Hit Union combines deep local knowledge of the special Japanese textile market with an extensive manufacturing background. This joint venture will establish Japan as the 2nd largest market for PUMA and it immediately establishes PUMA in the top three brands in its segment in the country.

In 2003 PUMA bought back its footwear and accessories license in Japan and founded a fully owned subsidiary, PUMA Japan K.K. The aim of the joint venture is to have the critical Japanese business fully aligned under one umbrella while being able to continue to use the tremendous apparel expertise of its current license partner and thus to quickly explore the further potential of the PUMA brand in Japan.

Jochen Zeitz, CEO and Chairman of PUMA AG: “Hit Union have done an outstanding job with our business in the past, and now with our 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. Since Japan, and Tokyo in particular, is the epicenter of trends in the Asia/Pacific region, our focus is on further strengthening our position in this key market.”

Katsuyuki Tanabe, President and CEO of Hit Union: “Over the past years, PUMA apparel has become one of the leading brands in the Japanese market. Now with this joint venture partnership we look forward to being able to further accelerate our growth and desirability throughout Japan.”

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

Highlights Q2:

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

Highlights H1:

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

Outlook 2005:

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

Sales and Earnings Development

Global brand sales reach almost €1.2 billion in six months

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

Consolidated sales better than expected

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

Gross profit margin on a record level

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

Strong performance in licensed business

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

SG&A increase due to extension of own retail business

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

High profitability continues

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

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

Net Assets and Financial Position

Equity ratio greater 60%

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

Net cash position increased

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

Regional expansion affected working capital

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

Capex/Cashflow

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

Regional Development

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

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

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

Outlook 2005

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

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

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

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

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

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

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

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

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

Strong start into 2006: Q1 better than expected

Highlights Q1:

• Strong start into 2006: Q1 better than expected
• Consolidated sales rise almost 30%
• Gross profit margin remains above 52%
• EBIT margin above 20% despite strong brand investments
• EPS at €5.83 compared to €5.68

Outlook 2006:

• Further improvement in orders, now up by 35% to €1.1 billion, EMEA up double-digit y-o-y
• Management increases sales and earnings guidance for 2006

Sales and Earnings Development

Global branded sales rise more than 15%

PUMA’s worldwide branded sales, which include consolidated and license sales, rose 15.3% to €737 million or currency adjusted by 11.8%. Footwear sales improved by 12.5%, Apparel by strong 19.1% and Accessories by almost 20%.

Consolidated sales rise almost 30%

In Q1, consolidated sales grew 29.5% (currency adjusted 25.4%) to €643 million. Hence, sales developed significantly better than expected with positive contributions from almost all product segments and regions. As already announced, due to the license take-backs and new Joint Ventures the consolidated business was extended to Japan (Apparel), China/Hong Kong, Taiwan China, Canada and Argentina effective January 1, 2006. Furthermore, the fully owned subsidiaries in Dubai and India started their operating activities as of this year. Like-for-like, organic growth contributed a strong 10,7% and new consolidations 18.8% to the overall performance. In total, Footwear was up 18% (currency adjusted 14%) to €399 million, Apparel by a healthy 63.1% (59.8%) to €202 million and Accessories by 21.6% (19.3%) to €42 million.

Licensed business up almost 10% on a like-for-like basis

On a like-for-like basis, the licensed business increased by 9.9% to €87 million. However, due to the take-backs of the aforementioned license markets, total licensed sales declined by 34.1% versus prior year. Based on the remaining licensed business, the company realized a royalty and commission income of €8.5 million in the first quarter versus €12.5 million in the prior year.

Gross profit remains above 52%

In Q1, gross profit margin stood better than expected at 52.4% compared to 53.4% last year, despite the planned and implemented shift in the regional and product mix. The Footwear margin decreased from 53.6% to 52% and Apparel from 53.4% to 52.9%. Accessories margin increased from 51.1% to 53.4%.

SG&A expenses at 32%

Due to strong brand investments and regional expansion, total SG&A rose 45.4% to €205 million. As a percentage of sales, the cost ratio increased as expected from 28.4% to 31.9%. The increase was mainly driven by strong Marketing/Retail expenses.

Marketing/Retail expenses rose as expected by 60.8% to above €100 million, representing a cost ratio of 15.6% compared to 12.6% last year. Product development and design expenses increased by almost 39% to €13 million and, as a percentage of sales, from 1.8% to 2%. Other selling, general and administrative expenses were up 32.4% to €92 million and remained around last year’s level at 14.3% of sales.

EBIT margin above 20%

  Despite the strong brand investments EBIT, margin reached 20.6% and remained on a very high level. In absolute amounts EBIT increased by 0.5% to €132 million versus the intitial expectation of an earnings decline. Due to a strong increase in the financial results, pre-tax profit grew by more than 1% to €134 million. The tax ratio remained at 29.5 % and was unchanged versus last year’s quarter.

Earnings per share above last year

In Q1, net earnings grew by 2.5%. In absolute amounts, net earnings accounted for €93 million versus €91 million last year. The net return amounts to 14.5% versus 18.3%. Earnings per share reached €5.83, a 2.7% increase to last year’s €5.68. Diluted earnings per share were calculated at €5.78 compared with €5.63.

Net Assets and Financial Position

Equity ratio above 60%

Despite a 42.9% increase in the balance sheet total to €1,552 million, the equity ratio further improved. The end of March equity ratio reached 61.4% compared with 58.2% last year.

Solid net cash position

Cash and cash equivalents grew from €323 million to €354 million and bank debts increased from €22 million to €68 million. Therefore, net cash position slightly decreased from €302 million to €286 million due to the strong investments, the take-backs and Joint Ventures inseveral markets.

Working capital

Inventories increased by 49.2% to €283 million and receivables were up by 34.4% to €476 million. Total working capital at the end of March increased 59.5% and amounted to €440 million compared with €276 million last year. The increase was mainly due to the regional expansion. Excluding the regional expansion inventories increased by 17% and receivables by 21%.

Capex/Cashflow

Capex increased from €21 million to €59 million, whereby €42 million are related to acquisitions. Tax payments rose from €21 million to €34 million. Due to these effects as well as the higher working capital due to the regional expansion, free cashflow was €-135 million compared to €-25 million last year.

Share Buyback

PUMA purchased another 50,000 of its own shares during the first three months. At quarter-end, a total of 940,000 shares were held as treasury stock, accounting for 5.6% of total share capital.

Regional Development

Change in regional mix

Due to the license take-backs and Joint Ventures, the regional mix changed significantly resulting in a more balanced regional business portfolio. Now, EMEA accounts for 52.8% (last year 72.2%), Americas for 28.3% (19%) and Asia/Pacific for 18.9% (8.8%).

Sales in the EMEA-region reached €339 million versus €359 million last year. The anticipated decline was due to the strong top-line performance in Q1 2005, hence leading to strong comp basis. Gross profit margin reached 55.2% compared to 55.6% last year. However, orders for EMEA now report a better than expected increase of nearly 12% to €600 million. All countries in this region contributed to the improvement.

Sales in the Americas continued to grow strongly. Currency adjusted, Q1 sales jumped 75.2% and in Euro terms by 93.1% to €182 million. The growth was due to a particularly strong organic business as well as the consolidation of Canada and Argentina. Gross profit margin increased from 46.1% to 47.5%. The order volume was up by a strong 87.8% to €310 million, or currency neutral by 71.6%.
In the US market, sales increased like-for-like by 62.4% to $157 million and end-of-quarter orders were up by strong 45.9%.

In the Asia/Pacific region sales increased by a strong 177.6% (currency-adjusted 179.5%) to €122 million. The organic growth contributed 17.7% to the overall performance and the remaining growth was contributed by the regional expansion. The gross profit margin increased by 100 basis points to 51.9%. As of March 31, 2006, orders on hand were up 114.6% (currency adjusted 115%) and totaled €187 million.

Outlook 2006

Future orders now up 35%

Consolidated orders further improved and increased by 35% (currency adjusted 31.3%) to €1,097 million. This represents the 41st consecutive quarter of order increase. In terms of product segments, Footwear increased by 29.8% (25.5%) to €720 million, Apparel 49.1% (46.4%) to €309 million and Accessories by 34.6% (32.1%) to €68 million.

Management increases sales and earnings guidance for FY2006

Due to a further improvement in the order position for the EMEA region and the overall strong performance in Q1, Management once again raises its sales forecast and now expects a growth of up to 35% for FY 2006, reaching almost €2.4 billion. The gross profit margin should range between 50% and 51%, given the anticipated shift in regional and product mix. The takeover of the license markets into the consolidated business will lead to a corresponding reduction in royalty and commission income. Selling, general and administrative expenses will be impacted in particular by disproportionately high marketing expenses relating to the World Cup and other PUMA campaigns, as well as by planned expansion of the Group’s retail operations and higher expenses for infrastructure. Overall operating expenses are assumed to rise to approximately 35% of sales. The operating margin is expected to decrease versus the prior year to approximately 15% of sales as a result of the brand-building investments in 2006 and conversion of the license businesses into consolidated business. Based on the higher top-line growth, Management also increases operating profit expectation to now around €360 million. The tax rate is expected to be below the original guidance and should be between 30% and 31%. As a result, net earnings are now expected to be only high single-digits below the previous year’s level. Thus, in absolute figures, net earnings are expected to significantly exceed the original expectations for 2006 communicated with the Phase IV strategy mid last year.

Jochen Zeitz, CEO: “We are pleased to have catalyzed our Phase IV growth plans with a Q1 above our expectations and the smooth integration of former licensee partners into our consolidated business. With the World Cup and other exciting initiatives still to come in 2006, we remain very positive in the outlook for the remainder of the year.“

PUMA AG announces its consolidated financial results for the 2nd Quarter and First Half-Year of 2006PUMA AG announces its consolidated financial results for the 2nd Quarter and First Half-Year of 2006

Highlights Q2:

• Outstanding success during World Cup: Not only the most teams but also the World Champion wearing PUMA
• Consolidated sales increase more than 38%
• Gross profit margin above 51%
• EBIT margin impacted as expected by strong brand investments
• EPS at €3.12 versus €3.64

Highlights First Half-Year:

• Global brand sales reach almost €1.4 billion, up 16%
• Consolidated sales up more than 33%
• Gross profit margin at 52%
• EBIT margin better than expectations at 17%
• EPS at €8.95 compared to €9.32
  
  

Outlook 2006:

• Despite strong sales growth, orders remain on high level, up 35% currency adjusted
• Management confirms full-year guidance with top line growth up to 35% and EBIT level of about €360 million
  
  

Outstanding success during World Cup

For the first time in the company history, a PUMA sponsored national team has won the World Cup Final: The Squadra Azzurri from Italy.
PUMA was the dominant kit supplier at the championships, with a strong portfolio of 12 teams and gained brand visibility throughout 56% of all games on the pitch. PUMA was also among the top three brands in terms of player presence on the field, with 18% of all players wearing the innovative v1.06 product line. PUMA now has a great starting position with regards to the Euro 2008 in Switzerland and Austria, where both host federations are sponsored by PUMA. Looking ahead to the World Cup 2010 in South Africa, PUMA will continue as the dominant brand in African Football and will enter the tournament with Italy as the reigning champion and tournament favourite.

Sales and Earnings Development

Global branded sales up 16% reaching almost €1.4 billion in six months PUMA’s branded sales, which include consolidated sales and licensee sales, reached €620 million during Q2, thus marking a 17.1% (currency adjusted 17.2%) increase over last year.
During the first six months, branded sales grew 16.1% (currency adjusted 14.3%) to €1,356 million. Footwear sales increased 13.9% (12.1%) to €770 million, Apparel improved by 19.2% (18.2%) to €469 million and Accessories rose by 18.9% (18.8%) to €118 million.

Consolidated sales rise more than 38% in Q2 and 33% in first six months

In Q2, consolidated sales grew strong 38.2% (currency adjusted 38.7%) to €547 million. First-time consolidations contributed 22% to the growth. In total, Footwear was up 23.7% (24.3%) to €328 million and Apparel improved by a strong 81.2% (81.5%) to €182 million. Accessories realized a growth of 22.8% (25.3%) to €37 million. Team Sport sales contributed the strongest sales growth with over 40%.
Sales in the first six months rose by 33.3% or 31.3% currency adjusted to €1,189 million. Like-for-like, organic growth contributed a strong 12.9% and new consolidations 20.4% to the overall performance. In total, Footwear increased 20.5% (currency adjusted 18.5%) to €727 million, Apparel improved by 71.2% (69.5%) to €383 million and Accessories by 22.2% (22.1%) to €79 million.

Licensed business

The licensed business increased on a like-for-like basis by 30.9% in Q2, and 18.6% after six months. However, due to the take-backs of six license markets as of the beginning of this year, total licensed sales declined by 45.5% to €73 million and by 39.6% to €167 million respectively. Based on the remaining licensed business, royalty and commission income was €7.3 million in Q2 and €15.8 million for the first half.

Gross profit margin remains on a high level

Due to the planned and implemented shift in regional and product mix, the gross profit margin reached 51.4% in Q2 compared to 53.2% last year. First half gross profit margin reached 51.9% versus 53.3% last year. The Footwear margin decreased from 53.6% to 51.8% and Apparel from 53.4% to 51.8% while Accessories increased from 50.3% to 53.5%.

SG&A expenses impacted by strong brand investments

Due to the strong brand investments and the regional expansion total SG&A expenses increased in Q2 by 54.4% to €211 million and by 49,8% to €416 million during the first six months. As a percentage of sales, the cost ratio increased in line with expectations from 34.5% to 38.6% or from 31.1% to 35% respectively.

For the first half, Marketing/Retail expenses increased by 61.7% and accounted for €207 million or 17.4% of sales versus 14.4% last year, in line with expectations. In particular, the marketing campaign for the World Cup and other marketing and retail expenses led to the increase. Product development and design expenses rose by 40.6% to €27 million and, as a percentage of sales, from 2.1% to 2.3%. Other selling, general and administrative expenses were up 39.5% to €182 million, or from 14.6% to 15.3% as a percentage of sales. The increase in other SG&A expenses is related to the extended infrastructure and operations for Phase IV expansion and in line with expectations.

EBIT above expectation

Due to strong brand investments EBIT in Q2 declined by 15.4% to €69 million and by 5.6% to €201 million after six months. This resulted in an EBIT margin of 12.7% and 16.9% respectively. Taking into account the full-year guidance of a high single-digit decline in EBIT, H1 came out better than expected given the high investments.

With an interest result of €2.1 million in Q2 and €4 million for the first half, pre-tax profit decreased by 14.5% to €71 million and by 4.9% to €205 million respectively. During the first six months, tax rate remained at 29% on last years level.
As a result, net earnings were down by 14.9% to €50 million in Q2 and by 4.4% to €143 million in the first half. Net margin was calculated at 9.2% (last year 14.9%) for Q2 and at 12% (16.8%) for the first six months.

Earnings per share

Earnings per share in Q2 reached €3.12, a decrease of 14.3% versus last year. Year-to-date earnings per share were down by only 4% to €8.95, better than expected. Diluted EPS translates to €3.03 and €8.81 respectively.

„In the past seven years, since the launch of the Dow Jones Sustainability Indexes, sustainable investing has been recognized by a growing number of investors and is increasingly seen as an important driver of long-term performance. We are delighted to support this momentum by calculation an expanding family of professional and objective sustainability benchmarks that are utilized around the globe”, said Michael A. Petronella, president, Dow Jones Indexes/Ventures.

Jochen Zeitz, CEO of PUMA AG: “We are very pleased that PUMA has made it into the Dow Jones Sustainability Index, which not only acknowledges our involvement for sustainability, but also clearly affirms that we are on the right path with our transparency approach and our responsibility in the social and environmental field.”

The S.A.F.E. concept (Social Accountability and Fundamental Environmental Standards) is a specific tool PUMA developed to continuously improve social and environmental standards in all contractors and subcontractors factories as well as to fully implement the Code of PUMA Conduct established in 1993. PUMA is a gradual member of the FLA (Fair Labour Association) since 2004 and has been listed in the Financial Times Stock Exchange FTSE4Good since 2005.

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. “

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.“