Entrepreneurial activities are always associated with opportunities and risks. This is particularly true for the fast-moving sports and lifestyle industry in which PUMA globally operates and is therefore continuously exposed to risks and opportunities that must be identified and managed. We need effective risk and opportunity management through which risks and opportunities can be systematically recognized and monitored. A risk is defined as one or more future events with unplanned, adverse effects for the company up to any threat to the continued existence of the company. Similarly, an opportunity is defined as one or more events with unplanned, positive consequences for the company.

The Management Board of PUMA SE has overall responsibility for the risk and opportunity management system. The Risk Management Committee (RMC) is a management-level committee and responsible for the design and monitoring of the risk management system and therefore also the first point of contact for risk reporting. The task of operationally coordinating the group-wide risk management system has been transferred to Group Internal Audit & Governance, Risk Management & Internal Control (GRC). Opportunity management is not part of the risk management. Individual risk interviews are conducted with selected executives as risk owners below the Management Board throughout the company at regular intervals of currently twice a year. The objective of these interviews is to systematically identify, validate and categorize risks and record countermeasures. The Group Internal Audit & GRC department provides a uniform framework for the assessment of risks. The assessment considers the probability of occurrence, the potential effect and the control of the risk.
The risks identified and assessed during the risk interviews are presented to the RMC in an aggregated form in a so-called risk heat map. The RMC consists of a defined group of executives from various corporate divisions, including the Management Board. Chair of the RMC is the Chief Financial Officer as member of the Management Board. The results of the RMC meetings are reported to the Audit Committee as sub-committee of the Supervisory Board by the Chair of the RMC and the Head of the Group Internal Audit & GRC department. An integrated GRC tool used to document the risk management processes is available to the Group Internal Audit & GRC department and to the risk owners.

PUMA also has a comprehensive reporting and controlling system, which is an essential component of its risk management approach. PUMA’s reporting and controlling system is based on monthly financial reporting as well as the review and plausibility reports on reported information issued by the Controlling department.

Managers analyze opportunities and risks in annual planning discussions around the world, setting targets and defining courses of action based on the results. The comprehensive reporting system continuously monitors and generates reports on compliance with the set targets. This enables PUMA to promptly identify any deviations or negative developments, and to initiate any necessary countermeasures in a timely manner.

Risk and Opportunity Categories

The following explanations of opportunities and risks are shown in the order of their relative importance.

Macroeconomic Developments

As an internationally operating group, PUMA is exposed to global macroeconomic developments and the associated risks. For example, economic developments in important sales markets may have an effect on consumer behavior. This can have positive or negative effects on the planned sales and results. Likewise, political changes and social developments may result in changes in the legal framework conditions, such as in connection for example with Brexit and currency exchange rate fluctuations.
Overall, PUMA manages these challenges with geographic diversification and the development of alternative scenarios for the possible occurrence of serious events. This applies in particular to political developments and possible changes in legal framework conditions which are continuously monitored by PUMA.

Brand Image

Brand image and brand desirability are of key importance for PUMA, as consumer behavior can have a negative effect on the brand as well as a positive one. Accordingly, PUMA has formulated the guiding principle of “We want to become the fastest sports brand in the world” in order to underline the company’s long-term direction and strategy. The “Forever Faster” brand promise does not just stand for PUMA’s product range as a sports company, but also applies to all company processes.
PUMA manages brand image risks in particular through cooperation with brand ambassadors who embody the core of the brand and PUMA’s brand values (“brave”, “confident”, “determined” and “joyful”) and have a large potential for influencing PUMA’s target group. PUMA has therefore strengthened its position as sports brand through partnerships with top athletes, such as star striker Antoine Griezmann, sprint legend Usain Bolt, multiple Formula 1 world champion Lewis Hamilton and pro golfer Rickie Fowler. In 2019, we were able to sign further brand ambassadors, such as the goalkeeper Jan Oblak, the football manager Pep Guardiola, and Karsten Warholm, the 400-meter hurdles world champion. In football, PUMA has long-term sponsorship agreements with top clubs, such as Manchester City, Borussia Dortmund, AC Milan, Olympique Marseille and the Italian national team. PUMA's return to basketball and its engagement in athletics and other sports should also be viewed in this context. PUMA reaches young trendsetters via brand ambassadors and collaborations in the music, movie and fashion scene, such as with Jay-Z, Meek Mill, Adriana Lima, Cara Delevingne and Selena Gomez, and also increasingly through influencers in social networks.

Information Technology

The ongoing digitalization of PUMA's business environment exposes the company to risks, but it also increasingly provides opportunities. The failure of IT systems may significantly disrupt important business procedures and processes. External attacks or wrong behavior, for example, may result in the loss of confidential and sensitive data, and lead to high costs, loss of revenue and reputational damage. Opportunities arise, for example, from improved, tailored communication with customers via digital channels and new opportunities for product presentation. In addition, new or more efficiently supported processes may add value or result in cost optimization.
To mitigate these risks and use the existing opportunities inherent in digitalization at the same time, PUMA continuously carries out technical and organizational measures and invests in the renewal and security of its IT landscape. IT systems are regularly checked, maintained and undergo security tests. In addition, all employees are continuously sensitized using guidelines, training courses and information campaigns.

Sourcing and Supply Chain

The majority of PUMA products is produced in selected Asian countries, in particular in Vietnam, China, Bangladesh, Cambodia, Indonesia and India. Production in these countries is associated with significant risks for PUMA, which result, for example, from exchange rate fluctuations, changes in sourcing and wage costs, supply bottlenecks for raw materials or components, quality issues, but also from natural disasters and political instability. Moreover, risks may result from an overdependence on individual manufacturers.
The portfolio is regularly reviewed and adjusted to avoid creating a dependence on individual suppliers and sourcing markets. Generally, long-term master framework agreements are agreed upon to secure production capacities required in the future. A quality assurance process and the direct collaboration with manufacturers should permanently secure the quality of PUMA products.
Sourcing and the supply chain must also respond to risks and opportunities, including changes in duties and tariffs as well as trade restrictions. PUMA accordingly continuously analyzes political and legal framework conditions in order to be able to react to changes at an early stage.
The transport of products into the distribution countries is exposed to the risk of delays and disruptions among service providers. The collaboration with service providers is accordingly secured by selection processes, uniform contractual terms and permanent monitoring of relevant indicators.


Sustainability topics are highly important in sourcing, but also throughout the entire value chain. There is a risk that suppliers will violate core labor standards of ILO (International Labour Organization), not comply with environmental standards or use hazardous chemicals in production. This would violate PUMA's requirements to suppliers and also lead to negative reporting. Adherence to applicable standards is ensured through regular audits of supplier companies.
Climate change and increasing customer requirements with regard to sustainability are leading to a stronger ecological focus both in our own locations and along the production and supply chain. A more efficient use of resources and reduction of greenhouse gas emissions and the increased use of sustainable production materials are expressions of PUMA's sustainability strategy.

Product and Market Environment

The risk posed by market-specific product influences, in particular the risk of substitutability in the highly competitive sport and lifestyle market, is decisively countered by the early recognition and taking advantage of relevant consumer trends. Only those companies that identify these trends at an early stage will be able to gain an edge over their competitors.
Targeted investments in product design and product development are to ensure that the characteristic PUMA design of the entire product range is consistent with the overall brand strategy (“Forever Faster”), thereby creating a unique level of brand recognition.

Counterfeit Products

Counterfeit products can cause damage to consumer confidence in the brand and can damage PUMA's brand image. For this reason, PUMA has made fighting brand piracy a high priority. The PUMA team responsible for the protection of intellectual property not only ensures that we have a strong global portfolio of property rights, such as brands, designs and patents, but also works closely with customs and police forces and provides input regarding the implementation of effective legislation to protect intellectual property.

Distribution Structure

PUMA utilizes various distribution channels, such as the traditional wholesale business with our retail partners and the PUMA-owned retail and e-commerce business to reduce its dependency on individual distribution channels. The wholesale business represents overall the largest revenue share. The focus on the company-own retail and e-commerce business is intended to ensure a higher gross profit margin, better distribution control and exclusive presentation of PUMA products in the desired brand environment.
In the wholesale business, up-and-coming retailers, including those offering their own brands, and competitors pose the risk of intensified competition for consumers and market shares. Consumer purchase behavior is also changing, focusing more on e-commerce and a combination of stationary and digital trade. This requires continuous adjustment of the distribution structure. Distribution through the company's own retail stores and e-commerce channels is, however, also associated with various risks for PUMA. These include the necessary investments in expansion and infrastructure, setting up and refurbishing stores, higher fixed costs and leases with long-term lease obligations. This can have an adverse impact on profitability should business decline.
In order to avoid risks and take advantage of opportunities, PUMA carries out permanent monitoring of distribution channels and regular reporting by the Controlling and specialized departments. A detailed location and profitability analysis is carried out in our distribution channels before making any investment decision. The company’s reporting and controlling system allows us to detect negative trends early on, and to take the countermeasures required to manage individual stores. In e-commerce, global activities are harmonized and investments in the IT platform are made to further optimize purchase transaction settlement and further improve the shopping experience for consumers.

Reporting in the Media

A negative media report about PUMA, such as a product recall, infringement of laws, or internal or external requirements, can also cause significant damage to the brand and ultimately result in the loss of sales and profit, regardless of whether these events actually happened or were just rumors. PUMA manages this risk by way of careful press, social media and public relations work which is managed from its group headquarters in Herzogenaurach, Germany, and its subsidiary in the U.S. In addition, PUMA continuously seeks an open dialog with key external stakeholders, such as suppliers, NGOs and industry initiatives, and has institutionalized this as part of regularly held "Sustainability Stakeholder Meetings."

Organizational Challenges and Project Risks

PUMA's organizational structure with its group headquarters in Herzogenaurach, a central sourcing organization and globally positioned distribution companies gives the group a global orientation. This results in a risk for PUMA that the flows of goods and information are not sufficiently supported by modern IT infrastructure. For this reason, existing business processes must be continually optimized and adapted. This is carried out systematically through targeted optimization projects, which are planned and managed centrally by a specialized department.

Personnel Department

The creative potential, commitment and performance of PUMA employees are important factors for a successful business development and represent a significant opportunity for our business. PUMA encourages independent thinking and action, which are key in an open corporate culture with flat hierarchies. PUMA’s human resources strategy seeks to ensure this successful philosophy on a long-term and sustainable basis. To achieve this goal, a control process is in place to detect and assess human-resource risks. Accordingly, special attention has been paid to managing talent, identifying key positions and high-potential individuals, and optimizing talent placement and succession planning. PUMA has instituted additional national and global regulations and guidelines to ensure compliance with legal provisions. PUMA will continue to make targeted investments in the human-resource needs of particular functions or regions in order to meet the future requirements of its corporate strategy.

Legal Risks

As an internationally operating group, PUMA is exposed to various legal risks. These include contractual risks or risks that a third party could assert claims and litigation for infringement of its trademark rights, patent rights or other rights. The continuous monitoring of contractual obligations and the integration of internal and external legal experts in contractual matters is to ensure that any legal risks are avoided.

Compliance Risks

PUMA is exposed to the risk that employees violate laws, directives and company standards (compliance violations). These risks, such as theft, fraud, breach of trust, embezzlement and corruption, as well as deliberate misrepresentations in financial reporting, may lead to significant monetary and reputational damage. Therefore, PUMA uses various tools to manage these risks. This includes an integrated compliance management system, the internal control system, group controlling and the internal audit department. As part of the compliance management system, awareness measures are carried out regarding critical compliance topics, such as corruption prevention and cartel law, and corresponding guidelines are introduced in the group. PUMA employees also have access to an integrity system for reporting unethical behavior.

Currency Risks

As an international company, PUMA is subject to currency risks resulting from the disparity between the respective amounts of currency used on the purchasing and sales sides and from exchange-rate fluctuations.
PUMA’s biggest sourcing market is Asia, where most payments are settled in US dollars (USD), while sales of the PUMA Group are mostly invoiced in other currencies. PUMA manages currency risk in accordance with internal guidelines. Currency forward contracts are used to hedge existing and future financial liabilities in foreign currencies.

To hedge signed or pending contracts against currency risk, PUMA only concludes currency forward contracts on customary market terms with reputable international financial institutions. As of the end of 2019, the net requirements for the 2020 planning period were adequately hedged against currency effects.

Foreign exchange risks may also arise from intra-group loans granted for financing purposes. Currency swaps and currency forward transactions are used to hedge currency risks when converting intra-group loans denominated in foreign currencies into the functional currencies of the group companies (Euro).

In order to disclose market risks, IFRS 7 requires sensitivity analyses that show the effects of hypothetical changes in relevant risk variables on earnings and equity. The periodic effects are determined by relating the hypothetical changes caused by the risk variables to the balance of the financial instruments held as of the balance sheet date. The underlying assumption is that the balance as of the balance sheet date is representative for the entire year.

Currency risks as defined by IFRS 7 arise on account of financial instruments being denominated in a currency that is not the functional currency and is monetary in nature. Differences resulting from the conversion of the individual financial statements to the group currency are not taken into account. All non-functional currencies in which PUMA employs financial instruments are generally considered to be relevant risk variables.

Currency sensitivity analyses are based on the following assumptions:
Material primary financial instruments (cash and cash equivalents, receivables, interest-bearing and non-interest-bearing liabilities) are either denominated in the functional currency or are transferred into the functional currency using currency forward transactions.

Currency forward contracts used to hedge against payment fluctuations caused by exchange rates are part of an effective cash flow hedging relationship pursuant to IAS 39. Changes in the exchange rate of the currencies underlying these contracts have an effect on the hedge reserve in equity and the fair value of these hedging contracts.

Tax Risks

In an international business environment, applicable tax regulations must be observed. By means of appropriate internal rules of conduct, employees are required to comply with and adhere to the relevant tax regulations. In addition to compliance with national tax regulations to which the individual group companies are subject, there are increasing risks in the course of intra-group transfer pricing, which must be applied for various internal business transactions in accordance with the arm's length principle between individual group companies. In all tax areas PUMA has taken adequate precautions with internal and external tax experts in order to comply with the relevant tax regulations, but also to be able to react to changes in the constantly changing tax environment.
For the group-internal transfer prices a corresponding documentation exists, which was prepared according to international and national requirements and standards. There are guidelines and specifications for determining transfer prices for intra-group transactions that are customary for foreign companies, which comply with the applicable procedural rules and are binding on the employees acting on behalf of the group. By means of internal tax reporting, external and internal tax experts are able to control and monitor tax developments at PUMA on an ongoing basis. Both the Management Board and the Supervisory Board are continuously informed about tax developments at PUMA in order to identify and avoid tax risks as early as possible.

Liquidity Risk

PUMA continually analyzes short-term capital requirements through rolling cash flow planning at the level of the individual companies in coordination with the central Treasury department. PUMA maintains a liquidity reserve, for example, in the form of cash and confirmed credit facilities in order to ensure the company’s solvency, financial flexibility and a strategic liquidity buffer. In this respect, there was a syndicated credit line amounting to € 350.0 million as of December 31, 2019, which was not utilized as of the balance sheet date.
Medium and long-term funding requirements that cannot be directly covered by net cash from operating activities are financed by taking out medium and long-term loans. For this purpose, promissory note loans were issued in four tranches in July 2018 (one tranche each with a fixed and a variable coupon with a residual term of 2 years for a total of € 100.0 million and one tranche each with a residual term of 4 years for a total of € 60.0 million). Furthermore, an additional promissory note loan totaling € 70.0 million was concluded in December 2019 with payout in January 2020. This promissory note loan comprises two tranches with a fixed and a variable coupon and a term of 5 years.

Interest-Rate Risks

At PUMA, changes in interest rates do not have a significant impact on interest rate sensitivity and therefore do not require the use of interest rate hedging instruments.


The assessment of the overall risk situation of the group and PUMA SE is the result of a consolidated view of the individual risks described above. The Management Board is currently not aware of any significant risks that, either independently or in combination with other risks, could jeopardize the continued existence of the group and PUMA SE. In 2019, there was no significant change in the overall assessment of the risk situation compared to the previous year.
However, we cannot exclude the possibility that in the future factors that are currently unknown to us or that we currently assess as immaterial could influence the continued existence of the group and PUMA SE and its consolidated companies. Due to the extremely solid balance sheet structure and equity ratio, as well as the positive business outlook, the Management Board does not see any risks that could jeopardize the continued existence of the PUMA Group and PUMA SE.