Statement regarding the business development and the overall situation of the Group

In financial year 2023, we were confronted with an increasingly difficult geopolitical and macroeconomic market environment. The conflict in the Middle East, the war in Ukraine, persistent inflation and risks of recession had a negative impact on the consumer sentiment and led to volatile retail demand. We therefore considered 2023 to be a transitional year. In 2023, we continued to focus on overcoming the short-term challenges without compromising the medium and long-term success of PUMA. Accordingly, we prioritised sales growth and increasing market share over short-term profitability optimisation. Despite the difficult market environment, we were able to further increase PUMA's sales based on our operating flexibility. In the past financial year, we were also able to fully achieve our target in terms of operating result.

Our focus on the PUMA family is an important cornerstone of our corporate strategy. We want to offer our employees an attractive working environment and diversity plays an important role in our corporate culture. In 2023, PUMA received multiple awards for this successful strategy, including the "Top Employer Award" for 24 PUMA subsidiaries in the Europe, Asia/Pacific and Latin and North America regions. We can therefore continue to call ourselves a "Global Top Employer". We were also named one of the "World's Best Employers" by Forbes and a "Leader in Diversity" by the Financial Times, and awarded the "Great Place to Work" seal in numerous countries. We were able to further optimise our processes by upgrading the logistics centres in our main markets, and by expanding existing warehouses and opening new ones. We also invested in improving our IT infrastructure, product development and ERP systems.

We were able to achieve currency-adjusted sales growth of 6.6% in the financial year 2023. Sales development was affected by the significant devaluation of the Argentine peso, which had an extraordinary impact in the fourth quarter and on the full-year 2023. Due to the extent and timing of these currency effects, we were unable to fully compensate for all of the negative impacts at the end of the year. Nevertheless, sales development was mainly in the high single-digit percentage range, in line with the outlook for currency-adjusted sales growth. In addition to sales growth, the gross profit margin improved. However, these positive effects were offset by the slightly stronger increase in other operating income and expenses compared to sales.

Operating result (EBIT) of € 621.6 million in the past financial year was in line with our forecast of a range between € 590 million and € 670 million. Despite the significant devaluation of the Argentine peso, we have therefore fully achieved our target in terms of operating result in the past financial year. The devaluation of the Argentine peso had a particularly negative effect on the financial result. Because of this, consolidated net income amounted to € 304.9 million compared to € 353.5 million in the previous year. This corresponds to a decrease of 13.7%. Earnings per share therefore decreased from € 2.36 in the previous year to € 2.03. Under the given circumstances of a challenging macroeconomic environment worldwide and the exceptional devaluation of the Argentine peso, we are very satisfied with the achievement of objectives in financial year 2023. We believe that, despite the exceptional devaluation of the Argentine peso, the business development of PUMA in 2023 reflects strong underlying operational development and strict cost discipline.

With regard to the consolidated balance sheet, we believe that PUMA continues to have a very solid capital base. As of the balance sheet date, the PUMA Group's equity amounted to nearly € 2.6 billion and the equity ratio was 38.9%.

Our measures to right-size inventories to an appropriate level contributed to limiting the increase in our working capital in 2023. This is also reflected in the improvement in the cash flow from operating activities and free cash flow. Our cash and cash equivalents amounted to € 552.9 million as of the balance sheet date. In addition, the PUMA Group has unutilised credit lines totalling € 986.1 million at its disposal.

Consequently, the net assets, financial position and results of operations of the PUMA Group is overall very solid at the time the combined management report was prepared. This enables the Management Board and the Supervisory Board to propose to the Annual General Meeting on 22 May 2024 a dividend of € 0.82 per share for the financial year 2023. This corresponds to a payout ratio of 40.3% in relation to the consolidated net income according to IFRS. The higher payout ratio results from the strong improvement in free cash flow and reflects the underlying positive operating business development. In general, PUMA's dividend policy continues to provide for a payout of 25% to 35% of consolidated net income.