In their winter forecast dated December 21, 2022, experts at the Kiel Institute for the World Economy (IfW Kiel) expect global gross domestic product (GDP) to increase by only 2.2% in 2023, following growth of 3.2% in 2022. According to IfW Kiel experts, the expected slowdown in the global economy is due to the growing dominance of slowing effects, resulting primarily from the financial environment. Higher financing costs are slowing investment and consumption. In many countries, the financial cycle also seems to be entering a new phase. Real estate prices are now falling after a long period of significant rises. When the financial cycle enters a new phase, financial imbalances often appear, which further slow economic activity. IfW Kiel experts forecast that economic output in the United States will decline in 2023 and that the Eurozone is also on the threshold of a recession. For the Chinese economy, the departure from the zero-COVID policy presents both opportunities and risk. Overall, the risks of this economic forecast for 2023 are likely to increasingly arise in the financial environment, in the opinion of IfW Kiel experts. In addition, energy supply and energy prices continue to represent a risk for the forecast.
Provided that the geopolitical environment and the continued course of the COVID-19 pandemic do not result in a renewed significant negative impact on the macroeconomic conditions, we expect the sporting goods industry to grow in 2023. We expect demand for sporting goods to increase in 2023 as the trend toward increased sports activities and healthier lifestyles continues and becomes even more significant as a result of the COVID-19 pandemic. This applies equally to the increasing popularity of athletic footwear and leisure/athletic apparel as an integral part of everyday fashion ("athleisure"). In addition, we assume that major sporting events in 2023, such as the World Athletics Championship in Hungary, the Men's Basketball World Cup in Japan, Indonesia and the Philippines, and the Women's Football World Cup in Australia and New Zealand, will help to support growth in the sporting goods industry.
PUMA achieved another record in sales and operating result (EBIT) in the financial year 2022. We delivered the strong growth based on our continued brand momentum, successful product launches and the best possible service for our athletes, retail partners and consumers. As people make the difference, a significant part of our momentum is due to our very engaged employees.
Despite the strong growth in 2022, we continue to face a high degree of geopolitical, macroeconomic and commercial uncertainty. The war in Ukraine, the threat of recession, high inflation and high interest rates are resulting in volatile retailer and consumer demand. In addition, we are seeing increased inventory levels across our industry, which contribute to a competitive market environment.
Considering PUMA's strong momentum, we expect currency-adjusted sales growth in the high single-digit percentage range and operating result (EBIT) in a range of € 590 million to € 670 million (2022: € 641 million) for the financial year 2023. PUMA’s net earnings are expected to change accordingly.
The development of the gross profit margin and OPEX ratio will largely depend on the extent and the duration of the negative impacts described above. Given the timing of these unfavorable factors, we expect the gross profit margin to be under more pressure in the first half of the year than in the second half. For the full year 2023, PUMA expects currencies, higher freight rates and raw material prices to again dilute profitability.
As in previous years, PUMA will continue to focus on managing short-term challenges without compromising the mid- and long-term momentum of the brand. Our sales growth and market share gains will have priority over short-term profitability. The exciting product range for 2023 and the very good feedback from retail partners as well as consumers make us confident for the mid- and long-term success and continued growth of PUMA.
Investments in fixed assets of around € 330 million are planned for 2023. The majority of these investments will be in infrastructure in order to create the operating conditions required for the planned long-term growth. The investments mainly concern own distribution and logistics centers, investments in administrative buildings and further investments in the expansion and modernization of the Group’s own retail stores.
The Management Board and the Supervisory Board have set long-term strategic priorities. Action plans are being implemented in a targeted and value-oriented manner. We believe that the corporate strategy “Forever Faster” provides the basis for mid- and long-term positive development.
Herzogenaurach, February 2, 2023
The Management Board
This is a translation of the German version. In case of doubt, the German version shall apply.