EANS-News: PUMA SE PUMA speeds up and extends Scope of Corporate
Transformation Program
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Financial Figures/Balance Sheet
Herzogenaurach (euro adhoc) - PUMA speeds up and extends Scope of Corporate
Transformation Program
Herzogenaurach, July 26, 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 EUR 47.1 million
- Net earnings decline by 29.2% to EUR 26.7 million
- EPS down from EUR 2.51 to EUR 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 EUR 149.1 million
- Net earnings decline by 12.8% to EUR 100.6 million
- EPS falls from EUR 7.69 to EUR 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 EUR 100 million.
- Management expects annual net earnings to decrease significantly after
posting EUR 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 EUR 752.9 million. Whereas Footwear sales were
flat
currency adjusted at EUR 370.9 million, with Teamsport and Running balancing
the
softening sales in the Motorsport and Fitness categories, Apparel sales
increased by 7.9% to EUR 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 EUR 125.6 million with strong results in all regions for our Cobra
Golf
products and our socks business.
The performances of the PUMA supported Italian and Czech teams were resounding
successes for our growing football category and clearly underline PUMA's
reinforced commitment to strengthen our brand visibility and position as one of
the top three football brands. The "Squadra Azzurra" made it all the way to the
final, while the Czech Republic put on an excellent display to reach the
quarter-finals. PUMA's main footwear style for the Euro 2012, the new EvoSpeed,
worn by German striker Mario Gomez, was launched shortly before the start of
the tournament, generating strong sell-through figures.
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 EUR 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 EUR 278.7 million in the
second
quarter. Asia/Pacific posted a gain of 8.6% to EUR 190.6 million. Sales in
EMEA
declined by 3.0% to EUR 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 EUR 150 million, 22.3% ahead of last year's EUR 122
million,
representing 19.9% of total sales. From January to June, retail sales were up
19% from EUR 228 million to EUR 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 EUR 327.4 million in the second quarter of
the
year compared to EUR 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 EUR 71.4 million from EUR
578.5
million to EUR 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 EUR 47.1 million during the second
quarter
of 2012. On a half-year basis EBIT fell by 10.4% to EUR 149.1 million,
which
represents an EBIT margin of 9.5%.
Financial Result
The financial result declined from EUR -1.6 million to EUR -3.7 million due
mainly
to negative currency developments. Similarly, for the year to date, the
financial result moved down from EUR -1.8 million to EUR -2.7 million.
Earnings before Taxes
PUMA's second quarter EBT was down 19.4% to EUR 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 EUR 164.6 million to EUR 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 EUR 26.7 million, coming
in
weaker than Management had anticipated. Earnings per share fell by 29.0% to
EUR
1.78.
For the first half of 2012, net earnings weakened by 12.8% to EUR 100.6
million
and EPS decreased by 12.6% to EUR 6.72.
Net Assets and Financial Position
Equity
Total assets as of June 30, 2012 grew by 10.1% from EUR 2,343 million to EUR
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 EUR 1,392
million
to EUR 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 EUR 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
EUR 582.7 million, broadly in line with sales growth. On the liabilities
side,
trade payables increased by 10.4% to EUR 469.5 million.
Cashflow/ CAPEX
The Free Cashflow (before acquisitions) came in at EUR -57 million compared to
EUR
-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 EUR 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 EUR
352
million to EUR 282 million, affected by the purchase of the remaining
Dobotex
shares. Including bank debts, the net cash position decreased 26.6% from EUR
321
million to EUR 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 EUR 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 EUR 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 EUR 230.1 million
posted
last year, impacted by the aforementioned one-off expenses.
[pic]
Rounding differences may be observed in the percentage and numerical values
expressed in millions of Euro since the underlying calculations are always
based on thousands of Euro.
[pic]
Rounding differences may be observed in the percentage and numerical values
expressed in millions of Euro since the underlying calculations are always
based on thousands of Euro.
[pic]
Rounding differences may be observed in the percentage and numerical values
expressed in millions of Euro since the underlying calculations are always
based on thousands of Euro.
Media Relation:
Kerstin Neuber - Corporate Communications - PUMA SE - +49 9132 81 2984 -
kerstin.neuber@puma.com
Investor Relations:
Carl Baker - Finance - PUMA SE - +49 9132 81 3188 - carl.baker@puma.com
Notes to the editors:
- This press release and financial reports are posted on www.about.puma.com.
- PUMA SE stock symbol:
Reuters: PUMG.DE, Bloomberg: PUM GY,
Börse Frankfurt: ISIN: DE0006969603- WKN: 6969603
Notes relating to forward-looking statements:
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 |
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 and
Mihara Yasuhiro. The PUMA Group owns the brands PUMA, Cobra Golf and Tretorn.
The company, which was founded in 1948, distributes its products in more than
120 countries, employs about 11,000 people worldwide and has headquarters in
Herzogenaurach/Germany, Boston, London and Hong Kong. For more information,
please visit http://www.puma.com
Further inquiry note:
Kerstin Neuber
Telefon: +49 (0)9132 81-2984
E-Mail: Kerstin.Neuber@puma.com
end of announcement euro adhoc
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company: PUMA SE
PUMA Way 1
D-91074 Herzogenaurach
phone: +49 (0)9132 81 0
FAX: +49 (0)9132 81-2246
mail: investor-relations@puma.com
WWW: http://about.puma.com/?lang=de
sector: Consumer Goods
ISIN: DE0006969603
indexes: Midcap Market Index, MDAX, CDAX, Classic All Share, HDAX, Prime All
Share
stockmarkets: free trade: Hannover, Berlin, Hamburg, Düsseldorf, Stuttgart,
regulated dealing: München, regulated dealing/prime standard:
Frankfurt
language: English