PUMA SE’s financial statements have been prepared pursuant to the rules of the German Handelsgesetzbuch (HGB – German Commercial Code).
PUMA SE is the parent company of the PUMA Group. PUMA SE’s results are significantly influenced by the directly and indirectly held subsidiaries and shareholdings. The business development of PUMA SE is essentially subject to the same risks and opportunities as the PUMA Group.
PUMA SE is responsible for wholesale business in the DACH region, consisting of the home market of Germany, Austria and Switzerland. Furthermore, PUMA SE is also responsible for managing global distributors in the area of motorsport, the pan-European distribution for individual key accounts and sourcing products from European production companies as well as global licensing management. In addition, PUMA SE acts as a holding company within the PUMA Group and is as such responsible for international product development, marketing and the areas of finance, operations and PUMA’s strategic direction.
RESULTS OF OPERATIONS
Sales (including royalties and commission income) overall increased in financial year 2017 by 16.4% to € 629.2 million. The increase was a result of increased sales in the DACH region, strong sales growth in individual regions and higher royalties and commission income. Product sales in the DACH region increased by 24.1% to € 227.4 million. At the same time, product sales in the other regions increased to € 73.2 million. Subsequently, PUMA SE sales from the sale of products increased overall by 34.2% to € 300.6 million. The royalties and commission income included in sales increased by 3.0% to € 289.7 million and other sales increased by 11.1% to € 38.8 million.
Other operating income amounted in 2017 to € 60.7 million (previous year: € 57.4 million) and in particular includes realized and unrealized income from currency conversion with regard to the reporting date valuation of receivables and payables in foreign currencies.
The total expenditure from material expenses, personnel expenses, depreciations/amortizations and other operating expenses increased compared to the previous year by 25.8% to € 831.0 million (2016: total € 660.8 million). The increase in material expenses was associated with the increase in sales.
Personnel expenses increased among other things due to the increased number of employees. Other operating expenses increased due to targeted further investment in marketing.
The financial result increased compared to the previous year by 92.1% to € 279.1 million. The cause for the increase was higher income from profit transfer agreements and decreasing expenses from loss absorption. In addition, write-ups on financial investments were made in 2017 which contrast the depreciations/amortizations on financial investments in the previous year.
The income before tax increased by 67.8% from € 82.2 million to € 137.9 million. Expenses for income taxes increased from € 3.5 million to € 9.3 million. Net income amounted to € 128.7 million compared to € 78.7 million in the previous year.
NET ASSETS
Total non-current assets increased in 2017 by 10.3% to € 559.8 million. The increase resulted mainly from investments in intangible assets and in the new building and the write-up of financial investments.
In total current assets, inventories increased by 15.4% to € 57.9 million due to the increase of business volume. Trade receivables and receivables from affiliated companies remained almost unchanged in comparison to the previous year.
On the liabilities side, equity increased due to the net income by 21.5% to € 665.7 million. That corresponds to an improvement of the equity ratio from 47.3% to 52.3%. The increase in provisions resulted from higher personnel provisions and higher provisions for outstanding invoices. The decline in liabilities mainly resulted from the repayment of liabilities existing towards affiliated companies.
FINANCIAL POSITION
The positive development of working capital significantly contributed to the improvement of cash flow from operating business activity. Cash outflow from investing activities increased slightly from € -63.0 million to € -68.3 million. This resulted in an overall improvement in free cash flow of € -84.3 million in the previous year to € -70.5 million in 2017.
The cash flow from financing activity showed a cash inflow of € 116.8 million in 2017 (previous year: € 109.8 million). The increase compared to the previous year resulted from taking out a loan to finance the new building.
This led to an overall increase in cash and cash equivalents from € 73.1 million to € 119.4 million. Moreover, PUMA SE also has various financing credit lines at its disposal. As of December 31, 2017, the credit lines amounted to € 320.7 million and were not used as at the reporting date.
OUTLOOK
For the financial year 2018 PUMA SE expects a slight increase in net sales and income before tax.
The proposal of a one-off dividend of € 12.50 per share for the financial year 2017 will lead to a significant reduction in the equity ratio in the financial statements of PUMA SE according to German Commercial Code.
COMBINED NON-FINANCIAL REPORT
Due to the CSR Guideline Implementation Law, PUMA was obligated to submit a non-financial explanation for the first time in financial year 2017.
Sustainability is an important element in PUMA’s company strategy. Social, economic and, environmental sustainability have been core values at PUMA for years. Therefore, PUMA publishes its Annual Report each year on the day of the Annual General Meeting, which contains the sustainability report for the past year, including the combined non-financial report, in addition to the Combined Management Report and the Consolidated Financial Statements. Furthermore, important sustainability information can be found on PUMA’s website in the sustainability section (http://about.PUMA.com/en/sustainability). PUMA is planning to publish its sustainability report for financial year 2017 on Thursday, April 12, 2018, the day of PUMA SE’s Annual General Meeting.
RELATIONSHIPS WITH AFFILIATED COMPANIES
At the end of the dependent company report given by the Managing Directors for the financial year 2017, the following statement was given: “Under the circumstances which were known to the Managing Directors at the time when the transactions listed in the report on relationships with affiliated companies were made, PUMA SE received an appropriate consideration in all cases. There were no reportable measures taken or not taken in the reporting period.”