contributed positively to the performance. Europe was up 22.9%, the Americas achieved growth of 24.4% (9.2% in Euro currency), Asia/Pacific increased by 251.8% or 26.4% excluding Japan and the Africa/Middle East region realized an increase of 49.9%.

July 27, 2004
Increase of Branded Sales and Consolidated Sales

PUMA AG announces its consolidated financial results for the 2nd Quarter and 1st Half-Year of 2004

Financial Highlights:

  • Branded sales increase 20% in Q2 and 21% ytd.
  • Consolidated sales rise 17% in Q2 and 24% ytd.
  • Gross profit margin sustained at a high level of 51%.
  • EBT increase 41% in Q2 and 53% in the first half.
  • EPS increase 47% to €3.43 and by 56% to €8.45 respectively.

Outlook:

  • Due to a strong order intake total future orders are up by 22% end of June.
  • New records expected across the board in FY 2004: Sales growth of about 20% and earnings growth of more than 30% now anticipated

Sales and earnings review

Sales momentum continues

During Q2, consolidated sales increased by 17.1% to €352 million. The Apparel segment realized the strongest growth of 26.3%, reaching €99 million. Footwear was up 13.3% to €229 million and Accessories improved by 19.2% to €25 million. On a currency neutral basis, total sales in Q2 were up 18.3%. Q2 marks the first quarter in which year-to-date comparisons reflect full consolidation of PUMA Japan, as the first-time consolidation took place April 1 of last year. Sales in the first half of 2004 grew by 23.6% to €796 million; this marks a currency neutral improvement of 26.2% versus the first half of the previous year. First half Footwear sales grew by 18.5% to €535 million, Apparel by 32.8% to €210 million and Accessories jumped by 48.1% to €51 million.

Branded sales exceed €1 billion in H1

PUMA’s branded sales, which include consolidated sales and licensee sales, reached €465 million during Q2, thus marking a 20.4% (currency adjusted 20.9%) increase over last year. During the first six months, a growth rate of 21.1% was realized, yielding YTD sales in excess of €1.0 billion. Footwear sales rose by 14.7% to €590 million, Apparel by 29.9% to €349 million and Accessories by 38.7% to €75 million. Currency adjusted growth was even higher, reaching 23.1%. After the end of H1 Footwear accounted for 58.2% (PY 61.5%), Apparel for 34.4% (PY 32.1%) and Accessories for 7.4% (PY 6.4%) of global branded sales.

Strong performance in licensed business

Overall, PUMA’s licensed business showed very positive developments. In Q2, licensee sales increased by 32% to €112 million, driven by sales in Asia. Sales in H1 increased by 12.9% to €218 million or by 34.2% excluding the first time consolidation effect from Q1. During Q2 PUMA generated royalty and commission income of €11 million. Despite the consolidation effect of the Japanese business in Q1, royalty and commission income reached €22 versus €21 million in the first half of ‘03. On a like-to-like basis, royalty and commission income increased by approximately 23%.

Herzogenaurach, Germany, October 29, 2004
PUMA reports strongest quarter in history

PUMA AG announces its consolidated financial results for the 3rd Quarter and First Nine Month of 2004

Financial Highlights:

  • PUMA reports strongest quarter in history.
  • Consolidated sales grow almost 17% in Q3 and 23% ytd. (currency neutral).
  • Highest gross profit margin ever achieved in a quarter.
  • EBIT margin sustains a high level: 27% in Q3 and 25% ytd.
  • Earnings per share up 22% to €5.30 and 41% to €13.75 respectively.

Outlook:

  • Management anticipates new records across the board in FY2004, and upgrades earnings expectations: Sales growth of around 20% and earnings growth between 35% and 40% now anticipated.
  • 35th consecutive quarter of order growth
  • Future orders are up by 19% currency adjusted.

Sales and earnings review

Strong sales performance

Third Quarter showed another outstanding performance with growth in consolidated sales of 16.5% on a currency-neutral basis or by 14.6% to €461 million in Euro currency. Footwear sales grew by 13.9% (in Euro terms 12.4%) to €301 million, Apparel increased 19.3% (17.6%) to €130 million and Accessories were up 27.1% (25.1%) to €31 million. Currency neutral sales for the first nine months jumped by 22.5%. In Euro terms, sales were up 20.1% to €1,257 million, nearly reaching full year sales of FY2003. Footwear sales grew by 18.1% (in Euro terms 16.2%) to €836 million, Apparel by 28.5% (26.6%) to €339 million and Accessories recognized the strongest growth of 39.8% (38.6%) reaching €82 million.

Branded sales growth in line with consolidated sales

PUMA’s global branded sales, which include consolidated and licensee sales, totaled €590 million during Q3, an increase of 17.2% (in Euro terms 15.2%) over last year. Licensed sales contributed with an increase of 19.7% (17.3%) to global sales. During the first nine months, branded sales grew by 20.9% currency neutral or by 18.9% to €1,604 million. Footwear sales rose by 15.4% (in Euro terms 13.4%) to €922 million, Apparel by 27.7% (25.7%) to €556 million and Accessories by 36% (34%) to €126 million. Sales from licensees were up by 15.3% or 14.5% respectively.

Herzogenaurach, Germany, November 4, 2005
Consolidated financial results for the 3rd Quarter and First Nine Months of 2005

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

Highlights Q3:

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

Highlights First Nine Months:

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

Outlook 2005:

  • Future orders up by more than 10% marking the 39th consecutive quarter of order increase
  • Management now expects double-digit sales growth and confirms the 5th consecutive year of record earnings for 2005
December 19, 2005
PUMA Takes Over Distribution in Argentina
Joint Venture with UNISOL S.A.

UNISOL not only has valuable know-how of the local market, but also combines broad product and marketing experience with an extensive manufacturing background. Through this joint venture PUMA’s position in Argentina will be further strengthened and maximized. Argentina currently is the largest market for PUMA in Latin America.

Jochen Zeitz, CEO and Chairman of PUMA AG: “As licensee UNISOL have done an outstanding job in the past – not only in building the brand, but also in extending brand visibility. With the new partnership as well as our direct involvement in the management of all aspects of our brand, we will ensure that we jointly capitalize even more on future opportunities and further accelerate desirability throughout the South American market.”

Nisan Devecyan, Managing Partner of UNISOL S.A.: “We would like to thank PUMA for the trustful partnership over the past decades. Now with this joint venture cooperation we will be able to quickly explore the further potential in the Argentine market.”

Photo Credits: Conné/ PUMA
Herzogenaurach, Germany, November 07, 2006
Consolidated sales up more than 32%

PUMA AG announces its consolidated financial results for the 3rd Quarter and First Nine Months of 2006

Highlights Q3

  • Consolidated sales up more than 32%
  • Gross profit margin on a high level at above 50%
  • EBIT margin ahead of expectations at 17.6%
  • EPS at €5.41 versus €5.70

Highlights First Nine Months

  • Global brand sales increase 15%
  • Consolidated sales up 32%
  • Gross profit margin remains above 51%
  • EBIT at €325 million or 17% on sales
  • EPS at €14.36 compared to €15.02

Outlook

  • Orders above € 1 billion, up 26%
  • Management confirms full-year guidance with EBIT around €360 million

 

Sales and Earnings Development

Global branded sales up double digits

PUMA’s branded sales, which include consolidated sales and licensee sales, increased 13.7% currency neutral or 12.5% in Euro terms reaching €786 million during Q3.
For the first nine months, branded sales were up 14.0% or 14.7% respectively, totaling €2,142 million. Footwear sales increased 12.2% (currency adjusted 11.5%) to €1,209 million, Apparel rose by 18.5% (17.7%) to €742 million and Accessories improved by 17.2% (16.5%) to €191 million.

Consolidated sales up 32% in Q3 and for the nine months period

In the reporting quarter, consolidated sales were up 32.2% currency neutral and by 30.3% in Euro currency, reaching €699 million. By segments, Footwear increased 19.8% (currency adjusted 21.5%) to €420 million, Apparel improved 57.5% (58.5%) to €235 million and Accessories were up 21.3% (23.9%) to €45 million.

Sales for the first nine months grew by 31.7% like-for-like and 32.2% in Euro terms, totaling €1,889 million versus €1,428 million last year. Organic growth contributed 12.8% and new consolidations 19.4% to the overall performance. By segments, Footwear was up 20.2% (currency adjusted 19.6%) to €1,147 million, Apparel increased 65.7% (65.1%) to €618 million and Accessories improved by 21.9% (22.8%), totaling €124 million.

Licensed business

On a comparable base, the licensed business increased by 3.2% in Q3, and 12.8% after nine months. Due to the take-backs of several license markets, total actual licensed sales declined from €162 million to €87 million and from €439 million to €254 million respectively. Based on the remaining licensed business, royalty and commission income was €9 million in Q3 and €25 million after nine months.

Gross profit margin remains on a high level

Gross profit margin reached 50.4% in Q3 compared to 52.1% last year and remained at 51.4% on a high level after nine months. This development is mainly influenced by regional and product mix and was in line or slightly better than expected. Footwear margin declined from 53.1% to 51.2% and Apparel from 52.6% to 51.2%. Accessories improved from 51.5% to 54%.

SG&A expenses impacted by strong brand investments

Due to the strong brand investments and the regional expansion total SG&A expenses increased in Q3 by 44.7% and 48% after nine months and totaling €228 million or €644 million respectively. As a percentage of sales, the cost ratio increased as expected from 29.4% to 32.6% during Q3 and from 30.5% to 34.1% for the first nine months.

For the nine-month period, Marketing/Retail expenses were up from 13.9% to 16.6% on sales, totaling €313 million compared with €198 million last year. In particular, the marketing campaign for the World Cup, other marketing and retail initiatives as well as the license take-back program contributed to the increase. Product development and design expenses increased 34.9% to €40 million and were flat as a percentage of sales. Other selling, general and administrative expenses were up 40.3% to €292 million and increased as a percentage of sales from 14.6% to 15.5%. The increase in other SG&A expenses is related to the extended infrastructure and operations for Phase IV expansion and is in line with expectations.

EBIT margin above 17% and better than expected

EBIT margin reported strong 17.6% in Q3 and 17.2% year-to-date. In absolute terms, operating profit amounts to €123 million versus €129 million and to €325 million versus €343 million respectively, representing a decline of only 5%. Taking into account the full-year guidance of a high single-digit decline given the high brand investment, the year-to-date EBIT came out better than expected.

In Q3, the company reported an interest result of €2.1 million and €6.1 million year-to-date. Hence, pre-tax profit declined only 4.8% to €125 million and 4.9% to €331 million respectively. The tax ratio remained at 29%. As a result, net earnings were €87 million versus €92 million in Q3 and €230 million versus €242 million after nine months. This translates into a net yield of 12.5% compared to 17.1% in last year’s quarter, and 12.2% compared to 16.9% year-to-date. Once again, profitability was better than initially expected.

Earnings per share

Earnings per share in Q3 were €5.41 compared to €5.70. Year-to-date earnings per share totaled to €14.36 versus €15.02 last year. Diluted EPS translated to €5.39 and €14.27 respectively.

Net Assets and Financial Position

Strong equity ratio

Total assets grew by 32.1% to €1,713 million mainly due to the regional expansion. As a result, the equity ratio slightly declined but remained on a strong level at 60.8%.

 

Working capital

Inventories grew 58.8%, reaching €338 million and receivables were up 28.6% to €502 million. Total working capital at the end of September totaled €506 million compared to €300 million last year. The increase was mainly due to the regional expansion. Excluding the regional expansion, inventories increased 27.9% and receivables only 3%. Like-for-like, working capital was up 35.6%.

Capex/Cashflow

Capex increased from €51 million to €125 million and in line with expectations, of which €74 million is related to acquisitions. Free cashflow amounts to €-56 million, a decline from a total of €85 million last year. This is mainly due to the investments for acquisitions and further working capital needs in the newly consolidated countries.

Cash position

Total cash at the end of September was €404 versus €437 million last year. Bank debts grew from €34 million to €67 million. As a result, the net cash position declined from €403 million to €337 million year over year, which is due to the aforementioned investments and working capital needs.

Share Buyback

PUMA continued its share buy back program in Q3 and added 50,000 shares to the treasury stock, which corresponded to an investment of €13 million. At the end of September, the company held a total of 1,090,000 shares for an investment of €217 million. This represents 6.4% of stock capital.

Regional Development

Change in regional mix continues

Due to the license take-backs, the regional mix changed as expected resulting in a more balanced business portfolio. EMEA now accounts for 51.8% (last year 66.1%), Americas for 29.1% (23.8%) and Asia/Pacific for 19.1% (10.1%).

The EMEA region reported sales of €378 million in Q3, a strong growth of 9.4% versus last year. Year-to-date, sales increased 3.7% and totaled €978 million. The gross profit margin reached 54.2% compared to 54.9% last year. The order book at the end of September was up almost 3% currency neutral or 1.6% in Euro terms and amounted to €518 million compared with €510 million.

Sales in the Americas reached €195 million in Q3, a currency neutral growth of 45.7% or 42.3% in Euro terms. After nine months, sales were up 57.7% like-for like (61.5% in Euro terms) and totaled €549 million. The gross profit margin decreased from 47.7% to 46.8%. Future orders stand at €284 million, a currency neutral growth of 29.7% or 26% in Euro terms. In the US market sales increased 23.1% in Q3 and strong 41.8% year-to-date. Due to a high base effect resulting from the particularly strong order growth in Q3 last year (+78%), future orders for the US were only slightly above last years level at $245 million.

In the Asia/Pacific region sales improved 145.6% currency neutral and 134.9% in Euro terms to €126 million in Q3 and by 155.5% or 149.7% respectively to €361 million year to date. The regional expansion in particular contributed to the overall sales performance. Due to the new consolidation in this region, the gross profit margin was down 120 basis points and reached 50.6%. As of September, the order book was up 135.6% currency neutral and 127.5% in Euro terms and totaled €222 million.

Board of Management

Martin Gänsler informed the Supervisory Board that he is not planning to extend his current contract beyond 2007 as he is planning to retire from his duties after that. He will be actively involved with the search of his successor, who will be announced at a later date. Over his 25 year career with PUMA, Gänsler has been serving as Member of the Board since 1993 and since 1998 as Vice Chairman, overseeing Research, Development and Design, and Sourcing.

Outlook 2006

Future orders up almost 26%

Total orders on hand as of September increased by 25.5% currency neutral or 22.9% in Euro terms, reaching at €1,024 million the 43rd consecutive quarter of order increase. The orders are mainly for deliveries scheduled for Q4 2006 as well as Q1 2007.

In terms of product segments, Footwear increased 12.8% (currency adjusted 15.6%) to €668 million, Apparel 53.8% (55.3%) to €297 million and Accessories 23.1% (28.7%) to €58 million.

Management confirms full-year guidance
The 4th quarter is expected to generate continued strong top-line growth. Hence, management confirms the full-year guidance, which was already upgraded earlier this year with a currency adjusted sales growth of up to 35%.

The full-year gross profit margin should range at the higher end of the given range between 50% and 51%. Based on the final top-line, selling, general and administrative expenses should rise as expected to or slightly above 35% of sales.

Due to the ongoing brand investments for the remaining of the year, profit in Q4 is expected to decline double digits versus last year’s quarter. For the total year, management expects operating profit (EBIT) to reach the earlier given guidance of around €360 million. The tax rate should stay on last year’s level around 29%. As a result, net earnings should post a high single-digit decline versus last year and should therefore significantly exceed the original expectations for 2006 communicated with the Phase IV strategy mid last year.

Jochen Zeitz, CEO: “We are more than pleased with our results for Q3 and through the first nine months of 2006 as we will significantly exceed full-year guidance as part of our original Phase IV plan. Based on these results we remain very confident in our ability to reach all of our Phase IV targets. “

Photo Credits: Robert Ashcroft/ PUMA
February 19, 2007
PUMA AG ANNOUNCES ITS CONSOLIDATED FINANCIAL RESULTS FOR THE 4TH QUARTER AND FINANCIAL YEAR OF 2006

Consolidated sales up 43%


Highlights Q4

  • Consolidated sales up 43%
  • Gross profit margin at 48%
  • Operating profit better than expected
  • EPS at € 2.03 versus € 2.76

Highlights January – December

  • Global brand sales at record € 2.8 billion
  • Consolidated sales up 34% reaching almost € 2.4 billion
  • Gross profit margin still on a high level at almost 51%
  • EBIT margin at 15.5% better than expected
  • EPS at € 16.39 compared to € 17.79

Outlook 2007

  • Orders up 10% reaching more than € 1.1 billion
  • Management expects new record-high for sales and earnings

PUMA continued its success story in the 2006 financial year, and finished the first year of Phase IV of its long-term corporate development better than expected. Overall, the previous financial year saw the integration of seven license markets into the PUMA Group – Japan (Apparel), Taiwan China, Hong Kong, China, Argentina, Mexico and Canada – and three of the announced seven new product categories have already been launched successfully.

Worldwide brand sales climbed by over 16% to € 2.8 billion in financial year 2006. Consolidated sales jumped over the 2 billion hurdle for the first time, growing currency adjusted by 34% to just under € 2.4 billion. At 50.6%, the gross profit margin remained at a very high level. Operating profit reached € 366 million and significantly exceeded original expectations. Earnings per share were € 16.39, compared to € 17.79 in the previous year. The PUMA share closed the year at € 295.67, posting another value increase of 20%. Market capitalization was € 4.8 billion.

Highlights Q4

In Q4, consolidated sales increased currency neutral 43.3% to € 480.6 million. Footwear rose by 30.3% to € 273.2 million, Apparel by 79.4% to € 177.4 million and Accessories by 16.9% to € 29.9 million. All regions contributed to the growth: EMEA sales increased 12.8%, America was up by 37.2% and Asia/Pacific significantly by 151.7%. The gross profit margin was at 47.7% 230 basis points below last year as expected. SG&A increased from 36.7% to 39.0% of sales. Pre-tax profit amounts to € 43.3 million versus € 56.5 million in last year’s quarter. Earnings per share were at € 2.03 compared to € 2.76.

Sales and Earnings Development 2006

Global brand sales at record € 2.8 billion

The worldwide PUMA brand sales, comprised of consolidated and license sales, rose significantly by 15.4% to € 2.8 billion. This corresponds to currency adjusted growth of 16.1%. In terms of segments, Footwear sales improved by 14.8% to € 1,512.9 million, Apparel by 18.9% to € 981.9 million and Accessories by 13.5% to € 260.3 million.

Consolidated sales up 34%

PUMA succeeded in significantly increasing its annual consolidated sales for the twelfth consecutive year, and for the first time in its company history exceeded the 2-billion mark. Sales rose currency neutral by 34.0% to a new record of € 2,369.2 million. Excluding new consolidation, currency adjusted sales rose by 12.9%. The Footwear segment posted a 21.6% sales increase to € 1,420.0 million, Apparel contributed to growth with a significant increase of 68.1% to € 795.4 million and Accessories posted an increase of 21.5% to € 153.8 million.

Licensed business

Due to takeovers in a number of license markets which were part of the Phase IV strategy, reported license sales in 2006 decreased to € 385.9 million. On a comparative basis, the remaining license business posted an increase of 16.8%. Overall, royalty and commission income from license sales amounted to € 37.0 million.

Effective expansion of retail operations

Expansion of the Group’s own retailing activities progressed sharply during the 2006 financial year. Overall, the financial year saw the opening of a further twenty-five concept stores. At the year-end, PUMA had ninety-one Concept Stores. Sales from the company’s own retail operations again saw an above-average increase of 39.5% in 2006. Sales grew to € 344.3 million, rising from 13.9% to 14.5% of consolidated sales.

Gross profit margin still on a high level at almost 51%

Changes in the regional and product mix led to a planned reduction of the gross profit margin from 52.3% to 50.6%. Thus, the gross profit margin remains at the upper end of the sporting goods industry. By product segments, the Footwear margin decreased from 52.7% to 50.3% and Apparel from 51.8% to 50.7%. Accessories improved from 50.4% to 53.3%.

Cost structure increases as planned

Total selling, general and administrative expenses rose by 47.6% to € 831.8 million in financial year 2006. The cost ratio increased from 31.7% to 35.1% as planned. This increase is due mainly to higher marketing and retail costs as well as the infrastructure expansion required for implementing Phase IV.

Marketing/Retail expenses increased as planned by 54.3% and stood at € 419.6 million. The cost ratio rose from 15.3% to 17.7% of sales. This increase was due primarily to marketing expenditure for the World Cup, as well as to other marketing and retail expenditures. Product development and design expenses climbed by 35.2% to € 56.7 million, and at 2.4% of sales, remained constant in comparison with the previous year. The remaining SG&A expenses were up by 42.4% to € 355.4 million, or from 14.0% to 15.0% of sales as part of the expansion of the global infrastructure.

Operating profit better than expected

Operating profit (EBIT) reached € 366.2 million after € 397.7 million in the previous year. As a percentage of sales, the operating margin was reduced from 22.4% to 15.5% as planned. The decrease is related to the announced investments in the brand and to the infrastructure strengthening required to achieve the long-term goals of Phase IV. Overall, however, operating profit was significantly above original expectations.

The financial result increased by 21.9% to € 7.9 million and includes interest expense of € 3.1 million for discounted long-term purchase price liabilities (license take-backs). The adjusted interest result yields a rate of return of 3.1% versus previous year’s 1.8%.

Earnings before taxes (EBT) reached € 374.0 million, compared to € 404.1 million in the previous year. Tax expenses were reduced from € 117.2 million to € 108.1 million. At 28.9%, the average tax rate was nearly unchanged compared to the previous year.

Net earnings above € 263 million

At € 263.2 million, net earnings were only 7.9% below the previous year’s level of € 285.8 million, and thus significantly above original expectations. The net return expressed as a percentage of sales was 11.1%, compared to 16.1%. Earnings per share came to € 16.39, compared to € 17.79, and the diluted earnings per share were € 16.31, compared to € 17.68.

Regional Development

Like-for-like, sales in EMEA were up by 5.1% to € 1,158.7 million. Although the difficult economic environment continued in some markets, the region developed better than expected, supported by the World Cup. As planned, due to regional expansion, the EMEA region share in consolidated sales declined from 62.2% to 48.9%. According to product segments, Footwear posted a minor 1.6% decrease, Apparel climbed by 17.4%, and Accessories were up by 7.9%. The gross profit margin was slightly down from 54.3% to 53.8%. The operating margin (EBIT) accounted for 22.0% of sales, after 27.4% in the previous year.

Sales in Americas saw a significant increase to € 724.1 million, which corresponds to a currency neutral growth of 51.8%. Excluding the initial consolidation of Argentina, Canada and Mexico, sales grew by 33.1% on a comparable basis. The share in consolidated sales rose from 26.8% to 30.6 %. Classified by product segment, the strongest growth was posted in Accessories at 61.0%. Footwear was up by 54.3%, and Apparel by 41.8%. Due to the regional expansion and increased key customer business, the gross profit margin decreased from 48.9% to 46.1%. The operating margin was 17.4%, compared to 19.6% in the previous year. The US-market contributed substantially to the overall performance in this region with sales growth of 31.3%. Sales improved significantly from USD 472.4 million to USD 620.2 million.

Asia/Pacific sales reached € 486.5 million; this corresponds to an increase of 154.5% after currency adjustments. Regional expansion in Japan (Apparel), China, Hong Kong, and Taiwan China made a particular contribution to the growth. Excluding initial consolidation, the growth on a comparative basis was 9.3%. Overall, the share of consolidated sales grew from 11.0% to 20.5%. According to product segment, Footwear sales jumped by 58.1%. The strongest growth of 765.4% was achieved in Apparel, due mainly to the initial consolidation of PUMA Apparel Japan. Accessories posted growth of 24.8%.

The gross profit margin increased from 49.5% to 49.8%, and the operating margin climbed to 21.9%, from 21.0% in the previous year.

Net Assets and Financial Position

Strong equity ratio

As of December 31, 2006, the equity ratio reached 61.2% after 66.3% in the previous year. Shareholders’ equity rose by 19.8% from € 875.4 million to € 1,049.0 million, and the balance sheet total climbed by 29.8% from € 1,321.0 million to € 1,714.8 million.

Working capital

Working capital increased by 57.1% to € 401.6 million and accounted for 16.9% of sales, after 14.4% in the previous year. The increase was due mainly to regional and retail expansion. Excluding new consolidation working capital grew by 24.9%. The reason for this growth is due to higher inventories by 26.9% which is mainly related to sourcing related issues, whereby liabilities increased only slightly.

Capex/Cashflow

Capex for own retail operations and current investments totaled € 72.7 million. In addition, investments for acquisitions (license take-backs) amounted to € 81.2 million. These scheduled investments led to a reduction in the free cashflow to € 10.4 million.
Excluding acquisition-related investments, the remaining free cashflow is € 91.6 million or 3.9% of sales.


Dividend

The Board of Management will propose at the Annual Meeting on April 11, 2007 a dividend of € 2.50 per share (previous year: € 2.00 per share) for fiscal year 2006. This would lead to a total profit distribution of € 40.3 million compared to € 31.8 million in the previous year, and an increase in the dividend pay-out ratio from 11.2% to 15.3% relative to net earnings.

Share Buyback

In 2006, PUMA purchased another 230,000 of its own shares for an investment of € 66 million. At year-end, the company held 1,120,000 own shares or 6.5% of subscribed capital as treasury stocks in its balance sheet.


Outlook 2007

Orders volume tops € 1.1 billion

At the 2006 year-end, orders on hand increased for the eleventh consecutive time. Like-for-like, orders rose on a comparative basis by 10.2%, or in Euro by 4.7% to € 1,119.7 million, compared to € 1,069.1 million in the previous year.

In terms of segments, currency adjusted orders for Footwear were up by 6.1% to € 716.8 million, Apparel orders climbed by 20.3% to € 340.2 million, and Accessories rose by 9.0% to € 62.7 million.

Development in the regions as of year-end was as follows: Currency adjusted, orders in EMEA region were up by 6.2% to € 652.7 million, despite last year’s World Cup effect. The Americas region posted currency adjusted growth of 4.6% to € 271.2 million. Orders on hand for the US-market totaled USD 245.8 million, compared to USD 261.9 million in the previous year. The decline in last year’s comparison is mainly due to the higher basis effect and to a planned reduction of sales with a customer. In the Asia/Pacific region, orders increased to € 195.7 million, which corresponds to a currency adjusted increase of 35.8%.

New record year in sales and earnings expected for 2007

As announced with Phase IV of the long term oriented business plan, Management expects new record results in sales and earnings for 2007.

After the strong sales growth of 34% in the past financial year, a currency neutral growth in the medium to higher single-digit range is expected for 2007.

The gross profit margin is expected to move at the previous year’s range of 50% – 51%. Selling, general and administrative expenses, expressed as a percentage of sales, are expected to decrease to approximately 34%. This should lead to an improvement in the EBIT margin to about 16% of sales, and thus to a new record high. Given the unchanged tax rate of approximately 29%, double-digit growth in consolidated net earnings and thus an increase of at least 10% is expected.

Phase IV on track

As a result of initiatives undertaken in 2006, PUMA has a solid global operative base as well as momentum generated by its very successful World Cup year and new category launches. This gives Management a confident outlook for PUMA’s future, both for 2007 and the remainder of Phase IV.

Jochen Zeitz, CEO: “Overall, we are very pleased with 2006 and our start to Phase IV, as we set some ambitious targets and are on track or ahead on all accounts. But more important than the past is the future, and we’ve put ourselves in a solid early position to deliver on our Phase IV objectives.“

Photo Credits: Conné/ PUMA
Herzogenaurach, Germany, April 10, 2007
PUMA TO SERVE SOUTH KOREAN MARKET DIRECTLY
Licence agreement between PUMA and E-Land will expire end of 2007

Jochen Zeitz, CEO of PUMA AG: “PUMA Korea will ensure to maximize the PUMA brand potential on the South Korean market with the aim to become the most desirable sportlifestyle company worldwide.”

With the new subsidiary PUMA accelerates its regional expansion in the Phase IV of the long-term company development plan. The South Korean market represents one of the largest markets for PUMA’s distribution in Asia. The aim of PUMA Korea is to fully explore the PUMA brand potential in the South Korean market in the coming years.

May 07, 2007
PUMA AG ANNOUNCES ITS CONSOLIDATED FINANCIAL RESULTS FOR THE 1ST QUARTER 2007

Consolidated sales up 7% currency neutral or 2% in Euro currency


Highlights Q1

  • Consolidated sales up 7% currency neutral or 2% in Euro currency
  • Gross profit margin at 52%
  • BIT up 2% to € 135 million, representing 21% on sales
  • EPS at € 6.02 compared to € 5.83

Outlook 2007

  • Orders up currency neutral 1.4% to nearly € 1.1 billion
  • Management now expects sales and earnings growth in the low single-digits

Sales and Earnings Development

Global branded sales up 9%

PUMA’s worldwide branded sales, which include consolidated and license sales, rose currency neutral 8.9% (3.5% in Euro terms) to € 762.1 million. Footwear sales improved by 9.7% to € 441.4 million, Apparel by 6.1% to € 253.3 million and Accessories by 14.8% to € 67.4 million.

Licensed business increased 15%

The licensed business increased by 15.2% currency neutral (13.3% in Euro terms) to € 106.3 million. The company realized a royalty and commission income of € 9.7 million in the first quarter versus € 8.5 million in the prior year, an increase of 14.0%.

Consolidated sales up 7%

In Q1, consolidated sales grew 7.4% currency neutral (2.0% in Euro terms) to € 655.8 million. Sales in Footwear were up 9.0% to € 413.5 million, Apparel by 4.8% to € 200.7 million and Accessories by 4.7% to € 41.7 million.

Gross profit at 52%

In Q1, gross profit margin reached 52.2% compared to 52.4% last year. The Footwear margin was slightly up from 52.0% to 52.1% and Accessories increased from 53.4% to 54.9%. Apparel reported 51.9% compared to 52.9% last year.

SG&A ratio below last year

In total, SG&A rose 1.0% to € 207.3 million in Q1 2007. As a percentage of sales, the cost ratio decreased slightly from 31.9% to 31.6%. Marketing/Retail expenses were down by 0.8% to € 99.8 million, representing a cost ratio of 15.2% compared to 15.6% in the previous year. Product development and design expenses increased by 3.0% to € 13.1 million and were flat at 2% of sales. Other selling, general and administrative expenses increased 2.7% to € 94.4 million, or slightly from 14.3% to 14.4% of sales.

EBIT margin stable

EBIT increased by 2.0% to € 134.8 million versus € 132.2 million last year. As a percentage of sales this relates to a stable EBIT margin of 20.6%.
Due to an increase in the financial results, pre-tax profit grew by 2.3% to € 137.2 million. The tax ratio was 29.1% versus 29.5% in last year’s quarter.

Earnings per share 3.3% above last year

In Q1, net earnings grew by 3.7%. In absolute amounts, net earnings accounted for € 96.6 million versus € 93.1 million last year. The net return amounts to 14.7% versus 14.5%. Earnings per share reached € 6.02, a 3.3% increase from last year’s € 5.83. Diluted earnings per share were calculated at € 6.01 compared with € 5.78.


Net Assets and Financial Position

Equity ratio at 61%

As of March 31, 2007, total assets climbed by 15.8% to € 1,797.7 million and the equity ratio reached 60.9% after 61.4% in the previous year.

WORKING CAPITAL

Inventories grew 21.4% to € 344.1 million, mainly due to the retail expansion and early deliveries from the Asian production. Receivables were up 9.1%, reaching € 519.2 million. Total working capital at the end of March totaled € 496.1 million compared to € 440.3 million last year.

CAPEX/CASHFLOW

For Capex, the company spent € 16.4 million in Q1 versus € 59.3 million in last year’s quarter, whereas € 1.6 million versus € 41.8 million were related to acquisitions. Free cashflow amounts to € -9.8 million compared to € -135.2 million last year or € -8.2 million versus € -93.4 million excluding acquisition costs.

Cash position

Total cash end of March stood at € 402.4 versus € 354.1 million last year. Bank debts were down from € 68.1 million to € 63.5 million. As a result, the net cash position improved from € 286.0 million to € 338.9 million year over year, but declined since end of December 2006, mainly due to further share buybacks.


Share Buyback/New Subscribed Capital

During Q1, PUMA purchased another 150,000 of its own shares. At quarter-end, 1,270,000 shares were held as treasury stock in the balance sheet, accounting for 7.4% of total share capital.
Effective April 10, 2007 all own shares were cancelled and share capital was reduced accordingly. Including the option rights (Management-Incentive-Program) exercised in April 2007, subscribed capital consists of 16,007,364 shares or € 40,978,851.84 as of today.


Regional Development

Sales in the EMEA-region increased currency adjusted 8.0% reaching € 360.9 million versus € 339.3 million last year, representing 55.0% of consolidated sales compared to 52.8%. Gross profit margin reached 53.7% compared to 55.2% last year. Orders in the EMEA-region were slightly up 0.8% currency adjusted which represents a decline in Euro terms of -0.8% to € 595.3 million.

Sales in the Americas were up currency neutral 4.5% to € 174.3 million. The region now accounts for 26.6% compared to 28.3%. Gross profit margin increased from 47.5% to 49.7%. The order volume decreased 8.6% currency adjusted to € 260.6 million.
Despite the announced consolidation in the US market, sales were only slightly down to $ 156.2 million in Q1. However, orders for US end-of-quarter declined 17.6%, which is mainly due to a business related adjustment with one key account that had seen a significant sales increase in the prior years, as well as a generally moderating environment in the US mall business.

The Asia/Pacific region showed a currency neutral sales increase of 8.6% to € 120.6 million with a strong double-digit increase in China. The total region accounts for 18.4% of sales versus 18.9% last year. The gross profit margin was down from 51.9% to 51.4%. End of March orders on hand were up currency adjusted by 20.0% totaling € 206.9 million.


Outlook 2007

Future orders up 1.4% to nearly € 1.1 billion
Consolidated orders were up currency adjusted by 1.4% to € 1,062.8 million. In terms of product segments, Footwear decreased by 4.5% to € 654.5 million, while Apparel was up 15.4% to € 343.2 million and Accessories 0.1% to € 65.1 million.

Management expects sales and earnings growth in the lower single-digits
Due to the order situation end of Q1, Management now expects for FY2007 sales and earnings growth in the low single-digits. Gross profit margin should range between 50%-51%. Due to already announced and expected investments in relation to the Volvo Ocean Race participation as well as other planned SG&A initiatives, total cost ratio is expected to be around or above 35% of sales. EBIT should therefore develop in line with sales while the tax rate should come in at last year’s level.

Jochen Zeitz, CEO: “We’re pleased to have started Q1 with continued growth despite difficult year-on-year comps. While the remainder of the off-year in terms of major sports events will certainly be challenging given our current order book, we continue to be fully focused on our long-term objectives.”

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