Samsonite net takes 47 per cent nosedive

Samsonite's first-half net profit plunged 46.62 per cent to US$16.39 million, but the luggage-maker said its full-year profit target of US$64.2 million was still feasible and might even be surpassed.

'The [fall in net profit] was mainly due to the non-recurrent listing costs and our debt restructuring scheme, but ... I am confident we will not only maintain [the target] but better the profit for the whole year,' said Ramesh Tainwala, president for Asia-Pacific and the Middle East.

The US-based company raised HK$1.43 billion, after expenses and fees, upon its listing in Hong Kong in June. It priced its float at HK$14.50, the lower end of its indicative price range of HK$13.50 to HK$17.50.

Shares of Samsonite closed up 1.77 per cent at HK$13.78 yesterday, compared with a 1.71 per cent gain by the Hang Seng Index.

Net sales for the first six months jumped 34.5 per cent year on year, to US$743.8 million. Excluding the effects of ending licences for clothing brands Lacoste and Timberland, net sales rose by 40.8 per cent.

Wages, inflation and higher sales volume have pushed distribution costs up 32.4 per cent to US$195.9 million, while advertising costs jumped by nearly 40 per cent, to US$60.4 million, on marketing strategies by new chief executive, Tim Parker. For every 10 yuan (HK$12.20) made in China, for example, one yuan was spent on advertising.

Much of Samsonite's future growth will bank on Asia, which overtook Europe as the group's largest money-spinner this year. Net sales in Asia jumped 56.2 per cent year on year over the first six months, to US$267.6 million, compared with 34.6 per cent in Europe and 33.3 per cent in North America.

Three of the group's top five markets are in Asia, and Tainwala said it was only a matter of time before Japan overtook Germany. That would make the United States the only non-Asian country among the top five.