PUMA is continuously exposed to opportunities and risks in the competitive, fast-paced and international sport and lifestyle industry. The risk strategy is therefore to take business risks in a calculated manner in order to implement the corporate strategy with all its opportunities. For this purpose, effective risk and opportunity management is required so that opportunities can be recognized and utilized, and risks identified and managed at an early stage. We define risks as potential future developments or events that may lead to a negative deviation from targets for the company. Similarly, opportunities are potential future developments or events that may result in a positive deviation from targets.

Risk Management System

PUMA takes a conscious and controlled approach to risks in order to achieve the company's goals. The aim of the risk management system is to identify and manage material or even existence-threatening risks in particular at an early stage in order to support the achievement of the company's goals. In addition, compliance with the related laws, regulations and standards must be ensured, as well as transparency in relation to the risk situation from the perspective of partners such as customers, suppliers and investors. Therefore, PUMA has established an appropriate risk management organization which is able to identify risks at an early stage and manage them in accordance with the corporate strategy and promote risk awareness within the PUMA Group to facilitate risk-based decisions. Opportunity management is not part of the risk management system and is the responsibility of operational management teams.

The Management Board of PUMA SE bears overall responsibility for the risk management system. The Management Board regularly updates the Audit Committee of the Supervisory Board of PUMA SE. The Risk Management Committee, which consists of the PUMA SE Management Board and selected managers, is responsible for the design, review and adaptation of the risk management system. The risk management function of the Group Internal Audit, Risk Management & Internal Control Department has been assigned to prepare regular risk reports for the Risk Management Committee. Their remit is to enhance operational coordination of the risk management process and support risk owners. The responsibilities, tasks and processes relating to the risk management system are defined in guidelines. The structure and design of the risk management system is as follows:

G.21 Risk Management System

The risk owners are mainly the managers of the functional areas and the managing directors of the subsidiaries. Risks are identified by performing a bottom-up analysis within the risk owner's area of responsibility and are regularly reported to the risk management function and/or the local monitoring bodies in structured interviews or on an ad-hoc basis. The risks are assessed using a systematic methodology based on the probability of occurrence, extent of damage and level of control using qualitative criteria. Regular risk identification and assessment is carried out by the risk management function every six months with all major functional areas. The risks recorded and assessed are also reviewed in a top-down assessment by the Risk Management Committee. This ensures that adequate consideration is given to interdependencies and the overall risk situation.

The risk owners are responsible for the operational management of identified risks. Risks can be managed by avoiding, reducing, diversifying or transferring the risk in order to achieve the aimed and acceptable residual risk. Within the reporting process, material or even existence-threatening risks are coordinated and managed with the Risk Management Committee or the Management Board. The methodology and structure of the risk management system are continuously assessed in terms of their effectiveness, and adapted or improved when required.


The following explanations of risk categories are presented based on their relative importance.

COVID-19 Pandemic

The COVID-19 pandemic was identified as a new risk in the financial year 2020 and was considered the most significant business risk for the PUMA Group. This risk relates to the macroeconomic and social impacts of the pandemic, caused for example by lockdowns, government-ordered closures of retail stores, restrictions on store opening hours, a reduction in store traffic, travel restrictions and social distancing measures, the cancellation or postponement of major sporting events, and the exclusion or limitation in the numbers of spectators. These consequences have led or may in the future lead to declines in revenue and challenges in maintaining business operations. Furthermore, we are faced with new requirements, regulations and further measures in relation to the health and safety of our employees and customers. The COVID-19 pandemic has also had a negative impact on existing sourcing and supply chain risks, as well as default risks of receivables.

In 2020 the COVID-19 pandemic has developed rapidly and dynamically, and the extent and duration of the resulting impact on our business was and remains extremely difficult to predict. However, we assume that the situation created by the COVID-19 pandemic will not be long term.

Our aim is to survive this crisis, to stabilize and recover, and then to emerge stronger than before without hindering PUMA's mid-term growth. Our approach is local, as different markets are going through these phases at different times. Our main focus is on the health and safety of our employees and customers, securing the liquidity of the PUMA Group by securing credit lines, maintaining close and reliable cooperation with our partners, suppliers and customers, strengthening and expanding the supply chain, digitalizing key business processes and further strengthening our e-commerce business. In particular, we strengthened the partnership with our suppliers by cancelling only a very small proportion of orders with our suppliers and agreeing extended payment terms in return. The unused credit lines of the PUMA Group serve as a safety reserve for the potential consequences of the COVID-19 pandemic. The significant increase in credit lines in the 2020 financial year results from the conclusion of a syndicated credit facility in May of €900 million from 11 commercial banks and the Kreditanstalt für Wiederaufbau (KfW) as “bridge financing” for a maximum of 2 years. This credit line has not been used so far and could already be reduced by €700 million to only €200 million by the end of 2020. For the refinancing and planned redemption of this “bridge financing”, we secured a new promissory note loan in the amount of €250 million with a term of 3 or 5 years and increased existing syndicated credit lines by €450 million.

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 contains considerable risks for us. These risks arise, for example, from changes in sourcing and wage costs, supply bottlenecks for raw materials or components, and quality issues, as well as from the possibility of 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 the required production capacities for the future. A quality control process and the direct and partnership-like collaboration with manufacturers should permanently secure the quality and availability of our products. Sourcing and the supply chain must also react to risks, like changes in duties and tariffs as well as trade restrictions. The transport of products to the distribution countries is also exposed to the risk of delays and failures by warehouse and logistics service providers.

We therefore continuously analyze political, economic and legal framework conditions and have further enhanced our close cooperation with our logistics partners in order to be able to react to changes in the supply chain early on and to continuously strengthen the supply chain. The collaboration with warehouse and logistics service providers is accordingly secured by selection processes, consistent contractual terms and permanent monitoring of relevant indicators.

The COVID-19 pandemic caused delays and interruptions in sourcing and supply chain operations, especially in the first half of the financial year 2020, and this led to an increase in the individual risk. To counter this risk, we have intensified our cooperation with suppliers and logistics partners in order to be able to react flexibly and solution-oriented to the circumstances.

Information Technology

The ongoing digitalization of the business environment exposes PUMA to risks in information technology. Key business procedures and processes may be significantly disrupted by the failure of IT systems, and external attacks or wrong behaviour may result in the loss of confidential and sensitive data, as well as high costs, loss of revenue and reputational damage.

To mitigate these risks, we continuously carry out technical and organizational measures and invest in the renewal and security of our 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.

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.

Brand Image

Brand image and brand desirability are of key importance for us, as consumer behavior can have a negative effect on the brand as well as a positive one. Accordingly, we have 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.

We manage 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. Therefore, we are strengthening our position as a sports brand through partnerships with top athletes such as star striker Antoine Griezmann, sprint legend Usain Bolt, multiple Formula 1 world champion Sir Lewis Hamilton, pro golfer Rickie Fowler, NBA player Danny Green, cricketer Virat Kohli, 400-meter hurdles world champion Karsten Warholm, and many other top athletes. In 2020, superstar and professional football player Neymar Jr. also became a PUMA brand ambassador. 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 also intensified its involvement in basketball, athletics, handball and other sports. We reach young trendsetters via brand ambassadors and collaborations in the music, movie and fashion scene, such as Jay-Z, Meek Mill, Adriana Lima, Cara Delevingne, Selena Gomez, Winnie Harlow and Dua Lipa, and also increasingly via global and local influencers in social networks.

Macroeconomic Developments

As an internationally operating group, PUMA is exposed to global macroeconomic developments and the associated risks having an impact on our sales and sourcing markets. 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, social developments and environmental events can also be reflected in changes in legal and macroeconomic conditions. This may happen, for example, in connection with protest movements such as those seen in Hong Kong and other parts of the world, or as a consequence of Brexit.

Overall, we manage 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 and incorporated into appropriate measures, such as the adjustment of the supply chain to the UK due to the Brexit.

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 us that the flow of goods and information are not sufficiently supported by modern warehouse, logistics and 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 the specialized departments.

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 2020, the net requirements for the 2021 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 (EUR).

In order to disclose market risks, IFRS 7 requires sensitivity analysis 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 that are denominated in a currency that is not the functional currency and are 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 analysis are based on the following assumptions: Material original monetary 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.

Default risks

PUMA's business activities result in the company being exposed to default risk that is managed by continuously monitoring outstanding receivables and recognizing impairment losses, where appropriate. The default risk is limited where possible by credit insurance and the maximum default risk is reflected by the carrying amounts of the financial assets recognized on the balance sheet. Due to the negative macroeconomic effects of the COVID-19 pandemic, the default risk of receivables increased in the financial year 2020. As a result, value adjustments to receivables increased compared to the previous year. Furthermore, default risks to a lesser extent arise from the counterparty's other contractual financial obligations such as bank deposits and derivative financial instruments.

Liquidity Risk

PUMA continually analysis 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, as of December 31, 2020, the PUMA Group had unused credit lines totaling €1,372.7 million.

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, various promissory note loans were issued in July 2018, December 2019 and December 2020, each in several tranches with a fixed and a variable coupon and each with different residual terms. The utilized promissory note loans total €245.0 million as at December 31, 2020 and have a remaining term of between one and five years.

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 is defined by strong partnerships and represents the largest revenue share overall. The company's own retail and e-commerce business is intended to ensure a higher gross profit margin, better control on distribution and presentation of PUMA products exclusively 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 us. 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 in case of a business decline.

In order to avoid risks, we carry 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.

Counterfeit Products

Counterfeit products can undermine consumer confidence in the brand and damage PUMA's brand image. Fighting brand piracy is therefore a high priority for us. 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.

Reporting in the Media

A negative media report about PUMA, such as a product recall, the infringement of laws or internal or external requirements, and exposure on social media in this age of “fake news”, as well as workforce diversity and tolerance, can also cause significant damage to brand image and ultimately result in the loss of sales and profit, regardless of whether these events actually happened or were just rumors.

We encounter this risk via careful press, social media and public relations work and through monitoring of the press and social media environment. This is managed from the group headquarters in Herzogenaurach, Germany, and the 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.”


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 our requirements to suppliers and also lead to negative reporting and potentially to a loss of revenue. Adherence to applicable standards is ensured through regular audits of supplier companies.

In addition, climate change and the resulting increase in customer requirements with regard to sustainability are leading to a stronger ecological focus in our product range, both at our own locations and along the production and supply chain. A more efficient use of resources and reduction of greenhouse gas emissions as well as the increased use of sustainable production materials are crucial parts of our sustainability strategy.

PUMA's sustainability report (the Non-financial Report) for the financial year 2020 will be available by April 30, 2021 at the latest on the following page of our website: https://about.PUMA.com/en/investor-relations/financial-reports. Furthermore, important sustainability information can always be found in the Sustainability section on PUMA's website: http://about.PUMA.com/en/sustainability

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, we use 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 and a global network of compliance officers are introduced in the group. PUMA employees also have access to an whistleblowing system for reporting unethical behavior.

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.

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.

Risk Overview Table

The following table summarizes the risk categories described above based on their relative importance and any changes during the year: