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Puma leaps over weak economy

The German sportswear company Puma posted on Friday stable third-quarter results despite weaker economic activity worldwide and raised slightly its 2008 sales outlook, but still failed to convince investors.

Puma leaps over weak economy
Photo: DPA

Puma, which is majority-owned by French luxury retailer PPR, reported a 1.0-percent increase in operating profit to €125 million, and a 0.1 percent slip in net profit to €89 million. Sales of sports shoes climbed by 13 percent in the three-month period, while accessories were up by 16.7 percent.

Markets in the United States and Asia showed the strongest results with a growth of 18.7 percent and 11.9 percent respectively on a 12-month basis.

“Given the results achieved so far this year as well as the order book for the fourth quarter, management raises its sales guidance for the full-year outlook from a single-digit to a mid to high single-digit currency adjusted growth,” a statement said. That meant full-year sales should increase by between five and 10 percent. Equinet analysts called the results “neutral” and said the narrowed sales guidance was rather “cosmetic.”

Puma shares, which had initially jumped following the earnings release, later slumped again by 2.92 percent to €125 in morning trading on the Frankfurt stock exchange, while the mid-cap MDax index on which they are listed, was off by 1.27 percent overall.

During the Beijing Olympics in August, Jamaican sprinter Usain Bolt wore Puma Theseus II shoes with gold soles during his record-breaking wins in the 100- and 200-meter events.

ECONOMY

German consumer prices set to rise steeply amid war in Ukraine

Russia's war in Ukraine is slowing down the economy and accelerating inflation in Germany, the Ifo Institute has claimed.

German consumer prices set to rise steeply amid war in Ukraine

According to the Munich-based economics institute, inflation is expected to rise from 5.1 to 6.1 percent in March. This would be the steepest rise in consumer prices since 1982.

Over the past few months, consumers in Germany have already had to battle with huge hikes in energy costs, fuel prices and increases in the price of other everyday commodities.

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With Russia and Ukraine representing major suppliers of wheat and grain, further price rises in the food market are also expected, putting an additional strain on tight incomes. 

At the same time, the ongoing conflict is set to put a dampener on the country’s annual growth forecasts. 

“We only expect growth of between 2.2 and 3.1 percent this year,” Ifo’s head of economic research Timo Wollmershäuser said on Wednesday. 

Due to the increase in the cost of living, consumers in Germany could lose around €6 billion in purchasing power by the end of March alone.

With public life in Germany returning to normal and manufacturers’ order books filling up, a significant rebound in the economy was expected this year. 

But the war “is dampening the economy through significantly higher commodity prices, sanctions, increasing supply bottlenecks for raw materials and intermediate products as well as increased economic uncertainty”, Wollmershäuser said.

Because of the current uncertainly, the Ifo Institute calculated two separate forecasts for the upcoming year.

In the optimistic scenario, the price of oil falls gradually from the current €101 per barrel to €82 by the end of the year, and the price of natural gas falls in parallel.

In the pessimistic scenario, the oil price rises to €140 per barrel by May and only then falls to €122 by the end of the year.

Energy costs have a particularly strong impact on private consumer spending.

They could rise between 3.7 and 5 percent, depending on the developments in Ukraine, sanctions on Russia and the German government’s ability to source its energy. 

On Wednesday, German media reported that the government was in the process of thrashing out an additional set of measures designed to support consumers with their rising energy costs.

The hotly debated measures are expected to be finalised on Wednesday evening and could include increased subsidies, a mobility allowance, a fuel rebate and a child bonus for families. 

READ ALSO: KEY POINTS: Germany’s proposals for future energy price relief

In one piece of positive news, the number of unemployed people in Germany should fall to below 2.3 million, according to the Ifo Institute.

However, short-time work, known as Kurzarbeit in German, is likely to increase significantly in the pessimistic scenario.

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