Highlights January – March 2011

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

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

• EBIT 2.1% above last year at € 111.0 million

• Net earnings improved by 7.1% to € 77.7 million

• EPS increased to € 5.17 from € 4.81 last year

Outlook 2011:

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

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

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

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

Sales and Earnings Development January-March 2011

Global Brand Sales

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

Consolidated Sales

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

Gross Profit Margin

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

Operating Expenses

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

EBIT

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

Financial Result / Income from associated companies

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

Earnings before Taxes

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

Net Earnings

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

Net Assets and Financial PositionEquity

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

Working Capital

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

Cashflow/Capex

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

Cash Position

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

Share buyback

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

Other Events

PUMA AG converts to a Societas Europaea (SE)

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

Outlook 2011

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

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

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

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

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

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

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

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

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

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

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

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

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

• Tier 1: The manufacturing of its products

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

Biggest Environmental Impact Derives from Raw Material Production

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

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

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

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

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

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

PUMA’s Response to the Results to Minimize Risks

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

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

Raising Awareness

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

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

Developing synergies and partnerships

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

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

Building Capacity to Create Snowball Effect

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

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

Innovating for the Development of Sustainable Materials and Products

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

In his previous role, Franz Koch has been in charge of Global Strategy for PUMA and therefore the long-term strategic group development. He was instrumental in developing PUMA’s growth strategy “Back on the Attack 2011-15” with its clear mission for PUMA to become the most desirable and sustainable Sportlifestyle company.

Besides Franz Koch (CEO), PUMA SE’s Managing Directors are Klaus Bauer (Operations), Stefano Caroti (Commerce), Antonio Bertone (Marketing) and Reiner Seiz (Supply Chain). No longer part of the management team is Melody Harris-Jensbach. The separation has been mutually agreed between the company and herself. The Product function that Harris-Jensbach has held, will not be filled with a managing director role in the foreseeable future, and will report directly to Koch.

The European Corporation is a legal form for companies that operate in several member states within the European Union. It facilitates cooperation across borders and is therefore – due to the international orientation of PUMA as a brand and company – a logical step to support the strategic growth of the Sportlifestyle company in the next phase of its development. More than 90 percent of PUMA’s staff of about 9700 is employed outside of Germany, whilst equally 90 percent of PUMA’s sales are generated abroad.

With the structure of PUMA as an SE, participation by PUMA’s employees will gain more importance. In addition to the national works councils in PUMA’s subsidiaries, PUMA SE will also have an SE works council – a panel of around 30 employee representatives from 26 countries. The SE works council will observe the rights of European Employees on information and consultation at PUMA SE. Furthermore, the employees will be represented on the Administrative Board of PUMA SE by three employee representatives from Europe.

The transformation of PUMA into a European Corporation was welcomed by the grand majority of shareholders. At PUMA’s 2011 Annual General Meeting in April, 99.82 percent of shareholders had voted in favour of the resolution of transforming PUMA AG into an SE, as suggested by the Board of Management and the Supervisory Board.

The shares of PUMA SE, which have been traded at the stock exchange since 1986, will remain
listed on the Xetra as well as Frankfurt floor trade under WKN 6969603/ISIN DE0006969603.

Highlights Second Quarter 2011

• Consolidated sales increased by 14.1% currency adjusted to a record second quarter high of € 674 million

• Gross profit margin holding up well at 49.1% despite pressure from external factors

• EBIT 3.2% above last year at € 55.4 million

• Net earnings up 10.6% to € 37.6 million

• EPS up to € 2.51 from € 2.26 last year

Highlights First Half 2011

• Consolidated sales up by 11.5% currency adjusted to a record € 1.45 billion

• Gross profit margin still a strong 50.9%

• EBIT 2.5% above last year at € 166.4 million

• Net earnings improved by 8.2% to € 115.3 million

• EPS increased to € 7.69 from € 7.07 last year

Outlook for the Financial Year 2011

• PUMA’s continued business success over the past six months confirmed the Management view that the 3 billion milestone in sales for the full year of 2011 is attainable.

• Sourcing cost increases caused by rising prices for commodities and higher wages in Asia will continue to impact gross margins. PUMA will continue to support business growth and the “Back on the Attack” growth strategy; thus investments in marketing, sales, product development as well as process optimization will continue to affect overall expenses.

• Although increases in sourcing costs and continued investments in brand and product will impact overall operational results, management foresees continuous improvement of net earnings by mid single-digits for the full year.

“I could not have asked for a better start to my new position as PUMA’s CEO than to announce the best second quarter in PUMA’s history in terms of sales, a performance that underlines our ambition to achieve our sales target of 3 billion Euros for this year,” said Franz Koch, CEO of PUMA SE. “The investments into our core markets, in line with our Back on the Attack company growth strategy, have started to pay off and we will continue to strengthen our brand and product in order to become the most desirable and sustainable sportlifestyle company in the world.“

PUMA’s Q2 Sales Record underpinned by Running Category and strong Growth in Latin America and Asia

With the global economic recovery having gained strength, the Sportlifestyle company PUMA posted a strong second quarter growth in consolidated sales of 14.1% currency-adjusted and 9.4% in Euro terms to € 673.5 million compared to last year, representing PUMA’s best ever second quarter sales performance.

PUMA Faas is building up momentum

With all product categories contributing to this increase, Footwear rose 16.2% currency adjusted to € 352.6 million, Apparel went up 10.7% to € 224.3 million and Accessories again posted an eye catching 15.0% increase to € 96.7 million. In particular, PUMA’s Running category grew significantly, boosted by the ongoing top seller PUMA Faas, a lightweight neutral racer for tempo runs and racing. The shoe is constructed with BioRide Technology, an integrated system that provides more natural running rhythm and enhanced speed. Another Performance category that performed well in the second quarter was Cobra-PUMA-GOLF as a result of synergies arising from the Cobra Golf integration.

In the Teamsport category, PUMA claimed another champion title with Uruguay winning the Copa America for the 15th time, building on their fourth place at the 2010 FIFA World Cup. The team also achieved their second-ever qualification for the FIFA Confederations Cup to be held in Brazil in 2013. Uruguay beat Paraguay 3-0 in Sunday’s final, becoming the most successful team in the tournament’s history. The FIFA Women’s World Cup in Germany provided another great opportunity, where PUMA further strengthened its brand awareness in Women’s Football. PUMA sponsored eight PUMA players on the German team as well as international stars from England, Canada, Norway, Sweden, France and the USA as well as brand ambassador Marta of Brazil, who all sported the PUMA Speed v1.11 football boot. In fact, the v1.11 scored most goals in the tournament, 16 in total.

Over the first half of this year sales across all categories increased in pace. Footwear sales were up 9.9% (10.9% currency adjusted), Apparel sales were up 7.0% (6.1% currency adjusted) and Accessories were up 29.4% (28.3% currency adjusted) partly due to the full year effect of Cobra golf.

Latin America and Asia remain the main growth areas

In regional terms, PUMA continued its excellent performance in the Americas with sales growing by 16.9% currency-adjusted to € 226 million. Latin America and Asia excelled with a strong double-digit rise with Lifestyle and PUMA’s Motorsport categories being the main growth drivers.

Sales in EMEA grew by 9.2% currency-adjusted to € 290 million with satisfying performances in both Western and Eastern Europe. Spain advanced significantly after a PUMA subsidiary was opened in the second quarter of last year. Women’s Fitness (Bodytrain) increased by double-digit rates.

Asia/Pacific posted a gain of 20.1% currency adjusted to € 158 million, as sales in Japan have recovered much faster than anticipated in the aftermath of the earthquake disaster, posting double-digit growth. PUMA’s Lifestyle (PUMA Social), Running (Faas and light-weight gear) and Fitness (Bodytrain) categories drove the overall growth.

Half-year EMEA sales are up 7.3% (6.5% currency adjusted), the Americas are up a satisfying 14.3% (18.4% currency adjusted) and Asia/Pacific is up an impressive 16.5% (13.0% currency adjusted).

Gross Profit Margin at industry-leading levels

The gross profit margin remained at an industry leading 49.1%, which is testament to PUMA’s continuing efforts to maximize returns and efficiencies.

The Footwear segment had a gross profit margin of 48.1%, down from 50.7%. Apparel stood at 48.9%, down from 52.1%. Both segments were impacted by slightly higher sourcing costs as well as negative currency impacts from hedging. Accessories were at 53.3%, a sharp jump from 46.3% which is based on last year’s impact of the Cobra takeover.

Overall the half year gross profit margin is down slightly to 50.9% after 51.5% last year. The Footwear margin is currently at 49.8%, Apparel at 51.4% and Accessories at 53.7%.

Operating Expenses

Operating expenses rose by 10.3% to € 279.9 million during the second quarter of 2011. As a percentage of sales, this represents a slight increase from 41.2% to 41.6% compared to last year. For the full year to the end of June 2011, OPEX rose by 15.9% to € 578.5 million. Increases in expenditure arose from our continued investments outlined in our 5-year growth plan and the full year effects caused by the extension of the scope of consolidation with Cobra and PUMA Spain now fully included.

EBIT

Operating profit came in as expected, improving to € 55.4 million from € 53.6 million. This represents 8.2% of consolidated sales, down slightly from a rate of 8.7% at this time last year. On a half year basis EBIT is up slightly to € 166.4 million.

Financial Result / Income from associated companies

The financial result declined from € -1.3 million to € -1.6 million, however, the half year number improved from € -2.7 million last year to € -1.8 million.

Earnings before Taxes

PUMA’s second quarter EBT rose from € 52.3 million to € 53.8 million. They also rose from € 159.6 million to € 164.6 million on a half yearly basis. Quarterly tax expenses declined from € 18.2 million to € 16.2 million and the tax rate dropped from 34.9% to a normalized tax rate of 30.0%.

Net Earnings

Consolidated net earnings increased by 10.6% to € 37.6 million from € 34.0 million in 2010. Earnings per share rose from € 2.26 to € 2.51, and diluted earnings per share were up from € 2.25 to € 2.51.

For the first half of 2011, net earnings rose by 8.2% to € 115.3 million. EPS increased by 8.8% to € 7.69.

Net Assets and Financial Position

Equity

Total assets (as of 30th June 2011) grew by 2.6% from € 2,284.8 million to € 2,343.4 million. This rise is primarily attributable to an increase in non-current assets in the form of deferred taxes and non-current assets as a result of our ongoing capital investment program. The equity ratio rose from 58.6% to 59.4%. In absolute figures, shareholders’ equity increased by 4.1% to € 1,392.5 million from € 1,338.3 million. PUMA’s balance sheet remains strong.

Working Capital

PUMA’s overall Working Capital went up by 13.0% to € 509 million. On the asset side, inventories went up by 12.1% from € 453.1 million to € 508.0 million, supporting our continued and expected sales growth. Trade receivables also increased, up 5.0% from € 497.1 million to € 522.0 million. This again is an effect of our growth in sales compared to this point in time last year. On the liabilities side, trade payables rose 7.6% from € 395.4 million to € 425.3 million.

Cashflow/ Capex

The Free Cashflow (before acquisitions) came in at € -9.2 million versus € 57.2 million last year. The additional outflow resulted from tax payments and higher working capital needed as well as higher CAPEX. The payments for acquisitions are related to the purchase of the outstanding shares in our Chinese venture. For Capex, the company spent € 29.1 million versus € 18.5 million in 2010. The increase derives mainly from investments in the improvement of organizational processes and IT as well as in the expansion of our Retail store portfolio, which are necessary components of our growth strategy.

Cash Position

Total cash (as of 30th June, 2011) dropped by 21.6% to € 351.6 million from € 448.3 million last year. Bank debts were reduced by 41.2% from € 51.5 million to € 30.3 million. As a result, the net cash position decreased 19.0%, from € 396.8 million to € 321.3 million.

Share buyback

PUMA continued with its share buy-back program and purchased 72.853 shares for € 15.7 million during the second quarter. The company now holds 173.377 shares in total as treasury stock which equals 1.15% of the subscribed capital.

Other Events

PUMA AG converts to a Societas Europaea (SE)

With the completion of the transformation on July 25th,, 2011, Franz Koch has become Chief Executive Officer, with Jochen Zeitz taking over as Chairman of the Administrative Board of PUMA SE. At the same time, he will lead PPR’s Sport & Lifestyle Division. In this role, he will ensure PUMA SE’s continuous and strategic growth within the framework of the next phase of development and support the drive to sustainability as PPR’s Chief Sustainability Officer.

SPANISH Court Ruling

As already announced in an ad hoc release on 17th of June, 2011 the arbitration ruling of 2nd June, 2010 by a Spanish arbitration panel regarding the one-time payment of 98 million Euros has been repealed by the District Court of Madrid. PUMA is therefore no longer obliged to pay the amount of 98 million Euros.

Outlook for the Financial Year 2011

PUMA continues to target the € 3 billion sales mark for the full year which reflects a continuation of our first-half sales. There will, however, continue to be pressure on gross profit margins in the shape of higher raw material prices and Asian wage increases, although PUMA has thus far shown an ability to keep its gross profit margins at the highest level within the industry. Despite higher operating expenditures which are in line with the overall strategy, PUMA expects absolute net earnings to improve in the mid single digit range.

Highlights Third Quarter 2011

• Consolidated sales increased by 10.2% currency adjusted to € 841.6 million

• Gross profit margin remained at 50.0% despite volatile input prices

• EBIT improved by 1,8% to € 118.6 million

• Net earnings remained flat at € 81.7 million

• EPS are up to € 5.45 from € 5.43

• PUMA has signed football stars Agüero, Falcao and Fàbregas

Highlights First Nine Months of 2011

• Consolidated sales climbed 11.0% currency adjusted to € 2.3 billion

• Gross profit margin remained at a sector-best 50.6%

• EBIT rose by 2.2% to € 285.0 million

• Net earnings improved by 4.7% to € 197.1 million

• EPS increased from € 12.51 to € 13.15

Outlook for the remainder of the Financial Year 2011

• PUMA’s management reiterates that PUMA’s target is € 3 billion in sales for the full year.

• In light of PUMA’s “Back on the Attack” growth strategy, investments and expenses will remain at a high level, and gross profit margins will continue to be stressed based on procurement price volatilities.

• Management continues to foresee an improvement of net earnings in mid single-digits for the full year.

“PUMA posted a very solid sales performance for the fifth consecutive quarter,” said Franz Koch, CEO of PUMA SE.”This underpins our 5-year growth strategy, which is already delivering results. After a strong performance in the first nine months of this year, we are now approaching our sales target of € 3 billion for the full year, and despite continuing cost pressures we maintain our forecast of an improvement in net earnings in mid single-digits.“

Asia/Pacific and Latin America drive PUMA’s Sales Growth in the Third Quarter – Performance Business accelerating

PUMA’s third-quarter consolidated sales rose 10.2% currency adjusted and 7.3% in Euro terms to € 841.6 million compared to last year, representing the most successful quarterly performance in the firm’s history. Asia and Latin America provided the platform for these numbers, underpinning the excellent overall result with double-digit growth.

With all product categories contributing to this increase, Footwear rose 7.0% currency adjusted to € 431.1 million, Apparel went up 13.8% to € 294.7 million and Accessories climbed 13.9% to € 115.8 million.

PUMA’s Running category in particular grew significantly, boosted by Usain Bolt’s spectacular performances at the Track & Field World Championships in Daegu and by the light-weight concept which includes our best selling PUMA Faas range. The shoe is constructed with BioRide Technology which provides runners with a naturally responsive ride. PUMA’s Women’s Fitness category is growing strongly, a consequence of enhanced targeting of the female consumer demographic with PUMA’s Bodytrain concept. PUMA’s Sailing category also improved, as sales have been accelerating in the run-up to PUMA’s participation in the Volvo Ocean Race 2011-2012. Given the duration of this sailing marathon and in the light of our new extended range of outdoor products, PUMA expects the positive performance of its Sailing category to continue.

PUMA’s five-year growth plan “Back on the Attack” already yielding fruit

As previously detailed, PUMA is continuing to work on improving its performance categories without losing sight of its Sportlifestyle positioning as a brand. This was laid out in the company’s growth strategy one year ago, which focused on strengthening PUMA’s Sports Performance business alongside its lifestyle segment. To further boost PUMA’s brand visibility on international football pitches and underline our position as the No. 3 football brand, PUMA signed three of the world’s top football stars during the third quarter: Manchester City’s Sergio Agüero, Atletico Madrid’s Falcao and FC Barcelona’s Cesc Fàbregas.

PUMA also introduced its new football boot, the Powercat 12. These boots will be worn by Fàbregas, Nemanja Vidic of Manchester United and Gianluigi Buffon, goalkeeper of the Italian National Team, amongst others. This innovative boot features the new PUMA 3D DUO Power Shooting Technology, applied to the inside of the boot.

Cobra-PUMA-Golf also continues to perform well, where the 360 degree offering appeals to discerning consumers. PUMA also congratulates its brand ambassador and golf professional Lexi Thompson who, at 16 years of age, has become the youngest ever winner on the LPGA tour in America.

Asia/Pacific and Latin America remain the main growth areas in the quarter

In regional terms, PUMA continued its excellent performance in Asia/Pacific, with sales growing by 16.4% currency-adjusted to € 196.0 million. Light-weight Running gear such as the Faas range and Women’s Fitness products (Bodytrain) drove the overall growth in this region.

EMEA also performed well, posting an increase of 9.5% currency adjusted to € 410.6 million. Russia, Turkey, Spain and Germany in particular contributed to this performance.

Sales in the Americas grew by 6.7% currency-adjusted but were down 0.7% in Euro terms at € 235.0 million. Latin America delivered a remarkable top-line performance, reflecting broad-based double-digit growth across all countries in the region, while North America had to comp against strong double-digit growth numbers from the previous year.

Consolidated sales for the nine-month period climbed 11.0% currency adjusted (9.9% in Euro terms) to € 2.29 billion. EMEA sales rose 7.7% (7.6% currency adjusted), the Americas improved a satisfying 8.7% (14.2% currency adjusted) and Asia/Pacific climbed an impressive 16.4% (14.3% currency adjusted).

Nine-month sales across all product categories continued to climb. Footwear sales were up 7.5% (9.5% currency adjusted), Apparel sales increased 8.8% (8.9% currency adjusted) and Accessories grew 22.7% (22.8% currency adjusted), due in part to the full year effect of the Cobra golf acquisition last year.

Gross Profit Margin remains at industry-leading levels despite cost pressure

PUMA’s ongoing efficiency drive has resulted in a third quarter gross profit margin of 50.0%, which remains the industry leading number.

The Footwear segment had a gross profit margin of 49.8%, up from 49.7%. Apparel stood at 50.3%, up from 50.0%. Accessories were at 50.0%, a decline from 51.8% which can be attributed to higher procurement costs.

For the first nine months of 2011, gross profit margin is down slightly to 50.6% from 51.0% compared to last year. The Footwear margin is currently at 49.8% down from 50.4%, Apparel down from 51.9% to 50.9% and Accessories up from 51.2% to 52.4%.

Operating Expenses

Operating expenses rose by 9.7% to € 307.0 million during the third quarter of 2011. As a percentage of sales, this represents a slight increase from 35.7% to 36.5% compared to last year. For the full year to the end of September 2011, Operating expenses rose by 13.6% to € 885.5 million. Increases in expenditure arose from our continued investments outlined in our 5-year growth plan and the full year effects caused by the extension of the scope of consolidation with Cobra and PUMA Spain now fully included. The majority of those incremental increases went into Marketing, Product Design and enhancements in our supply chain.

EBIT

Operating profit improved to € 118.6 million from € 116.6 million in line with expectations. This represents 14.1% of consolidated sales versus 14.9% at this time last year. On a nine month basis EBIT was up 2.2% to € 285.0 million.

Financial Result / Income from associated companies

The financial result declined from € -1.4 million to € -2.1 million, however, the nine month number improved from € -4.1 million last year to € -3.9 million.

Earnings before Taxes

PUMA’s third quarter EBT rose from € 115.1 million to € 116.6 million. They also rose from € 274.8 million to € 281.1 million on a nine month basis. Quarterly tax expenses increased from € 33.4 million to € 34.9 million and the tax rate increased from 29.0% to 30.0% in the quarter but improved from 31.5% to 30.0% as of September 30, 2011.

Net Earnings

Consolidated net earnings were flat at € 81.7. Earnings per share rose from € 5.43 to € 5.45, and diluted earnings per share were up from € 5.39 to € 5.45.
For the first nine months of 2011, net earnings rose by 4.7% to € 197.1 million. EPS increased by 5.1% to € 13.15.

Net Assets and Financial Position

Equity

Total assets(as of September 30, 2011) grew by 4.5% from € 2,319.0 million to € 2,422.5 million. This rise is primarily attributable to an increase in both inventories and trade receivables based on the additional volume in business. The equity ratio rose sharply from 57.8% to 62.9%, signifying further improvement in our capital base. In absolute figures, shareholders’ equity increased by 13.7% from € 1,340.2 million to € 1,524.3 million.

Working Capital

PUMA’s overall Working Capital went up by 35.0% to € 668.7 million. On the asset side, inventories went up by 18.5% from € 449.2 million to € 532.4 million, supporting our continued and expected sales growth in addition to our new styles and offerings. Trade receivables also increased, up 13.3% from € 538.9 million to € 610.5 million. This again is an effect of our growth in sales compared to this point in time last year.

Cashflow/ Capex

The Free Cashflow (before acquisitions) came in at € -89.4 million versus € 57.9 million last year. The additional outflow resulted from tax payments and higher working capital needed as well as higher CAPEX. For Capex, the company spent € 44.6 million versus € 35.5 million in 2010. The increase derives mainly from investments in the improvement of organizational processes and IT systems as well as in the expansion of our Retail store portfolio, all of which continue to be integral components of our growth strategy.

Cash Position

Total cash (as of September 30, 2011) dropped by 30.7% to € 289.5 million from € 417.9 million last year. Bank debts were reduced by 39.9% from € 57.2 million to € 34.4 million. As a result, the net cash position decreased 29.3%, from € 360.7 million to € 255.1 million.

Share buyback

PUMA did not activate its share buyback program during the third quarter of 2011.

Outlook for the Financial Year 2011

Going into the final quarter of 2011, we reiterate that PUMA’s target is €3 billion in sales for the full year. Our overall outlook remains positive despite the current uncertainty afflicting various markets at this time. We anticipate ongoing input cost volatility, although we have demonstrated in the third quarter that our ability to maintain gross profit margins remains undiminished. As previously communicated, our current elevated operating and capital expenditures are an integral part of our growth strategy. None the less, we continue to expect full year net earnings to improve in the mid-single digit range.

Furthermore, in acknowledging the PUMA EP&L today as an innovative sustainability approach, the PPR Group, PUMA’s majority shareholder, announced that this groundbreaking economic valuation methodology1 for a company’s environmental impacts will be implemented across its Luxury and Sport & Lifestyle brands by 2015.

After publishing an economic valuation of € 94 million of GHG emissions and water consumption in May this year2, PUMA has now finalised its 2010 E P&L by adding € 51 million caused by land use change for the production of raw materials, air pollution and waste along its value chain. Only € 8 million of the € 145 million total derive from PUMA’s core operations such as offices, warehouses, stores and logistics while the remaining € 137 million fall upon PUMA’s supply chain. These costs, which will not affect PUMA’s net earnings, will serve as an initial metric for the company when aiming to mitigate the footprint of PUMA’s operations and all supply chain levels.

“The unprecedented PUMA Environmental Profit and Loss Account has been indispensible for us to realize the immense value of nature’s services that are currently being taken for granted but without which companies could not sustain themselves,” said Jochen Zeitz, Executive Chairman of PUMA and Chief Sustainability Officer of PPR. “At PPR HOME, we view the PUMA EP&L as an essential tool to help drive PPR’s sustainability development across its Group of brands because analysing a company’s environmental impact through an E P&L and understanding where environmental measures are necessary will not only help conserve the benefits of ecosystem services but also ensure the longevity of our businesses. The results of the PUMA E P&L underpin the urgency for a paradigm shift in the way we all currently do business and I have been pleased to also see that the release of PUMA’s first results has generated widespread interest among governments, corporations, NGOs and academics.“

The PUMA E P&L and the associated methodology3 were developed with the support of PricewaterhouseCoopers LLP and Trucost PLC, using recognised ecological and economic techniques and building on a large volume of work in the fields of environmental and natural resource economics. The valuation of the overall results shows:

• PUMA’s supply chain is responsible for 94% or € 137 million of its total environmental impact.

• Over half (57% or € 83 million) of all environmental impacts are associated with the production of raw materials (including leather, cotton and rubber) in Tier 4 of PUMA’s supply chain4.

• Only 6% or € 8 million derive from PUMA’s core operations such as offices, warehouses, stores and logistics; a further 9% (€ 13 million) occur in Tier 1, with the remaining 85% (€ 124 million) in Tiers 2-4.

• GHGs make up 90% of the total impact of PUMA’s offices, stores and warehouses.

Alan McGill, partner, Sustainability and Climate Change, PwC, said: “These values are enough to make any business pay attention. The PUMA E P&L offers a real insight into the environmental consequences of commercial decisions and at the same time highlights potential commercial consequences of the environmental realities unfolding around the world. This will make many companies consider how they can apply similar analysis in their own organisations. Companies – big and small – are now reliant on global supply chains, making their environmental footprint much larger than many realise. Assigning economic values to the environmental impact of a company’s operations enables a business to tackle vital questions now, not just about environmental impacts, but business risk, costs savings and finding new ways to become more effective. Without measuring them, the impacts cannot be managed, or reduced.”

E P&L Results Break-Down

Water Use and Greenhouse Gas Emissions

The impacts of water use and GHGs were found to be roughly equal, together making up just under two thirds of the overall impact (around € 47 million each)5. (For more details, please refer to the press materials of PUMA’s May 2011 announcement on http://about.puma.com/?p=6644)

Land Use

Negative impacts on biodiversity and ecosystem services as a result of land-use for agriculture and buildings in PUMA’s supply chain are valued at € 37 million or 26% of the total E P&L. More than any other impact these costs are concentrated in Tier 4 with just 1% arising in PUMA’s operations and Tiers 1-3. Because leather is used extensively in footwear – PUMA’s dominant business line – and it is the most land extensive raw material that PUMA sources, the use of leather is the greatest single factor contributing to impacts on land-use. As a result, footwear accounts for € 34 million or 91% of the overall land-use impact.

Air Pollutants

The environmental damage caused by air pollution (particulates, ammonia, sulphur dioxide, nitrogen oxide, Volatile Organic Compounds (VOCs) and carbon monoxide) amounts to € 11 million, representing 7% of the E P&L total. Tier 4 is responsible for the lion’s share of the air pollution impact, valued at just over € 4 million. The single most significant contributor to this impact is ammonia emissions from animal waste and fertilisers used in agricultural processes.

Waste

The environmental impact caused by waste generation (landfill and incineration) is valued at € 3 million, representing 2% of the total PUMA E P&L. More than half of this derives from Tier 1 with some 21,000 tonnes of waste, followed by Tier 2 suppliers with some 8,000 tonnes and PUMA Operations with some 6,000 tonnes of waste. The vast majority of PUMA’s overall waste is produced in Asia / Pacific where most of PUMA’s suppliers are located.

Dr. Richard Mattison, Chief Executive Officer, Trucost said: “The current era of volatile resource prices, growing consumer and investor interest and greater regulatory standards mean that environmental issues are increasingly core to the business strategy. Water supplies, access to raw materials, a stable climate and clean air are vital to business operations, but many companies struggle to assess these issues due to their long and intricate supply chains. The Environmental Profit and Loss Account approach provides a robust framework to help companies unlock this complex challenge and embed sustainability at the heart of business decision making. PUMA has demonstrated that accounting for the environment is no longer a ‘holy grail’ objective, but simply makes good business sense.”

Responses to the PUMA 2010 Environmental Profit and Loss Account

The PUMA E P&L findings from 2010 have revealed that the lion share of PUMA’s environmental impact occurs within its supply chain of external partners, which the company has limited control over. In order to reduce the environmental impact at the lower end of the supply chain, PUMA is dependent on the cooperation of other industry players. To tackle this issue, PUMA has already started to gain support from national governments, environmental organizations, and representatives of science and industry to push for a shift in the current business paradigm towards a more sustainable approach; one that acknowledges the indispensible services provided by healthy ecosystems and respects their limits. The first step to achieving this change requires the services to be given monetary values in order to account for them when doing business.

At the same time, PUMA has started to implement solutions at its Tier 1 suppliers and within its own operations, where the company is able to provide support for change, independently.

Jochen Zeitz commented: “Reducing the environmental impacts that derive from PUMA’s supply chain represents a real challenge for us, as we have limited control over these activities and on further Tiers, suppliers can be shared by thousands of companies. However, we recognise that in order to make a real change we, along with our industry peers, have to work responsibly to help reduce the impacts of external supplier factories and raw material producers. In addition to driving innovation in various areas along our own supply chain and with our consumers, we also need the support of policy makers and the engagement of the whole industry to implement a new model for businesses that works with nature rather than against it and ultimately supports social and economic sustainability.”

Raising Awareness Among National Governments, the Industry and Science

The release of the initial E P&L results in May generated extensive media coverage and attained significant interest among governments, industry peers and international organizations.

Having been nominated as a co-opted member of the German Council for Sustainable Development, which advises the German government on sustainability issues, Jochen Zeitz presented the results and benefits of the PUMA E P&L to 15 Council members and a representative of the Federal Government last month. As a result, the council will launch a project that aims at implementing standards for PUMA’s environmental accounting statement and will promote the E P&L approach as an innovative practice in public debates.

The UK government featured PUMA’s groundbreaking analysis as a best practices case study for sustainable business in the Department for Environment, Food and Rural Affair (DEFRA) Natural Environment White Paper in June 2011. White papers are documents produced by the UK government setting out details of future policy on a particular subject, often forming the basis for legislative reform.

Also, the Co-Chair of the Investment Commission and Treasurer for the UN Environment Programme Financial Initiatives referred to the PUMA E P&L when speaking at the 2011 UNEP Financial Initiatives Global Roundtable in Washington last month. Further references have been made by sustainability experts Pavan Sukhdev6 and John Elkington7, the Harvard Business Review8, the Stanford Social Innovation Review9 and the World Business Council for Sustainable Development to name but a few.

Stepping up internal Resources at PPR and PUMA

In support of these findings, PPR and PUMA have stepped up their internal resources, hiring additional staff on a group level as well as within the PUMA.Safe team in order to address the challenge of reducing the environmental impact. On a corporate level, PPR is adding an Energy Management Specialist to its sustainability team, who will immediately begin to investigate opportunities for reducing Greenhouse Gas emissions. PPR has also hired a Conservation and Ecosystem Services Specialist who will be investigating the development of broadly-accepted definitions of sustainable cotton and rubber and internal standards for their sourcing.

To better target and focus its efforts, the PUMA.Safe team, which ensures that supplier factories adhere to PUMA’s social and environmental standards, has created both a Humanity and an Ecology team. Five additional environmental and social auditors will be joining the existing 13 employees in the PUMA.Safe team, so that environmental impacts at PUMA’s Tier 1 and Tier 2 suppliers can be better addressed and solutions for their reduction more rapidly developed. PUMA is also hiring a Chemical Engineer to look at solutions to identify more sustainable materials as well as supporting PUMA in phasing out harmful substances within the supply chain.

Developing synergies and partnerships

PUMA and PPR HOME have shared the results of the E P&L with other industry players and corporations to leverage adopting a new business model that takes the costs of using natural resources and eco-system services within corporate supply chains into account. Furthermore, PUMA has collected information on the environmental performance of suppliers which can be used to provide benchmarks for supplier performance targets and the sharing of best practice. PPR HOME will also leverage the lessons learned during PPR’s Group EP&L implementation stages in order to provide case studies across the Group’s companies and brands to assist in broader adoption among businesses.

Building Capacity to Penetrate the Supply Chain

PUMA has already stepped up its capacity building programme for its suppliers such as the CONSERV project at apparel and footwear factories in Vietnam. The project, which was launched in cooperation with the German investment and development organization DEG and international capacity building organization Assist Asia, will support the factories of Tier 1, Tier 2 and Tier 3 suppliers to reduce greenhouse gas emissions, secure availability of natural resources and minimize the risks from waste and pollution through the implementation of resource efficiency practices.

2011 Fourth Quarter Highlights

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

2011 Full Year Highlights

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

Outlook for the Financial Year 2012

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

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

Americas region drives sales growth in the fourth quarter

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

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

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

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

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

Gross Profit Margin improves

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

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

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

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

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

Net Earnings excel with a 137% improvement

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

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

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

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

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

Record sales increase to more than € 3 billion

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

Regions

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

Segments

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

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

Retail sales rise by € 45 million

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

Gross profit margin remains stable

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

Operating expenses

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

Earnings

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

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

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

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

Net Assets and Financial Position

Equity

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

Working Capital

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

Cashflow/ Capex

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

Cash Position

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

Dividend

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

Share buyback

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

Outlook

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

PROFITABILITY AFFECTED BY SLOW-DOWN IN EUROPE

Highlights First Quarter 2012

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

Outlook for the Financial Year 2012

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

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

 

Sales Performance By Region

EMEA sales decline in a challenging consumer environment

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

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

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

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

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

 

Sales Performance By Segment

Footwear sales soften primarily in mature markets
 

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

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

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

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

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

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

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

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

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

Expenses and Profitability

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

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

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

 

Satisfying retail performance

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

 

Operating Expenses rise as growth strategy is implemented

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

 

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

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

 

Financial Result / Income from associated companies improves

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

Earnings before Taxes (EBT) lower

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

Net Earnings drop slightly

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


 

Net Assets and Financial Position

Equity rises
 

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

 

Working Capital increases

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

 

Cashflow (before acquisitions) remains constant

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

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

 

Cash Position reduced

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

Outlook for the Financial Year 2012

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

The Management has therefore decided to speed up as well as significantly expand the scope of the company’s Transformation Program in order to streamline the cost bases and increase efficiencies in terms of organization, processes and systems. PUMA’s Management estimates that these actions will require one-time costs of up to approximately € 100 million, to be booked in the second half-year of 2012.

The Management therefore revises its previous guidance for PUMA’s 2012 net sales growth from a high-single digit to a mid-single digit rate and expects annual Net Earnings to decrease significantly from the € 230.1 million posted last year, impacted by the aforementioned one-off expense.

Further details of PUMA’s business performance during the second quarter and first half year of 2012 will be provided with the results announcement on 26 July 2012.

Performance Second Quarter 2012

• Consolidated sales increase 11.8% in Euro terms
• Gross profit margin remains stable at 49.1%
• EBIT decreases by 15.0% to € 47.1 million
• Net earnings decline by 29.2% to € 26.7 million
• EPS down from € 2.51 to € 1.78
• Scope of Transformation Program will be expanded
  
  

Performance First Six Months of 2012

• Consolidated sales grow 8.8% in Euro terms
• Gross profit margin softens to 50.2%
• EBIT reduced by 10.4% to € 149.1 million
• Net earnings decline by 12.8% to € 100.6 million
• EPS falls from € 7.69 to € 6.72
  
  

Outlook for the Financial Year 2012

• PUMA’s Management has revised its previous guidance for 2012 net sales growth from a high-single digit to a mid-single digit rate.

• Transformation Program to be extended, resulting in one-time costs of up to € 100 million.

• Management expects annual net earnings to decrease significantly after posting € 230.1 million of net earnings last year due to the aforementioned one-time expenses.

“Despite the poor consumer sentiment and challenging business environment particularly in Europe, PUMA achieved respectable sales growth in the second quarter and first half of this year,” said Franz Koch, CEO of PUMA SE. “However, pressure on gross profit margins and further strategic investments related to our ‘Back on the Attack’ plan in combination with a weakening European business impacted second quarter net earnings. We have therefore taken measures to secure sustainable and profitable growth by broadening the scope of our Transformation Program. This program is designed to reduce complexity and establish a more efficient business model, operating on a leaner cost base.”

Americas region and Accessories segment support PUMA’s second quarter sales growth

Net earnings weaker than expected

Sales Performance by Segment

PUMA’s second quarter consolidated sales grew by 11.8% in Euro terms and by 6.0% currency adjusted to € 752.9 million. Whereas Footwear sales were flat currency adjusted at € 370.9 million, with Teamsport and Running balancing the softening sales in the Motorsport and Fitness categories, Apparel sales increased by 7.9% to € 256.4 million, fueled in part by higher demand for fan wear in the Teamsport category on the back of EURO 2012. Accessories jumped by 24.3% to € 125.6 million with strong results in all regions for our Cobra Golf products and our socks business.

In PUMA’s Sportlifestyle business, the Archive Lite, an ultra-light shoe with a contemporary look that derives from the Suede and has been fused with performance technology such as the FAAS Foam and mash, continued to resonate well with consumers.

Over the first half of this year, consolidated sales improved by 8.8% in Euro terms or by 5.1% currency adjusted to € 1.57 billion. Footwear sales slowed down 1.2% currency adjusted. Apparel sales were up 8.0% currency adjusted and Accessories rose 21.5% currency adjusted, with Cobra Golf and the new Accessories joint venture in the US continuing to deliver excellent results.

Sales Performance by Region

Growth continues in the Americas and Asia

In regional terms, PUMA continued its excellent performance in the Americas with sales growing by 15.0% currency adjusted to € 278.7 million in the second quarter. Asia/Pacific posted a gain of 8.6% to € 190.6 million. Sales in EMEA declined by 3.0% to € 283.6 million, due to the difficult market environment in Europe and the weaker performance of the footwear category.

Half-year sales in the Americas rose strongly by 11.8% currency adjusted with good results across nearly all major markets. Asia/Pacific increased by 9.4% currency adjusted, supported by excellent numbers from India and Japan, while EMEA sales were down 2.1% currency adjusted with most markets not performing at the expected level, although Spain and Germany returned satisfying figures.

Sales Performance Retail

Retail posts solid growth

PUMA’s retail operations continue to provide solid growth. Second quarter retail sales were € 150 million, 22.3% ahead of last year’s € 122 million, representing 19.9% of total sales. From January to June, retail sales were up 19% from € 228 million to € 272 million, delivering 17.3% of total sales. Increased volumes at existing stores, new store openings as well as continued growth in our e-commerce business were responsible for this positive development.

Margins, Expenses and Profitability

Gross Profit Margin remains steady in Q2, but falls in H1

PUMA was mostly able to allay the effects of continued input price pressures in the second quarter. The gross profit margin stayed flat at 49.1% in the second quarter of 2012, supported by a favorable hedging impact compared to last year. However, the expected slight increase in margin did not materialize and we were therefore not able to offset higher input cost and margin pressure. Footwear rose slightly from 48.1% to 48.3% and Apparel improved from 48.9% to 49.4%. Accessories, however, fell back from 53.3% to 51.1% compared to 2011.

On a half year basis, the gross profit margin declined 70 basis points from 50.9% to 50.2%. Footwear fell from 49.8% to 48.9%. Apparel rose marginally from 51.4% to 51.5% while Accessories moved lower from 53.7% to 51.5% due to increased golf club business, which carries lower margins.

Operating Expenses increase

Second quarter operating expenses continued to rise as set out in our growth strategy. OPEX rose by 17.0% to € 327.4 million in the second quarter of the year compared to € 279.9 million last year. Increased expenditures were necessary to support the Euro-Cup in Poland and Ukraine and first initiatives for the Olympics in London, while at the same time PUMA has been extending RD&D resources and initiatives in order to strengthen the company’s product pipeline. In addition, PUMA’s increased number of retail stores, currency impacts and the extended scope of consolidation were responsible for a considerable portion of this increase.

For the first half of 2012, OPEX rose by 12.3% or € 71.4 million from € 578.5 million to € 649.9 million, impacted by the same factors as the second quarter figures. In addition, higher costs incurred to build up the groundwork of the Transformation Program, such as standardized ERP-IT-systems and the regional supply chain initiative.

EBIT declines due to lower than expected sales and higher expenses

Operating profit declined by 15.0% to € 47.1 million during the second quarter of 2012. On a half-year basis EBIT fell by 10.4% to € 149.1 million, which represents an EBIT margin of 9.5%.

Financial Result

The financial result declined from € -1.6 million to € -3.7 million due mainly to negative currency developments. Similarly, for the year to date, the financial result moved down from € -1.8 million to € -2.7 million.

Earnings before Taxes

PUMA’s second quarter EBT was down 19.4% to € 43.3 million. The quarterly tax ratio increased from 30.0% to 33.8%.

EBT also fell for the first half of the year from € 164.6 million to € 146.4 million, representing a drop of 11.0%. However, the company reported an improved tax rate of 29.1% compared to last year’s 30.0%.

Net Earnings decline

As a consequence of lower than expected gross profit and increased expenses, consolidated net earnings decreased by 29.2% to € 26.7 million, coming in weaker than Management had anticipated. Earnings per share fell by 29.0% to € 1.78.

For the first half of 2012, net earnings weakened by 12.8% to € 100.6 million and EPS decreased by 12.6% to € 6.72.

Net Assets and Financial Position

Total assets as of June 30, 2012 grew by 10.1% from € 2,343 million to € 2,580 million, mainly due to an increase in inventories. The equity ratio improved strongly from 59.4% to 65.7% when compared to the second quarter of 2011. In absolute figures, shareholders’ equity increased by 21.8% from € 1,392 million to € 1,696 million.

Working Capital related Assets and Liabilities

Looking at assets, inventories rose by 26.1% currency adjusted or 32.3% in Euro terms to € 672.3 million. This is mainly due to the continuing expansion of PUMA’s retail store network and higher average prices per unit on stock. Trade receivables also increased by 7.0% currency adjusted or 11.6% in Euro terms to € 582.7 million, broadly in line with sales growth. On the liabilities side, trade payables increased by 10.4% to € 469.5 million.

Cashflow/ CAPEX

The Free Cashflow (before acquisitions) came in at € -57 million compared to € -9 million for the same period in 2011, with the outflows consisting mostly of working capital increases. The payments for acquisitions relate to the purchase of the outstanding Dobotex shares, effected on January 1, 2012.CAPEX increased by 17.1% to € 34 million and continued for the most part to be related to investments aligned with “Back on the Attack”, such as supply chain initiatives and IT projects.

Cash Position

The total cash position as of June 30, 2012 was reduced by 19.8% from € 352 million to € 282 million, affected by the purchase of the remaining Dobotex shares. Including bank debts, the net cash position decreased 26.6% from € 321 million to € 236 million.
 

PUMA’s Transformation Program aiming at optimizing Business Model and improving Cost Structure

Given the challenges in its European business, coupled with increasing pressure on gross profit margins and the need for continued strategic investments into brand, product and the company’s structure, PUMA’s management has decided to accelerate the Transformation Program, which began in 2011 under the aegis of the company’s five-year growth plan.

This program aims to reduce complexity, increase operational efficiencies, and streamline the company’s cost bases. At the core of the program is the setup of a new regional business model which will initially be rolled out in Europe and will then be extended to the remaining regions.

The European setup will be simplified by consolidating the number of organizational entities within Europe from 23 countries to seven areas. Areas are groupings of countries where operations and back-office functions will be further centralized while each of the individual countries will maintain their commercial functions to enable a stronger focus on the end-consumer.

Another key component of the new regional business model is the establishment of a fully regionalized supply chain, which will significantly improve order management, inventory levels and turns, as well as production flows on the sourcing side. In order to enable and benefit from these new processes, PUMA has decided to roll out a globally harmonized IT systems landscape.

The extended scope of PUMA’s Transformation Program includes the continued optimization of PUMA’s retail portfolio mainly in Europe and North America. PUMA’s retail strategy consists of the selective adding of new stores in profitable locations, particularly in Emerging Markets, while closing those that are underperforming.

In addition, PUMA will further simplify its product portfolio by significantly reducing the overall number of articles developed. In line with the new regional business model, PUMA will develop strong global and regional collections while trimming collections that are created for specific local markets. Furthermore, collaboration and endorsement contracts that are either not viable or in line with PUMA’s long-term strategy will be terminated.

In addition to the above laid-out measures, PUMA will further improve the company’s cost structure by streamlining its global and regional organization setups.

PUMA’s Management estimates that these actions will require one-time costs of up to € 100 million, which will ultimately result in higher cost efficiency and working capital improvements in the upcoming years.

Managing Directors

Klaus Bauer (57), Chief Operating Officer, informed the Administrative Board that he is not planning to extend his current contract beyond 2012 due to his personal life planning. Michael Lämmermann (50), General Manager Finance, will take on the position of Chief Financial Officer, effective January 1, 2013 and will also be responsible for Legal in addition to Finance.

Klaus Bauer joined PUMA in 1989 and became a member of the Board of Management in 2009. As Chief Operating Officer, Klaus Bauer is responsible for Finance, Legal, Human Resources, IT, Logistics and Operations. He will remain in charge of his duties until he leaves the company at the end of the year, hence ensuring a smooth transition and hand-over to both Michael Lämmermann and the successor as COO, who will be announced at a later date.

Michael Lämmermann joined PUMA in 1993 and became the Director of Controlling in 1998. He was then promoted to Chief Financial Officer and Chief Operating Officer of PUMA North America, based in Westford, USA, a role he filled for 10 years, before returning to Germany to take up his current role as General Manager Finance.

Antonio Bertone (39), Chief Marketing Officer, will also be leaving the company at the end of 2012 to pursue other career opportunities after 18 years with PUMA. Antonio Bertone will continue to work for PUMA as a consultant on a project basis, providing his skills and expertise in managing global brand and marketing initiatives to PUMA. As Chief Marketing Officer, he oversees PUMA’s global brand management and will also remain in charge of his duties until the end of the year. His successor will be announced at a later date. Antonio Bertone had been a deputy member of PUMA AG´s Board of Management since 2008.
 

Outlook for the Financial Year 2012

The above laid-out one-time costs of up to € 100 million will be booked in the second half of 2012.

Management expects PUMA’s sales in the upcoming two quarters to grow, albeit at a reduced pace due to the increasingly difficult macro-economic environment and high levels of inventory in the markets.

The Management therefore revises its previous guidance for PUMA’s 2012 net sales growth from a high-single digit to a mid-single digit rate and expects annual Net Earnings to decrease significantly from the € 230.1 million posted last year, impacted by the aforementioned one-off expenses.

Performance Third Quarter 2012

• Consolidated sales increase 6.0% in Euro terms
• EBIT before special items decreases by 16.7% to € 98.8 million
• Special items € 80 million due to Transformation and cost reduction program
• EPS down from € 5.45 to € 0.81

Performance First Nine Months of 2012

• Consolidated sales grow 7.8% in Euro terms
• EBIT before special items reduced by 13.0% to € 247.9 million
• EBIT including special items € 168.6 million
• EPS declines from € 13.15 to € 7.53
• Equity ratio improves from 62.9% to 65.2%

Outlook for the Financial Year 2012

PUMA’s Management maintains its 2012 sales guidance at a mid-single digit rate in Euro terms.

• Transformation Program complemented by immediate cost cutting measures as the difficult business environment in particular in Europe required short-term adjustments.
• Management expects annual net earnings to be significantly below those of 2011, impacted in particular by the one-time expenses.

“PUMA posted a moderate increase in sales in the third quarter despite the challenging business climate in Europe,” said Franz Koch, CEO of PUMA SE. “We have taken decisive actions to overcome the issues we are currently facing in particular in Europe. Our Transformation Program 2010-2015 in combination with immediate cost cutting measures and a strengthened product pipeline in Performance and Lifestyle for next year will provide a solid basis for sustainable and desirable growth.”

Challenging Business Climate in Europe continues to slow down sales growth

 Sales Performance by Segment

PUMA’s third quarter consolidated sales grew by 6.0% in Euro terms and by 0.5% currency adjusted to € 892.2 million.

Footwear sales rose by 2.5% to € 441.9 million, supported by continuing demand for the lightweight running footwear range PUMA Faas and also Heritage styles such as the evergreen Suede Classics and our Archive Lite Mid and Low designs. PUMA’s success in its running footwear range was underlined by the Olympic Summer Games that saw PUMA’s blend of Sportlifestyle at its best: Outstanding athletic performances, combined with cool events in town. However, the positive performance in our Running category was dampened by declines in the Fitness & Training and Motorsport categories in PUMA’s mature markets.

Apparel sales increased by 5.6% to € 311.2 million, fueled not only by continued strength in our Cobra PUMA Golf division, but also by sales of replica jerseys as part of our Teamsport category. PUMA has had tremendous success with Borussia Dortmund replica and fan wear, which has played an important part in our sales performance in Germany this year.

Accessories continued to climb strongly, up 20.1% to € 139.1 million with strong results in our American sock and bodywear business and also in Golf. In September, PUMA was part of a sensational finish at the 2012 Ryder Cup when Cobra PUMA Golf athlete Ian Poulter, the undisputed player of the tournament, won all four matches he played in the prestigious competition between the best golfers from Europe and the USA.

Over the first nine months of this year, consolidated sales improved by 7.8% in Euro terms or by 3.3% currency adjusted to € 2.46 billion. Footwear sales rose 2.2% in Euro terms, Apparel sales were up 9.8% supported by strong sales in Running and other performance items, and Accessories rose 23.4%, with Cobra PUMA Golf products resonating well with consumers.

Sales Performance by Region

 Growth continues in the Americas

In regional terms, sales in EMEA declined by 3.4% to € 396.7 million as the economic slow-down in Europe and restrained consumer spending continued to have a severe impact on PUMA’s business performance. Strong numbers from Germany and Russia could not completely offset the slowdown elsewhere. However, PUMA continued its excellent performance in the Americas with sales growing by 20.5% in Euro terms (10.6% currency adjusted) to € 283.2 million in the third quarter, with Argentina, Brazil and Mexico all providing strong double digit increases and continued growth in North America. Asia/Pacific posted a gain of 8.3% in Euro terms to € 212.3 million with good numbers from Korea and India in particular. Growth in China has slowed down due to a challenging overall market environment and high inventory levels in the market.

First-nine-month sales in EMEA were down 2.5% with most markets in Western Europe continuing to face challenges, although Germany returned satisfying figures, as did Turkey. Conversely, sales in the Americas rose strongly by 18.3% with good results across both North and Latin America. North America benefitted in particular from continued growth in our socks and bodywear subsidiary as well as Cobra PUMA Golf. Asia/Pacific increased by 14.9%, supported again by excellent numbers from India and also Japan.

Sales Performance Retail

 Retail continues to grow

PUMA’s owned and operated retail operations generated higher sales numbers. Third-quarter retail sales were € 165.0 million, an increase of 22.7% compared to € 134.0 million for the third quarter of 2011 and equal to 18.5% of total sales. For the first nine months to the end of September, retail sales were up 20.4% from € 363.0 million to € 437.0 million, delivering 17.7% of total sales compared to 15.8% at the same stage last year. Comparable sales rose at existing stores and PUMA continues to open new selective stores in profitable locations. However, a considerable amount of retail stores in mature markets are not generating satisfying contributions and will be part of the retail store network optimization. PUMA’s e-commerce business is growing and has contributed positively.

Margins, Expenses and Profitability

 Gross Profit Margin fell in Q3 and for the first nine months of 2012

The gross profit margin declined to 48.2% in the third quarter of 2012, under pressure from input costs and unfavorable trading conditions in Europe. Footwear fell from 49.8% to 46.1%, mainly impacted by inventory clearances which have led to a stock reduction in the footwear category in the third quarter, ahead of the launch of our new ranges for Spring/Summer 2013. Apparel fell marginally from 50.3% to 50.1%. Accessories, however, rose from 50.0% to 50.6% compared to 2011.

On a nine-month basis, the gross profit margin declined 110 basis points from 50.6% to 49.5%. Footwear fell from 49.8% to 47.9%. Apparel remained steady at 50.9% while Accessories moved lower from 52.4% to 51.2% due to higher input costs and the competitive Teamsport business.

Operating Expenses increase

Third-quarter operating expenses rose by 9.5% to € 336.1 million in the third quarter of the year compared to € 307.0 million last year. Retail costs have continued to rise as PUMA has increased the number of retail stores it owns and operates, whilst the Olympics and associated costs meant that marketing was significantly higher than over the same period in 2011. As well as continuing to invest steadily in RD&D in order to further strengthen our product portfolio, we are continuing to enhance our supply chain and IT-systems.

For the first nine months of 2012, OPEX rose by 11.3% or € 100.5 million from € 885.5 million to € 986.0 million, impacted as above by increased marketing, retail and RD&D expenditures as well as investments in line with the accelerated Transformation Program. The OPEX has also been impacted by currency effects which alone led to an increase of 450 basis points.

Operating result before Special Items

As a result of the lower gross profit margin and increased operating costs related to the Transformation Program, the operating result before special items declined by 16.7% to € 98.8 million during the third quarter of 2012. On a nine months basis EBIT before special items fell by 13.0% to € 247.9 million, an EBIT margin of 10.1%

Special Items

PUMA recorded a total of € 80 million in special items that are related to the Transformation Program during the third quarter. These have been mainly incurred by restructuring the European region, optimizing the retail portfolio and reorganizing its global operations and functions.

EBIT after special items

EBIT including special items were equal to € 19.6 million for the third quarter and € 168.6 million for the nine months to the end of September.

Financial Result

The financial result was positive at € 1.7 million compared to € -2.1 million in the third quarter of 2011, due mainly to positive currency developments. Similarly, for the year to date, the financial result improved from € -3.9 million to € -0.9 million.

Earnings before Taxes

PUMA’s third-quarter EBT was down 81.7% to € 21.3 million. The quarterly tax ratio decreased from 30.0% to 27.7%.

EBT also fell for the first nine months of the year from € 281.1 million to € 167.7 million after special items, a drop of 40.3%. The company reported an improved tax rate of 28.9% compared to last year’s 30.0%.

Net Earnings decline

As a consequence of continued pressure on the gross profit margin, increased expenditures and the special items in particular, consolidated net earnings fell by 85.1% to € 12.2 million. Earnings per share therefore fell to € 0.81.
For the first nine months of 2012, net earnings weakened by 42.8% to € 112.8 million and EPS decreased to € 7.53.
Net Assets and Financial Position

Equity

Total assets as of September 30, 2012 grew by 6.5% from € 2,423 million to € 2,580 million, mainly due to an increase in inventories. The equity ratio improved from 62.9% to 65.2% when compared to the third quarter of 2011. In absolute figures, shareholders’ equity increased by 10.3% from € 1,524 million to € 1,682 million.

Working Capital related Assets and Liabilities

Looking at assets, inventories rose by 21.3% in Euro terms to € 646.0 million or 16.8% currency adjusted. This increase is significantly lower than in previous quarters and testament that our efforts to reduce the current over-stock levels have been successful in the quarter. Inventories have generally advanced in the wake of continued retail expansion as well as higher average prices per unit on stock. Trade receivables rose only slightly to € 623.7 million, which is due to a sharper focus and reflects PUMA’s dedication to improve outstanding days. On the liabilities side, trade payables fell slightly to € 382.9 million.

Cashflow/ CAPEX

The Free Cashflow (before acquisitions) came in at € -82.7 million compared to € -89.4 million for the same period in 2011, with working capital increases offset by lower tax payments. The payments for acquisitions relate to the purchase of the outstanding Dobotex shares, effected on January 1, 2012.
CAPEX increased by 21.4% to € 54.2 million and continued for the most part to be related to investments aligned with the “Back on the Attack” growth plan, such as supply chain initiatives, IT projects and profitable retail store extension.

Cash Position

The total cash position as of September 30, 2012 was reduced by 9.4% from € 289.5 million to € 262.2 million, affected by the purchase of the remaining Dobotex shares. Including bank debts, the net cash position decreased 19.5% from € 255.1 million to € 205.4 million.

Implementation Status of PUMA’s Transformation Program and Cost Reduction Measures

PUMA has progressed with and has already begun to implement major parts of its Transformation Program which was introduced in 2010 as a new development phase with the aim to reduce complexity and increase operational efficiencies in the long run. In addition, immediate cost reduction measures were initiated to improve the overall current financial performance.

New Regional Business Model: At the core of the program is the setup of a new regional business model which will initially be rolled out in Europe and then gradually be extended to the remaining regions. The European organizational structure has now also been expanded to include several central and eastern European Union member states (Czech Republic, Poland, Hungary, Slovakia and the Baltic nations). Furthermore, PUMA has reduced the number of organizational entities from 23 countries to seven areas in order to reduce complexity of the business. Each area has a full management team and P&L responsibility, while each country will focus its activities on the commercial side of the business. The seven areas are: DACH (Germany, Austria, Switzerland), IBERIA (Spain, Portugal), UKIB (Belgium, Ireland, Luxemburg, Netherlands, UK), NORDICS (Denmark, Finland, Norway, Sweden) EASTERN EUROPE (Czech Republic, Estonia, Hungary, Lithuania, Latvia, Poland, Slovakia), FRANCE and ITALY.

Consolidation of Warehouse Portfolio: Correspondingly, PUMA has initiated the consolidation process of its warehouse portfolio across Europe in order to generate further efficiencies and cost savings with the long-term objective to align the warehouse network with the new area structure.

Optimization of Retail Portfolio: PUMA has decided to close a total of approximately 80 unprofitable stores with the focus on mature markets, while the company will continue to open new selected stores in profitable locations primarily in emerging markets. By the end of December 2013, PUMA aims to operate around 540 stores worldwide, compared to its current 590 stores.

Termination of Collaboration and Endorsement Contracts: PUMA has decided to divest unprofitable collaborations and endorsement contracts in line with the overall consolidation of its product portfolio.

Reducing Product Collections: PUMA is planning to downsize its overall product palette by 30% by the end of 2015. The number of articles has already been aligned with the company’s core categories. The major portion of the article reduction will come from streamlining regional and local ranges. The first significant results of this rationalization and simplification will be visible in Spring/Summer 2013.

Establishment of Business Units: PUMA will evolve its international organization establishing seven Business Units (Teamsport; Running, Training and Fitness; Golf; Fundamentals; Motorsport; Lifestyle; Accessories and Licensing). Product management, design, development and product-specific marketing will be clustered under each Business Unit. Establishing the Business Unit structure will help PUMA to press ahead with its sharpened focus on Performance as well as Lifestyle categories.

Further actions are currently under investigation, to be put in place during the fourth quarter of the year.

Outlook for the Financial Year 2012

Against the backdrop of a difficult business environment in particular in Europe, PUMA’s management has complemented its 2010-2015 Transformation Program with immediate cost reduction measures. The above actions require one-time costs of € 80 million which were booked in the third quarter. PUMA expects that these one-time expenses will be amortized within two to three years.

PUMA’s management continues to forecast annual sales rising by mid-single digits in Euro terms and net earnings significantly decreasing from last year’s level due to the aforementioned one-off expenses.