Puma Keeps Dividend Stable After Argentine Peso Devaluation Hits Profitability — Update

By Mauro Orru

Puma is leaving its dividend unchanged after the devaluation of the Argentine peso weighed on profitability in the fourth quarter.

The German apparel group said Tuesday that it would propose a dividend of 82 European cents per share ($0.89) for 2023 to its annual general meeting on May 22, the same it paid for the previous year.

The amount means that Puma will be handing shareholders 40.3% of annual net profit compared with 34.7% the previous year, a development the group attributed to strong free cash flow and what it called a positive underlying business development. Free cash flow more than doubled to EUR369 million last year.

"Without the extraordinary devaluation of the Argentine peso, which had a significant one-off accounting impact, our results would have been even stronger," said Chief Executive Arne Freundt. "This outcome reflects the strong underlying performance of Puma."

Puma said in January that the decision from the government of President Javier Milei to devalue the Argentine peso by 54% in December to tame stubbornly high inflation had particularly harmed profitability.

Net profit in the fourth quarter slumped to EUR800,000 from EUR1.4 million, in line with preliminary figures Puma released last month.

Earnings before interest and taxes, a closely watched metric by analysts and investors, climbed to EUR94.4 million in the fourth quarter from EUR40.5 million. However, sales slumped 9.8% in reported terms and 4% on a currency-adjusted basis to EUR1.98 billion from EUR2.20 billion.

The company expects geopolitical tensions and macroeconomic headwinds will continue to weigh on consumer sentiment and demand, particularly in the first half.

"We expect a softer first half of the year. The persistent adverse currencies will also continue to be a pressure on the profitability in the first half 2024," Freundt said.

Puma is forecasting mid-single-digit sales growth on a currency-adjusted basis this year, and EBIT between EUR620 million and EUR700 million, based on its assumption that the devaluation of the Argentine peso will be fully compensated by price increases in the country.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

February 27, 2024 03:06 ET (08:06 GMT)

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