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Athletic apparel maker Puma says 4th-quarter profit drops 26 percent

Athletic apparel maker Puma says 4th-quarter profit drops 26 percent

Puma AG, the maker of athletic shoes, shirts and other sporting goods, said Monday its fourth-quarter profit fell 26 percent as it tries to broaden its product base and expand into new regions.
But the company, the world's third-biggest maker of sports apparel behind Nike Inc. and Adidas AG, said it expected sales and earnings in 2007 to increase in the higher single-digit figure range, largely on demand for its licensed products.
"Overall, we are very pleased with 2006 and our start to (the latest restructuring phase), as we set some ambitious targets and are on track or ahead on all accounts," Chief Executive Jochen Zeitz said in a statement. "But more important than the past is the future, and we've put ourselves in a solid early position to deliver on our ... objectives."
Puma earned euro32.8 million (US$43 million) in the last three months of 2006, down from euro44.1 million in the same quarter of 2005. Analysts polled by Dow Jones Newswires had expected a profit of euro34 million (US$44.6 million).
Sales rose 38 percent to euro480 million (US$629.7 million) from euro349.2 million a year ago, still less than the euro492 million (US$645.4 million) analysts had predicted.
For the year, Puma earned euro263.2 million (US$345.3 million), down nearly 8 percent from euro285.8 million in 2005, just below analysts' estimates of euro264 million (US$346.3 million). Sales rose 33 percent to euro2.37 billion (US$3.11 billion) from euro1.78 billion in 2005, just under estimates of euro2.38 billion (US$3.12 billion).
The sales increase was led, in part, by better-than-expected demand for its shirts and helped by the afterglow of the 2006 soccer World Cup, in which Puma sponsored the champion Italy. It is also a key supplier to many African teams.
Since Zeitz was named CEO and chairman of the company in 1993, Puma has returned to profitability and increased sales and expanded its research and development, marketing and branding programs.
Its latest restructuring effort is aimed at expanding the company's reputation as a maker of lifestyle brands _ clothes, shoes and accessories, such as eyeglasses _ and expand in more regions and categories.
For the year, Puma posted strong sales in North and South America, with sales reaching euro724.1 million (US$949.95 million), up 51.8 percent from 2005. In Asia and the Pacific, sales more than tripled to euro486.5 million (US$638.24 million).
In Europe, the Middle East and Africa sale increased 5.1 percent to euro1.15 billion (US$1.51 billion).
The company's backlog of orders _ a key indicator for future sales performance _ was at euro1.12 billion (US$1.47 billion) at the end of 2006, up 4.7 percent from euro1.07 billion in 2005.
Shares of Herzogenaurach-based Puma were up nearly 2 percent after the results were released but fell back more than half a percent to euro288.01 (US$377.84) in Frankfurt trading.
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On the Net:
http://about.puma.com