Puma Launches Cost-Saving Program After 2024 Profit Falls Short of Expectations
Friday, Jan 24, 2025 1:10 am ET
1min read Sportswear giant Puma (OTC:PMMAF) has announced a cost-cutting program, "nextlevel," following a disappointing 2024 net profit that fell short of expectations. The company reported a net income of €282 million, down from €305 million in 2023. CEO Arne Freundt acknowledged the solid sales growth and strategic progress made in 2024 but expressed dissatisfaction with the profitability. The cost-cutting program aims to achieve an EBIT margin of 8.5% by 2027, up from the 7.1% margin reported in 2024.
The "nextlevel" program focuses on optimizing direct and indirect costs, including personnel expenses, through better resource allocation aligned with Puma's strategic growth areas. The company has initiated decisive actions in 2025 to further improve profitability. Puma's brand elevation strategy complements the "nextlevel" program by building the foundation for sustainable and accelerated growth. The combination of these initiatives is expected to drive long-term profitability and growth, with a target of achieving a 10% EBIT margin.
Puma's 2024 net profit fell short of expectations due to higher net interest expenses and higher non-controlling interests. Despite the disappointing profit, the company reported solid sales growth, with a currency-adjusted increase of 9.8% in the fourth quarter and 4.4% for the full year. All regions contributed to the sales growth, with EMEA, Europe, Greater China, Other APAC, and North America showing stronger growth trajectories in the fourth quarter compared to the first nine months of 2024.
Investors should monitor Puma's progress in implementing the "nextlevel" program and its impact on the company's profitability. The success of this cost-cutting initiative, combined with the brand elevation strategy, will be crucial in determining Puma's long-term growth prospects. As the company operates in a dynamic environment, investors should also consider the company's ability to adapt to changing market conditions and maintain its growth momentum.
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