Puma has announced that it will maintain its dividend at the same level despite challenges posed by the devaluation of the Argentine peso, which impacted profitability in the fourth quarter.
The German apparel company stated on Tuesday that it plans to propose a dividend of 82 European cents per share ($0.89) for 2023 at its annual general meeting on May 22, matching the payout for the previous year. This decision comes as Puma aims to allocate 40.3% of its annual net profit to shareholders, up from 34.7% in the previous year, driven by robust free cash flow and positive business performance.
According to Chief Executive Arne Freundt, the company’s results would have been even stronger without the significant one-off accounting impact of the Argentine peso devaluation. Despite this challenge, Puma reported that free cash flow more than doubled to EUR369 million last year.
The devaluation of the Argentine peso, initiated by President Javier Milei’s government to address high inflation, notably affected Puma’s profitability. This led to a decline in net profit for the fourth quarter, which fell to EUR800,000 from EUR1.4 million, aligning with preliminary figures released by Puma last month.
In the fourth quarter, Puma witnessed a notable increase in earnings before interest and taxes (EBIT), rising to EUR94.4 million from EUR40.5 million, a metric closely monitored by analysts and investors. However, sales experienced a decline of 9.8% in reported terms and 4% on a currency-adjusted basis, falling to EUR1.98 billion from EUR2.20 billion.
Looking ahead, the company anticipates that geopolitical tensions and macroeconomic challenges will persist, continuing to impact consumer sentiment and demand, especially in the first half of the year.
Chief Executive Arne Freundt commented on the outlook, stating, “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 of 2024.”
Puma has set its expectations for mid-single-digit sales growth on a currency-adjusted basis for the year, with EBIT projected to range between EUR620 million and EUR700 million. This forecast is based on the assumption that the devaluation of the Argentine peso will be offset by price increases in the country.