Results of Operations


Illustration of Earnings Development in 2015 Compared to 2014
In the outlook in the 2014 Annual Report, PUMA forecasted a slight increase in gross profit margin for 2015 based on the assumption of fewer discounts and a favorable profit mix. PUMA forecasted a slight increase over 2014 in both operating income (EBIT) and net earnings.

Due to the continued negative currency effects, the forecast had to be revised downwards in May 2015, as the countermeasures taken were not able to fully offset the negative exchange rate effects. While the sales forecast was maintained, PUMA expected a decline in the gross profit margin within a range of 100 to 150 basis points from the previous year (2014: 46.6%). Currency-adjusted operating income (EBIT) was expected to be between € 80 million and € 100 million (previous year: € 128.0 million). Expectations for net income were corrected in line with the adjustment to operating income.

The adjusted forecasts were confirmed during the year and were fully met for the full year 2015.



Gross Profit Margin
In the financial year 2015, gross profit increased by 11.2% from €1,385.4 million to €1,540.2 million.

The gross profit margin declined by 110 basis points from 46.6% to 45.5%, due mainly to unfavorable exchange rate effects. In addition to the strong US dollar, the development of other key currencies also had a negative effect.

The decline in the margin was reflected in all product segments. The gross profit margin the Footwear segment fell from 42.6 % in the previous year to 41.2%. In Apparel, a decline from 49.5% to 49.3% was recorded. The gross profit margin for Accessories was 48.0%, compared with 50.0% in 2014.


Other Operating Income and Expenses
Strict cost controls remained a high priority for PUMA in the financial year 2015.

Excluded from these savings measures were investments in the IT infrastructure and expenses for increased marketing activities with the aim of repositioning PUMA as the fastest brand in the world. These measures included media campaigns and the sponsorship of global PUMA brand ambassadors.

The operation and opening of new retail stores contributed to the increase in other operating income and expenses. In addition, unfavorable exchange rate effects had a negative impact on other operating income and expenses. In the financial year 2015, they increased by 14.4% from € 1,276.8 million to € 1,460.5 million.

As a percentage of sales, the expense ratio stood at 43.1%, virtually unchanged from the previous year.

In terms of sales expenditure, expenditure for marketing/retail purposes increased significantly by 16.3% from € 599.7 million to € 697.6 million. This development is primarily related to the systematic continuation of the Forever Faster brand campaign and the increase in the number of the company’s own retail stores. As the increase is slightly higher in proportion to the sales development, the expense ratio increased marginally to 20.6% (previous year: 20.2%). Other sales and distribution expenses stood at € 442.8 million, an increase of 11.3%. The expense ratio decreased from 13.4% to 13.1%.

Expenditures for product management and merchandising increased by 7.8% to €37.5 million. The expense ratio remained stable at 1.1% (previous year: 1.2%). Expenditures for research and development increased by 22.7% to €56.7 million and the corresponding expense ratio was 1.7% (previous year: 1.6%).

Other operating income increased by 38.3% and totaled €23.9 million at the end of the financial year (previous year: €17.3 million). Administrative and general expenses rose slightly by 16% to €249.8 million. The expense ratio for administrative and general expenses was slightly above the previous year’s level at 7.4% (previous year: 7.2%).

Depreciation/amortization totaling €57.5 million (previous year: €50.5 million) is included under the respective cost items. This represents a 14.0% increase in depreciation/amortization compared to the previous year.

Operating Income (EBIT)
The operating income in the financial year 2015 was €96.3 million (-24.8% compared to the previous year) and was significantly impacted by negative effects from ongoing exchange rate fluctuations. This result is at the upper end of the adjusted forecast of €80 million to €100 million.

The operating margin declined accordingly from 4.3% to 2.8%.


Financial Result
The financial result changed from €-6.2 million to €-11.2 million. Expenses for currency conversion differences had a negative impact, resulting in increased financial expenses. Borrowing also increased interest expenses, which totaled €14.4 million (previous year: €9.8 million). Income from the associated company Wilderness Holdings Ltd, which is also included in the financial result, totaled €1.0 million in financial year 2015 (previous year: €1.3 million).

Earnings before Taxes (EBT)
In the financial year 2015, PUMA generated earnings before taxes of €85.0 million, a decline of 30.2% from the previous year (€121.8 million). The tax expense was €23.3 million (€37.0 million), resulting in a tax rate of 27.5% (30.4%).

Net Earnings Attributable to Non-controlling Interests
Income attributable to non-controlling interests in PUMA Wheat, PUMA Janed and PUMA Kids Apparel North America increased by 18.4% to €24.6 million (previous year: €20.8 million). PUMA Wheat and PUMA Janed distribute accessories in the American market, PUMA Kids Apparel concentrates on children’s clothing.

Net Earnings
Group earnings in 2015 stood at € 37.1 million and were thus in line with the expectations of the adjusted forecast. The decline was due mainly to the continued unfavorable developments in exchange rates and their negative impact on the gross profit margin. As a consequence, both earnings per share and diluted earnings per share fell to € 2.48 (previous year: € 4.29).