AP News, February 19th, 2007
Puma AG, the maker of athletic shoes, shirts and other sporting goods, said Monday its fourth-quarter profit fell 26 percent as it tries to broaden its product base and expand into new regions.
But the company, the world's third-biggest maker of sports apparel behind Nike Inc. and Adidas AG, said it expected sales and earnings in 2007 to increase in the higher single-digit figure range, largely on demand for its licensed products.
"Overall, we are very pleased with 2006 and our start to (the latest restructuring phase), as we set some ambitious targets and are on track or ahead on all accounts," Chief Executive Jochen Zeitz said in a statement. "But more important than the past is the future, and we've put ourselves in a solid early position to deliver on our ... objectives."
Puma earned 32.8 million euros ($43 million) in the last three months of 2006, down from 44.1 million euros in the same quarter of 2005. Analysts polled by Dow Jones Newswires had expected a profit of 34 million euros ($44.6 million).
Sales rose 38 percent to 480 million euros ($629.7 million) from 349.2 million euros a year ago, still less than the 492 million euros ($645.4 million) analysts had predicted.
For the year, Puma earned 263.2 million euros ($345.3 million), down nearly 8 percent from 285.8 million euros in 2005, just below analysts' estimates of 264 million euros ($346.3 million). Sales rose 33 percent to 2.37 billion euros ($3.11 billion) from 1.78 billion euros in 2005, just under estimates of 2.38 billion euros ($3.12 billion).
The sales increase was led, in part, by better-than-expected demand for its shirts and helped by the afterglow of the 2006 soccer World Cup, in which Puma sponsored the champion Italy. It is also a key supplier to many African teams.
Since Zeitz was named CEO and chairman of the company in 1993, Puma has returned to profitability and increased sales and expanded its research and development, marketing and branding programs.
Its latest restructuring effort is aimed at expanding the company's reputation as a maker of lifestyle brands _ clothes, shoes and accessories, such as eyeglasses _ and expand in more regions and categories.
For the year, Puma posted strong sales in North and South America, with sales reaching 724.1 million euros ($949.95 million), up 51.8 percent from 2005. In Asia and the Pacific, sales more than tripled to 486.5 million euros ($638.24 million).
In Europe, the Middle East and Africa sale increased 5.1 percent to 1.15 billion euros ($1.51 billion).
The company's backlog of orders _ a key indicator for future sales performance _ was at 1.12 billion euros ($1.47 billion) at the end of 2006, up 4.7 percent from 1.07 billion euros in 2005.
Shares of Herzogenaurach-based Puma fell back more than half a percent to 288.01 euros ($377.84) in Frankfurt trading.
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