PUMA AG Rudolf Dassler Sport

EANS-News: PUMA AG Rudolf Dassler Sport
PUMA AG announces its Consolidated Financial Results for the Fourth Quarter and Financial Year 2010

@@start.t1@@--------------------------------------------------------------------------------   Corporate news transmitted by euro adhoc. The issuer/originator is solely   responsible for the content of this announcement. --------------------------------------------------------------------------------@@end@@

Financial Figures/Balance Sheet

Herzogenaurach (euro adhoc) - Herzogenaurach, Germany, February 15, 2011 - PUMA AG announces its Consolidated

Financial Results for the Fourth Quarter and Financial Year 2010

Highlights Fourth Quarter 2010:

@@start.t2@@• Consolidated sales increased by 28.2% to EUR 623 million, posting record
  • Gross profit margin softened to 45.4% due to shift in regional mix,
      hedging, and sourcing prices
  • Operating result before special items increased by 2.6% to EUR 41.1 million
  • EPS improved to EUR 0.93
  • PUMA´s "Back on the Attack" plan presented in October outlined the
      company´s future growth strategy@@end@@

Highlights January - December 2010:

@@start.t3@@• Consolidated sales increased by 10.6% in Euro terms to more than EUR 2.7
      billion for the first time
  • Gross profit margin stood strong at 49.7%
  • Operating result before special items improved by 12.7% to EUR 337.8 million
  • EBT more than doubled to EUR 301.5 million
  • Net earnings improved by 154.0% to EUR 202.2 million
  • EPS increased significantly to EUR 13.45 from EUR 5.28 last year
  • Balance sheet ratios and cash position remained strong@@end@@

Outlook 2011:

@@start.t4@@• Despite a lack of major sporting events in 2011, Management expects sales
         to increase by mid to high single-digits for the full year.
      • Due to investments in marketing, product and process optimization that
         are part of our "Back on the attack" strategy, management expects the
         OPEX ratio to increase.
      • Net Earnings expected to improve by mid single-digits assuming a modest
         increase in sourcing costs related to raw materials and wages.@@end@@

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

The Year 2010

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

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

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

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

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

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

Sales and Earnings Development 4th Quarter 2010

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

Sales and Earnings Development January-December 2010

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

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

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

Operating Expenses

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

EBIT before special items

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


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

Financial Result

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

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

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

Regional Development

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

Net Assets and Financial Position


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

Working Capital

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


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


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

Share buy back

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

Other Events

PUMA AG to convert into a Societas Europaea (SE)

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

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


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

This  document  contains  forward-looking  information    about    the Company´s financial status and strategic initiatives. Such information  is  subject  to  a certain level of risk and uncertainty that  could  cause  the  Company's  actual results  to  differ   significantly  from  the  information  discussed  in    this document. The forward-looking information is based on the  current   expectations and prognosis of the  management  team.  Therefore,   this  document  is  further subject to the risk that such expectations or prognosis, or the premise of  such underlying expectations  or  prognosis,  become  erroneous.  Circumstances  that could alter the Company's actual results and  procure  such  results to  differ significantly from those contained in forward-looking statements made by  or  on behalf of the Company include, but are not limited to those discussed be above.


PUMA is one of the world´s leading sportlifestyle  companies  that   designs  and develops footwear, apparel and accessories.  It is committed to working in  ways that contribute to the world by supporting Creativity, SAFE  Sustainability  and Peace, and by staying true to the principles of  being  Fair,  Honest,  Positive and Creative in decisions made and actions taken. PUMA starts in Sport and  ends in Fashion. Its Sport Performance and Lifestyle labels include  categories  such as Football, Running, Motorsports, Golf  and  Sailing.  Sport  Fashion  features collaborations  with   renowned  designer  labels  such  as  Alexander    McQueen, Yasuhiro Mihara and Sergio Rossi. The PUMA Group owns  the  brands  PUMA,   Cobra and Tretorn.  The company, which was founded in 1948, distributes  its  products in ore than 120 countries, employs more than  9,000  people  worldwide  and  has headquarters in Herzogenaurach/Germany, Boston, London and Hong Kong.  For  more information, please visit www.puma.com

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Contact: Kerstin Neuber

Telefon: +49 (0)9132 81-2984

E-Mail: Kerstin.Neuber@puma.com

Branche: Consumer Goods
ISIN:      DE0006969603
WKN:        696960
Index:    Midcap Market Index, MDAX, CDAX, Classic All Share, HDAX,
              Prime All Share
Börsen:  Frankfurt / regulated dealing/prime standard
              Berlin / free trade
              Hamburg / free trade
              Stuttgart / free trade
              Düsseldorf / free trade
              Hannover / free trade
              München / regulated dealing

Weitere Meldungen: PUMA AG Rudolf Dassler Sport

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