For Subscribers

Get the complete article now!

TWST: What are the most important financial ratios for you; and what concerns do analysts raise when they're talking to you?

Mr. Van Nevel: About 3 years ago the shareholders and the board wanted to put up the company for sale; and certain short-term strategies were implemented that first of all did not result in the sale of the company, and secondly there were some conflicts with longer-term strategies. In the meantime I have taken care of that and made the necessary changes. When they did not succeed in selling the company, Samsonite purchased 51% of its own shares in the marketplace, and financed that with debt. How was that done? We issued 350 million of bonds and 175 million of preferred stock. Knowing what we know today we would not have done that. Samsonite on a net profit basis continues to lose money. We finished last year with 91.3 million of EBIT-DA. In other words the 770 million in sales produced last year an EBIT-DA of 91.3 million, and 70% of that comes from Europe. Last year, 1998, we lost a lot of money in the Americas on the EBIT level, and now we are making money. So the turnaround has definitely happened and is happening, and we will continue to increase our profit margin in the United States. The analysts were sceptical in the beginning about this turnaround. I just got back this week from New York, where I announced the results for the year, and nobody questions that turnaround any more. The problem is that because of what was implemented two years ago, Samsonite is over-leveraged. Now we work on fixing the capital structure. Most of what we earn today in EBIT-DA goes to interest expense to finance bonds, and also of course the preferred stock. So what the analysts are looking for is how is Samsonite going to recapitalise or fix its capital structure. Again, we are working on this and depending on market conditions are going to fix that. Quite frankly, the most difficult thing for me, and what takes time, was to fix the operational problems. Fixing a capital structure when the markets are in the right mood can be done in a morning, so to speak.

TWST: Are there milestones, particular dates, that an investor with a 2-5 years horizon should be looking out for?

Mr. Van Nevel: I think the investors are looking for a further improvement in Samsonite's earnings ratios. In the United States of America they are very happy with what we're doing in Europe and Asia; if we can do it in Europe and Asia then it's logical that the United States will follow; it's just a matter of time, and not years but months. And they are expecting a recapitalisation of our company in the next 12-18 months, and that is also my target.