Devaluation of the Argentine peso impacts Puma's 2023 results

Following the extraordinary devaluation of the Argentine peso by 54 percent in December 2023, Puma achieved full-year currency-adjusted sales growth of around 6.6 percent and 1.6 percent reported, with preliminary 2023 sales of approximately 8.6 billion euros.

The operating result (EBIT) for the year amounted to approximately 622 million euros compared to the outlook of between 590 to 670 million euros.

The company said that the devaluation of the Argentine peso and its hyperinflationary accounting treatment affected the financial result. Consequently, net income was approximately 305 million euros.

“The accounting treatment of the hyperinflationary economy of Argentina and its significant devaluation of the Argentine peso mid December resulted in an extraordinary impact on fourth quarter and financial year results for 2023. Due to the magnitude and timing of this currency effect, we could not fully compensate for the entire impact at the year-end,” said Arne Freundt, CEO of Puma in a statement.

Puma’s Q4 sales decline

Despite the extraordinary devaluation of the Argentine peso, the company added that fourth-quarter EBIT was strong at approximately 94 million euros and fully in line with expectations, driven by an improved gross profit margin and strict cost discipline.

However, on a currency-adjusted basis, fourth quarter sales declined by around 4 percent and reported sales declined by around 9.8 percent to approximately 1,982 million euros. The devaluation of the Argentine peso especially impacted the fourth quarter financial result, resulting in net income declining to approximately 0.8 million euros.

Puma expects to grow mid single-digit in 2024

“For 2024, we foresee the geopolitical and macroeconomic challenges as well as highly volatile currencies to persist. This continues to weigh on consumer sentiment and demand, especially in the first half of 2024,” added Arne Freundt.

Supported by Puma's continued brand momentum and despite continued global geopolitical and macroeconomic headwinds, the company expects in the financial year 2024 a mid-single-digit currency-adjusted sales growth and an EBIT in the range of 620 million euros to 700 million euros.

The outlook assumes that the future devaluation of the Argentine peso will be fully compensated by corresponding price increases in Argentina.