Puma Embarks on Cost-Cutting Journey to Boost Profitability
Disappointing Net Profit Spurs Action
German sportswear giant Puma has unveiled a comprehensive cost-cutting program aimed at revamping its financial performance. The move comes on the heels of a disappointing 2024 net profit, which fell short of expectations. The company’s net profit for the year stood at €282 million, a significant drop from €305 million in 2023.
Higher Interest Payments and Non-Controlling Interests Take a Toll
Higher interest payments on its debt and increased non-controlling interests were cited as key factors contributing to the decline in net profit. The latter was largely due to Puma’s joint venture with United Legwear & Apparel Co (ULAC), which, although successful, only allowed the company to book 51% of the profit.
CEO Freundt Vows to Get Back on Track
Arne Freundt, CEO of Puma, expressed disappointment with the company’s profitability, but remained optimistic about the future. He expects stronger growth in 2025 and is committed to implementing measures to drive profitability.
Cost-Cutting Program Aims for 8.5% EBIT Margin by 2027
The cost-cutting program is designed to help Puma achieve an earnings before interest and tax (EBIT) margin of 8.5% by 2027. The company’s long-term goal is to reach a 10% EBIT margin. In 2024, the EBIT margin stood at 7.1%. The program will focus on reducing personnel expenses, among other areas, but Puma has assured that it will maintain a stable headcount and has no plans for global layoffs.
Sales Growth Offers a Glimmer of Hope
Despite the disappointing net profit, Puma’s sales growth offers a silver lining. In the fourth quarter, sales grew by 9.8% in currency-adjusted terms, reaching €2.289 billion. Over the entire year, sales increased by 4.4% in currency-adjusted terms, totaling €8.817 billion. The company’s footwear and apparel sales also showed promising growth, with increases of 9.2% and 8.8%, respectively.
Regional Performance Highlights
Puma’s sales growth was particularly strong in the Europe, Middle East, and Africa region, where it rose by 14.3%. In Greater China, sales grew by 7.4%. The company will release its full fourth-quarter and annual sales on March 12.
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