Puma 1Q Net Profit Falls To 5.6 Million
The Associated Press
05/08/09 - 01:28 PM EDT
GEORGE FREY
FRANKFURT (AP) German sportswear company Puma AG said Friday net profit fell substantially in the first quarter as the global recession and restructuring charges hurt sales and earnings.
The Herzogenaurach-based company reported a net profit of 5.6 million ($7.5 million) in the January-March period, a fraction of the 90 million made in the first quarter of 2008.
Puma, which is Germany's second largest sportswear company behind Adidas AG, said sales for the period fell about 1 percent, to 738 million compared with 741 million a year earlier. However adjusted for currency effects, the sales result was pushed down by more than 3 percent.
Puma said first quarter earnings were affected by a one-time charge of 110 million which the company will use to restructure operations and organization, although it said it did not expect a reduction in the workforce. Puma called the move a proactive step to ensure an even leaner and more efficient company.
"Despite an ongoing slowdown in the global consumer's environment, Puma managed to post a solid sales and earnings performance before one-time expenses in the first quarter," Jochen Zeitz, the company's chief executive said in the company's report.
"Due to the worldwide recession, we plan for business to remain challenging in 2009, and have therefore decided to implement further measures to align our cost structure with the current market environment."
The company did not provide a detailed outlook, but said those measures included a cost savings plan which aims to save 150 million by 2011.
Puma however did say it expected benefits from next year's World Cup in South Africa. Puma is the outfitter of 11 African national teams and the defending champion, Italy. That means the company should see a boost in soccer related sales as fans snap up team garb.
Puma said sales in Europe, the Middle East and Africa, which makes up more than half of the company's sales, fell by a currency adjusted 3 percent to 366 million from 391 million in the first quarter a year ago. Sales in the year-ago quarter benefited from sporting events including the Euro2008 soccer tournament and the soccer African Cup of Nations.
Sales in the Americas for the quarter rose 12 percent currency neutral to 178 million from around 160 million in the first quarter a year ago. Sales in the U.S. rose more than 3 percent to 139 million.
In the Asia-Pacific region sales rose by 14 percent in euro terms to 153 million from around 130 million in the first quarter of 2008.
Around 65 percent of Puma shares are owned by the French retail and luxury goods company PPR, which also has interests in companies including the Gucci group.
Shares of Puma closed down 5.2 percent at 153.60 in Frankfurt.
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On the Net:
http://www.puma.com
