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MarketScreener Homepage  >  Equities  >  Xetra  >  Puma AG Rudolf Dassler Sport    PUM   DE0006969603

PUMA AG RUDOLF DASSLER SPORT (PUM)
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U.S. tariffs could push Puma to shift China production

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04/24/2018 | 11:57am CEST
FILE PHOTO: A woman walks past a Puma store at a commercial center in Santiago

BERLIN (Reuters) - German sportswear maker Puma is working on contingency plans to move some production from China to other Asian markets if U.S. tariffs are imposed on footwear, its chief executive said on Tuesday.

BERLIN (Reuters) - German sportswear maker Puma is working on contingency plans to move some production from China to other Asian markets if U.S. tariffs are imposed on footwear, its chief executive said on Tuesday.

Puma reported that strong demand in China helped power a jump in first-quarter sales and earnings, but cautioned that the threat of a U.S.-China trade war was tempering its optimism for the rest of the year.

Puma currently makes about a third of its products in China and is looking into moving sourcing of footwear to countries like Vietnam and Indonesia, and apparel to Cambodia and Bangladesh, said CEO Bjorn Gulden.

"Our sourcing people have been working on alternatives for the last two or three months," Gulden told a conference call for journalists. "It causes headaches for many people."

Puma shares, which have risen 23 percent in the last three months on its bullish outlook, were down 0.6 percent at 0945 GMT.

Apparel and footwear could be included in a new U.S. list of $100 billion (71.7 billion pounds) worth of Chinese imports expected to be announced in coming days as the trade fight started by U.S. President Donald Trump with China escalates.

Gulden said Puma might have an advantage over larger rivals Adidas and market leader Nike in being able to move sourcing faster because it its volumes are smaller.

However, he added that U.S. tariffs could also mean Puma has to accept a lower U.S. margin or raise prices, adding: "We are not the market leader in the U.S. so of course we will see what the market does."

Gulden said moving production for the U.S. market could take about 12 months, adding that capacity freed up could also be used to make products for the booming Chinese market, where Puma's sales growth was exceptional in the first quarter.

"We are not even touching the second and third tier cities in China," Gulden said, noting Puma had about 1,400 points of sale in China, compared to about 10,000 for its rivals.

Puma reported that first-quarter sales in the Asia-Pacific region jumped 35 percent.

Gulden noted that Puma had already been shifting production away from China over the last couple of years due to rising labour costs, with many of the factories across Asia owned by the same companies, making it easier to switch volumes.

Gulden dismissed the idea that tariffs could shift footwear production back to the United States, although medium to long-term it made sense to move sourcing closer to its major markets.

Ahead of the soccer World Cup in June, Gulden said Puma had a good order book for the second and third quarters. It has compensated for the failure of top sponsored team Italy to qualify by signing finalists Senegal and Serbia.

(Reporting by Emma Thomasson; Editing by Keith Weir)

By Emma Thomasson

Stocks mentioned in the article
ChangeLast1st jan.
ADIDAS -0.81% 207 Delayed Quote.23.84%
NIKE -0.37% 79.75 Delayed Quote.27.50%
PUMA AG RUDOLF DASSLER SPORT -0.55% 451 Delayed Quote.24.24%
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Financials (€)
Sales 2018 4 535 M
EBIT 2018 334 M
Net income 2018 197 M
Finance 2018 296 M
Yield 2018 0,65%
P/E ratio 2018 34,25
P/E ratio 2019 26,52
EV / Sales 2018 1,43x
EV / Sales 2019 1,28x
Capitalization 6 802 M
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 22
Average target price 475 €
Spread / Average Target 5,4%
EPS Revisions
Managers
NameTitle
Bjørn Gulden Chief Executive Officer
Jean-François Palus Chairman-Administrative Board
Lars Radoor Sørensen Chief Operating Officer
Michael Lämmermann Chief Financial Officer & Managing Director
Martin Köppel Member-Administrative Board
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