Comments on the Financial Statements of
PUMA SE in accordance with the German Commercial Code (HGB)
The annual financial statements of PUMA SE are prepared in accordance with the rules of the German Commercial Code (German GAAP, HGB), taking into account the SEAG (German SE Implementation Act) and the German Stock Corporation Act (AktG). PUMA SE is the parent company of the PUMA Group. PUMA SE's results are to a large extent 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. In addition, the management of earnings before taxes (EBT) is affected by changes in the financial result.
PUMA SE is responsible for wholesale business in the DACH area, consisting of the home market of Germany, Austria, and Switzerland. Furthermore, PUMA SE is also responsible for pan-European distribution for individual key accounts and for sourcing products from European production countries, 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, merchandising, international marketing, the global areas of finance, operations and PUMA's strategic direction.
Results of operations
2023 | 2022 | ||||
€ million | % | € million | % | +/- % | |
Sales | 1,243.7 | 100.0% | 1,151.9 | 100.0% | 8.0% |
Other operating income | 83.7 | 6.7% | 84.0 | 7.3% | -0.4% |
Cost of sales | -389.5 | -31.3% | -316.4 | -27.5% | 23.1% |
Personnel expenses | -130.8 | -10.5% | -120.2 | -10.4% | 8.8% |
Depreciation | -36.1 | -2.9% | -36.8 | -3.2% | -2.0% |
Other operating expenses | -898.8 | -72.3% | -816.3 | -70.9% | 10.1% |
Total expenses | -1,455.2 | -117.0% | -1,289.7 | -112.0% | 12.8% |
Financial result | 258.8 | 20.8% | 189.5 | 16.5% | 36.6% |
Income before Tax | 131.0 | 10.5% | 135.8 | 11.8% | -3.5% |
Income tax | -21.2 | -1.7% | -18.8 | -1.6% | 12.9% |
Net income | 109.8 | 8.8% | 117.0 | 10.2% | -6.2% |
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In the financial year 2023, sales increased by a total of 8.0% to € 1,243.7 million. The increase resulted both from higher revenues from product sales and from higher commission income in the context of licence management. Revenues from PUMA SE product sales rose by 15.8% to € 589.4 million (previous year: € 508.9 million). Royalty and commission income included in sales increased by 1.7% to € 599.3 million (previous year: € 589.1 million). Other sales, which mainly consisted of recharges of costs to affiliated companies, totalled € 55.0 million in 2023 (previous year: € 53.9 million).
Other operating income amounted to € 83.7 million in 2023 (previous year: € 84.0 million) and includes, in particular, realised and unrealised gains from currency conversion related to the measurement of receivables and liabilities in foreign currencies at the balance sheet date.
The total expenditure from material expenses, personnel expenses, depreciation and other operating expenses increased by 12.8% to € 1,455.2 million compared to the previous year (previous year: a total of € 1,289.7 million). The increase in material expenses compared to the previous year was mainly due to the increase in sales. The disproportionate growth in material expenses in comparison with sales resulted from intra-group sales of goods to PUMA Benelux, which were carried out without a surcharge. Personnel expenses increased due to a higher number of employees. Other operating expenses increased compared with the previous year, mainly due to increased administrative, marketing and sales expenses.
The financial result increased, compared to the previous year, by 36.6% to € 258.8 million. The increase was mainly due to higher profit transfer from affiliated companies. The interest result and the income from dividends from investments in affiliated companies fell slightly. In addition, the investment in Borussia Dortmund GmbH & Co. KGaA (BVB), Dortmund, was written down in the financial year due to an impairment of € 0.5 million, which is expected to be permanent.
The increase in sales was offset by the increase in expenses, which is why earnings before income taxes fell by 3.5% to € 131.0 million in 2023 (from € 135.8 million in the previous year). Taxes on income amounted to € 21.2 million (previous year: € 18.8 million). Accordingly, PUMA SE's net income under the German Commercial Code (German GAAP, HGB) decreased by 6.2% to € 109.8 million in the financial year 2023 (previous year: € 117.0 million).
Net assets
31.12.2023 | 31.12.2022 | ||||
€ million | % | € million | % | +/- % | |
Fixed Assets | 1,648.9 | 63.3% | 1,100.3 | 43.7% | 49.9% |
Inventory | 85.7 | 3.3% | 115.2 | 4.6% | -25.6% |
Receivables and other current assets | 680.9 | 26.1% | 1,177.8 | 46.8% | -42.2% |
Cash and cash equivalents | 165.8 | 6.4% | 96.5 | 3.8% | 71.8% |
Current Assets | 932.4 | 35.8% | 1,389.5 | 55.2% | -32.9% |
Others | 23.7 | 0.9% | 25.2 | 1.0% | -5.9% |
Total Assets | 2,605.0 | 100.0% | 2,515.1 | 100.0% | 3.6% |
Equity | 925.8 | 35.5% | 933.8 | 37.1% | -0.9% |
Accruals/Provision | 123.7 | 4.7% | 141.9 | 5.6% | -12.8% |
Liabilities | 1,555.0 | 59.7% | 1,438.9 | 57.2% | 8.1% |
Others | 0.5 | 0.0% | 0.5 | 0.0% | 0.0% |
Total Equity & Liabilities | 2,605.0 | 100.0% | 2,515.1 | 100.0% | 3.6% |
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Overall, fixed assets increased by 49.9% to € 1,648.9 million in 2023. The increase is mainly the result of the increase in shareholdings in the amount of € 521.9 million due to capital contributions to PUMA Sprint GmbH, Germany, as well as further investments in IT.
The decline in inventories of current assets by 25.6% to € 85.7 million was mainly due to more conservative purchasing behaviour, especially at the end of the year. The consolidation of inventories for Central Europe, including Benelux, and the associated improvement in the management of purchases and sales supported the positive development of inventories. Receivables and other assets decreased by a total of 42.2% compared with the previous year to € 680.9 million. In particular, lower receivables from affiliated companies contributed to this development, which resulted in particular from the capital contribution. Cash and cash equivalents increased by 71.8% to € 165.8 million compared to the previous year, due to the cash inflow from financing and investing activities.
On the liabilities side, equity fell slightly by 0.9% to € 925.8 million in 2023. In combination with the increase of the balance sheet total due to higher liabilities, this led to a decline in the equity ratio, which was 35.5% as at the balance sheet date of 31 December 2023 compared to 37.1% in the previous year.
Provisions decreased by 12.8% compared to the previous year to € 123.7 million. This development was mainly due to lower provisions for outstanding invoices. Liabilities increased from € 1,438.9 million in the previous year to € 1,555.0 million as of 31 December 2023. This increase primarily resulted from the increased liabilities to banks due to the taking out of a promissory note loan and, in contrast, lower liabilities to affiliated companies.
Financial position
2023 | 2022 | ||
€ million | € million | +/- % | |
Cash flow used in/ from operating activities | -92.6 | 4.9 | - |
Cash flow from/ used in investing activities | 66.3 | -441.2 | - |
Free Cash Flow | -26.3 | -436.3 | -94.0% |
Cash flow from financing activities | 95.6 | 134.0 | -28.7% |
Change in cash and cash equivalents | 69.3 | -302.3 | >-100% |
Cash and cash equivalents at beginning of financial year | 96.5 | 398.8 | -75.8% |
Cash and cash equivalents at year-end | 165.8 | 96.5 | 71.8% |
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In financial year 2023, cash outflow from operating activities amounted to € 92.6 million, compared to a cash inflow of € 4.9 million in the previous year. This development is mainly due to the decrease of receivables from affiliated companies. In contrast, the reduction in inventories had a positive effect.
The cash inflow from investing activities in 2023 is mainly due to the reduction in cash pool and loan receivables from affiliated companies. These are offset by cash outflows from investments in fixed assets.
Cash flow from financing activities showed a total cash inflow of € 95.6 million in 2023 (previous year: € 134.0 million). The cash inflow primarily resulted from the taking out of promissory note loans. In contrast, reduced liabilities to affiliated companies and the payment of dividends to PUMA SE shareholders for financial year 2022 in the amount of € 122.8 million led to a cash outflow.
Outlook
In PUMA SE's financial statements under German Commercial Code (German GAAP, HGB), we expect an increase in sales in the mid single-digit percentage range for the financial year 2024. Assuming dividends from investments in affiliated companies at the previous year's level, we expect earnings before tax for the financial year 2024 to be at the previous year's level.