Case for optimism on Asian growth
Confident that Asia is going places, luggage maker Samsonite plans to add 500 sales points in the region this year, including 200 in China.
'More and more people in China and India are travelling for business or for holidays. Asian demand will become a bigger part of the company's business in the coming years,' Samsonite chief executive Tim Parker said while announcing the company's first full-year results since its listing in Hong Kong.
The luggage firm's net profit tumbled 75.56 per cent to US$86.75 million due to higher marketing and distribution expenses but Parker said the net profit exceeded the US$64 million the company had forecast in its listing prospectus and beat market expectations.
He attributed the drop in net profit to the high base set by the exceptional gains in 2010, when the company wrote back bad debt. The 2011 results do not have a similar write-back; rather, its bottom line was eroded by a one-off listing cost.
Stripping out these factors, Parker said, the firm's underlying profit last year rose 29.6 per cent year on year to US$137 million, while net sales grew 28.8 per cent to US$1.57 billion.
The Hong Kong listing last year helped Samsonite repay debt and gave it enough cash to prepare for acquisitions. It has US$126.2 million of cash on hand.
It said it would pay a dividend of two US cents per share, representing a payout ratio of 34.6 per cent.
Asia is the largest growth market for Samsonite, with net sales for last year in China rising 57.4 per cent and in India by 41.1 per cent. Both markets, however, are expecting slower growth this year.
Premier Wen Jiabao has set the growth target for the Chinese economy this year at 7.5 per cent, compared with the 8 per cent target in past years.
India's government predicts its economy will grow by just 6.9 per cent in the year to March, down from 8.4 per cent in the previous year.
But Parker said any slowdown would be modest and would not hurt traveller numbers. Asia was expected to deliver the company about 20 per cent of its sales growth this year while sales in Europe and the US were expected to see 'upper single digit' growth.
According to Parker, even as the US economy remains weak and Europe battles its sovereign debt crisis, people are travelling more.
'People in some of the European economies are under a lot of pressure, but they don't want to give up their holidays,' he said.
The company's sales in Germany grew 30.9 per cent, while sales in France were up 26.6 per cent.
Parker said rising costs and the global economic uncertainty would be the major challenges but maintained that globally, traveller numbers were on a rising trend.