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p : 7 | C : 1 To our ShareholderS<br />
fOREwORd<br />
LETTER FROM YOUR CEO,<br />
FRANZ KOCH<br />
DEAR SHAREHOLDERS AND FRiENDS OF <strong>PUMA</strong>,<br />
2012 was an exceptional year for <strong>PUMA</strong> in many ways. First of all, I am happy to see that we<br />
finished the year with a satisfactory sales growth rate. <strong>PUMA</strong>’s full year consolidated sales<br />
rose by almost 9 percent in Euro terms which enabled us to achieve the record sales mark<br />
just short of 3.3 billion Euros. In the light of the continuously challenging business environment,<br />
especially in Europe, we are pleased with that sales performance. So let’s delve into<br />
some of the highlights from an eventful sports year that fuelled <strong>PUMA</strong>’s sales growth.<br />
“USAiN BOLT - THE BiggEST STORY OF THE gAMES”<br />
The success of our Running category was highlighted by the Olympic Games: The outstanding<br />
athletic performances of The Fastest Man on Earth, Usain Bolt, who finished his second<br />
successive Olympics with three gold medals, was undoubtedly the biggest story of<br />
the Games. In the World of Football we once again underlined our ambition to be the clear<br />
Number 3 brand. <strong>PUMA</strong> partnered “Squadra Azzurra” from Italy had an excellent tournament<br />
at the 2012 Euro C<strong>up</strong> reaching the final.<br />
Our successful season in Formula 1 was crowned by <strong>PUMA</strong> sponsored Ferrari driver<br />
Fernando Alonso. With 278 points in the drivers’ standings the Spaniard belonged to the<br />
dominating F1 drivers again falling just short of his third Formula One title. Our Golf category<br />
contained many highlights throughout 2012, making the past year a great success for<br />
COBRA <strong>PUMA</strong> GOLF. Ian Poulter was the undisputed player of the prestigious Ryder C<strong>up</strong>,<br />
and our iconic brand ambassador Rickie Fowler won his first PGA Tour title in May at the<br />
Wells Fargo Championship, cementing him as one of the top players of the world.<br />
In our Sailing category, our <strong>PUMA</strong> Ocean Racing team forged an amazing comeback at the<br />
around-the-world Volvo Ocean Race 2011-12, finishing in the third place at the beginning of<br />
July. In our Lifestyle business, we did not only successfully introduce the evolution of our<br />
<strong>PUMA</strong> Social Campaign TEAMMATES, but also continued to fuse the influences of Sport<br />
and Fashion with some of the world’s leading design houses such as Alexander McQueen<br />
PuMa BuSineSS and SuSTainaBiliTy rePorT 2012<br />
and Mihara. We will continue to rejuvenate our Lifestyle category throughout 2013, connecting<br />
with a more youthful audience and shifting the focus from brand- to more productoriented<br />
marketing campaigns.<br />
In the area of sustainability we continue on our pioneering path. After a sneak peek into our<br />
first collection of biodegradable and recyclable products last October, our <strong>PUMA</strong> InCycle<br />
collection hit the stores at the beginning of this year. All these product and marketing initiatives<br />
are aimed at increasing <strong>PUMA</strong>’s brand desirability to make further strides on our<br />
mission to become the most desirable and sustainable Sportlifestyle company in the world.<br />
“<strong>PUMA</strong>’S TRANSFORMATiON AND COST<br />
REDUCTiON PROgRAM iS ALREADY DELivERiNg RESULTS”<br />
2012 was also an exceptionally busy year as we continued with the implementation of our<br />
Transformation and Cost Reduction Program. I am pleased to see that the program is<br />
already delivering its first results. The program entails the set <strong>up</strong> of a new business model<br />
in Europe. To reduce complexity and further harmonize structures, we have lowered the<br />
number of reporting entities from 23 countries to seven areas. The newly created S<strong>up</strong>ply<br />
Chain Management function is fully <strong>up</strong> and running and has created new tools to manage<br />
s<strong>up</strong>ply and demand more efficiently on a regional level, delivering immediate results.<br />
“ANNUAL BOTTOM LiNE UNDER PRESSURE”<br />
While our sales performance in 2012 met our expectations, our annual bottom line results,<br />
however, took a major hit. <strong>PUMA</strong>’s lower profitability resulted mainly from increased<br />
pressure on our margins after we had to reduce inventory levels through discounting on<br />
our products in the second half of the year particularly. Furthermore, costs rose as we<br />
continued to make strategic investments into the growth drivers of our business such as<br />
Research, Design and Development, Marketing, our s<strong>up</strong>ply chain and IT systems as well<br />
as the expansion of our retail operations. In addition, the scope of the one-time expenses