PUMA SE (PUMSY): High Dividend Cut Risk Amid Financial Strains and Leadership Uncertainty

Investors in PUMA SE (PUMSY) face a growing risk that the company may cut its dividend in 2025. Despite a current yield of 3.5%, a combination of financial pressures, operational challenges, and geopolitical headwinds suggests the sustainability of the $0.09 annual dividend per share is far from assured. Below, we dissect the key risks and provide critical insights for investors.

The Dividend Policy: Stable on Paper, Unstable in Practice

PUMA’s dividend policy for 2025 remains unchanged at $0.09 per share annually, with the next ex-date set for May 23, 2025. The 3.5% yield reflects a dividend payout ratio that appears sustainable only if earnings and cash flows remain robust. However, recent data paints a far murkier picture:

• Earnings Outlook: PUMA is scheduled to report Q1 2025 results on February 19, with an EPS forecast of just $0.01—a figure that hints at minimal profitability.
• Revenue Growth: Management projects currency-adjusted sales growth in the "low-single-digit percentage range" for Q1, but this growth is expected to lag behind 2024 levels. Weak performance in key markets like the U.S. and China underscores the challenge.

Key Risks Driving Dividend Vulnerability

1. Trade Tariffs and Cost Pressures

PUMA’s reliance on Vietnamese manufacturing leaves it exposed to U.S. tariffs, which have already contributed to a near-nine-year low in its stock price. These tariffs, combined with rising operating expenses (OPEX), are squeezing margins:
- Q1 2025 adjusted EBIT (excluding one-time costs) is projected at €70 million, but including costs from its "nextlevel" cost efficiency program, EBIT could drop to significantly below the €159 million reported in Q1 2024.

2. Leadership Uncertainty and Cost-Cutting Measures

The abrupt departure of CEO Arne Freundt in April 2025, amid board conflicts, adds to operational instability. Simultaneously, PUMA’s decision to cut 500 global jobs highlights cash conservation efforts—actions that often precede dividend cuts.

3. Geopolitical and Macroeconomic Risks

• Trade Disputes: Ongoing tensions between the U.S. and China threaten supply chains and demand.
• Currency Volatility: A strong euro has historically hurt European exporters like PUMA, further complicating revenue growth.

4. Historical Precedent

During the 2020 pandemic, PUMA was among 187 U.S.-listed companies to suspend dividends. With EBIT margins now under pressure, the company may resort to similar measures if profitability falters.

Data-Driven Analysis: Why the Dividend Is at Risk

Let’s quantify the risks:

Metric	Q1 2025 Projection	Q1 2024 Actual	Change
Adjusted EBIT (€M)	70	159	-56%
Revenue Growth	Low single-digit %	Higher (2023: €8.8B)	Decline
Net Income (2024 Full Year)	€281.6M (vs. €305M in 2023)		-8%

The EBIT collapse alone suggests PUMA’s ability to sustain a dividend yielding 3.5%—already elevated given its stock price—is questionable. With one-time costs adding further strain, the board may prioritize liquidity over shareholder payouts.

Conclusion: Proceed with Caution

PUMA SE’s dividend is at high risk of a cut in 2025 due to a toxic mix of tariff-driven cost pressures, leadership instability, and weak sales growth. The February 19 earnings report will be critical: if Q1 results confirm the EBIT decline and revenue stagnation, a dividend reduction becomes almost inevitable.

Investors should:
1. Monitor PUMSY’s earnings closely for clues on EBIT recovery and cash flow.
2. Consider the 3.5% yield as a warning sign rather than a reward, given the company’s financial fragility.
3. Factor in broader risks: European dividends are projected to shrink by 3.4% in 2025, and PUMA’s exposure to trade disputes places it at the forefront of this trend.

In a market where dividends signal stability, PUMA’s 2025 payout appears increasingly precarious. Prudent investors would do well to reassess their positions ahead of the earnings report.