Samsonite Group (1910) H2 2014 earnings summary

Executive summary

• FY2014 net sales rose 15.4% reported and 17.3% in constant currency; EBITDA increased 13.8% and adjusted net income rose 9%.

• Sales grew at double-digit rates across all four operating regions; non-travel reached nearly one-third of revenue and direct-to-consumer about 25%.

• Strategy remains focused on diversifying brands, categories and channels, with management targeting double-digit sales and profit growth in 2015 and beyond.

Financial highlights

• Reported net income grew 5.8%; adjusted net income, excluding stock-option expense, grew 13.9%, while adjusted EPS increased about 10%.

• Operating cash flow reached $230 million versus $193 million in 2013; net cash declined after acquisitions, dividends and capital expenditure.

• CapEx was about $69 million, up from $57 million; net working capital was 12.7% versus a 14% target.

• Advertising spend increased 12% YoY, supporting brand investment, particularly American Tourister in Europe.

Outlook and guidance

• Management expects double-digit sales and profit growth in 2015, while acknowledging challenging conditions and currency movements in some markets.

• FY2015 EBITDA margin expected flat to slightly down, with gross margins generally expected to hold steady; core margins are expected to continue rising over time.

• Europe American Tourister sales expected to grow at a pace similar to 2014’s nearly 50%; selective European price increases planned from September to protect margins.

• FY2015 CapEx expected to increase modestly, driven by retail expansion, manufacturing capacity and a China distribution center; tax rate expected to move toward 26% in 2015.