vtech holdings ltd€¦ · vtech holdings ltd fy2012 annual results announcement 23 may 2012 . 2...

VTech Holdings Ltd FY2012 Annual Results Announcement

23 May 2012

2

Shereen Tong

Group Chief Financial Officer

3

Financial Highlights

-4.2% 218.7 209.5 Operating Profit

-5.0% 202.0 191.9 Profit Attributable to Shareholders

of the Company

-5.5% 81.5 77.0 Basic Earnings per Share (US cents)

Changes 2011 2012 (US$ M)

4.2% 1,712.8 1,784.5 Revenue

For the year ended 31 March

0.7% 566.9 570.8 Gross Profit

Dividend per Share (US cents)

Gross Profit Margin %

Net Profit Margin %

Operating Profit Margin %

-1.0% pts 11.8% 10.8%

-1.1% pts 12.8% 11.7%

-1.1% pts 33.1% 32.0%

16.0

60.0

76.0

• Interim

• Final

• Total dividend for the year

16.0

62.0

78.0

- 2.6%

4

Revenue by Region

Total 1,784.5 100.0 1,712.8 4.2%

67.6 Others 3.8 72.1 -6.2%

Europe 40.3 667.6 7.7% 719.3

North America 903.5 50.6 874.9 3.3%

Asia Pacific 94.1 5.3 98.2 -4.2%

% Change 2011 2012 (US$ M)

For the year ended 31 March

5

Working Capital

Stocks 239.2

Stocks Turnover Days 82 days

Trade Debtors

Trade Debtors Turnover Days 56 days

210.6

31/03/12 (US$ M)

229.8

85 days

198.8

63 days

31/03/11

6

Deposits and Cash 326.5

Net Cash Position 326.5

31/03/12 (US$ M)

Liquidity Position

Total Borrowings --

333.1

333.1

31/03/11

--

7

King Pang

Group President

8

Rising costs - the biggest challenge in FY2012:

• Higher raw material prices

• Rising labour costs in China

• RMB appreciation

Operations Review - Costs

Price increase + cost reduction +

efficiency enhancement

to mitigate cost pressure

9

North America

• Revenue up 3.3% to US$903.5

million, 50.6% of Group revenue

• Higher revenue from CMS and

ELPs offset a slight revenue

decrease from TEL products

• TEL revenue down 1.4% to

US$415.3 million

The decrease reflects the maturity

of the US residential phone market

Maintained No.1 position in US

Further progress in SMB and hotel

phones

Revenue by Product Line (US$ million)

TEL 415.3 (-1.4%)

ELPs 308.5 (+7.5%)

CMS 179.7 (+7.8%)

10

North America (continued)

Revenue by Product Line (US$ million) • ELP revenue up 7.5% to US$308.5

million

Growth was driven by platform products

InnoTab sold well, more than offset

lower sales of MobiGo and V.Reader

Revenue from standalone products was

flat

• CMS revenue grew by 7.8% to

US$179.7 million

Professional audio equipment and

internet phones were growth drivers

Higher sales of commercial solid state

lighting also supported growth

TEL 415.3 (-1.4%)

ELPs 308.5 (+7.5%)

CMS 179.7 (+7.8%)

11 11

Europe

• Revenue up 7.7% to US$719.3

million, 40.3% of Group revenue

• Higher ELP and CMS revenue

more than offset lower sales of

TEL products

• TEL revenue down 1.0% to

US$215.4 million

Sales decline was due to weak

second half sales as customers

delayed orders

Gained market share and became

No. 1 manufacturer of cordless

phones in Western Europe

Revenue by Product Line (US$ million)

TEL 215.4 (-1.0%)

ELPs 310.3 (+13.2%)

CMS 193.6 (+9.9%)

12 12

Europe (continued)

• ELP revenue up 13.2% to US$310.3

million

Both platform and standalone products

delivered solid results

Full launches of MobiGo and Storio,

higher sales in infant products and Kidi-

series drove growth

Sales were especially strong in France,

Germany and the Netherlands

• CMS revenue up 9.9% to US$193.6

million

Wireless headset was the best

performer, benefiting from supplier

consolidation

Professional audio also recorded higher

sales

Revenue by Product Line (US$ million)

TEL 215.4 (-1.0%)

ELPs 310.3 (+13.2%)

CMS 193.6 (+9.9%)

13 13 13

Asia Pacific

• Revenue down 4.2% to US$94.1

million, 5.3% of Group revenue

• TEL revenue decreased by 16.4% to

US$29.6 million, due to weakness in the

Japanese market and lower sales in

Australia

• ELP revenue grew by 10.1% to US$17.5

million, driven by growth in China, albeit

from a low base

• CMS revenue increased by 0.2% to

US$47.0 million. Higher sales in medical

and wireless products was offset by

significantly lower orders for LED light bulbs,

as customer faced keen competition

Revenue by Product Line (US$ million)

TEL 29.6 (-16.4%)

ELPs 17.5 (+10.1%)

CMS 47.0 (+0.2%)

14 14

Other Regions

• Revenue down 6.2% to US$67.6

million, 3.8% of Group revenue

• Other regions include Latin America,

the Middle East and Africa

• Revenue decrease mainly due to sales

decline in TEL products, as customers

delayed orders

• Revenue from TEL products fell by

14.0% to US$46.0 million

• Revenue from ELPs and CMS rose by

16.2% and 14.3% to US$20.8 million

and US$0.8 million respectively

Revenue by Product Line (US$ million)

TEL 46.0 (-14.0%)

ELPs 20.8 (+16.2%)

CMS 0.8 (+14.3%)

15

Growth Strategy

16 16

Growth Strategy

Geographic

Expansion

• AP + other regions =

9.1% of Group sales

• China is our focus

• ELPs: Expanding

steadily in China

• TEL: Start selling

AT&T phones in

China since 4QFY12

Gains in

Market Share

• World’s No. 1

cordless phone

manufacturer

• World’s No. 1 ELP

supplier

• CMS growth out-

paces global EMS

market

Operational

Excellence

• Tight cost control

• Efficient operations

• SG&A: As % of Group

revenue remained

unchanged (17.1% in

FY2012 & FY2011)

Operating Cost

• Micro business

phone system

• Platform products:

New versions of

InnoTab, MobiGo 2

and Storio 2

• Standalone

products: Switch &

Go Dinos, Toot-Toot

Drivers and more

Product

Innovation

17 17

Our Strengths

Excellent R&D

Strong Balance Sheet

Market Leadership Position

TEL -No.1 Global Manufacturer Efficient Operations

18 18

Allan Wong

Chairman and Group CEO

19

Outlook - Overview

• Macro-economic environment remains

challenging, with slow but continuous recovery in

the US

• In Europe, consumer demand is affected by

austerity measures and economic uncertainty

• Planning for overall top line growth in FY2013

20

Outlook - Overview

• Cautiously optimistic of profitability improvement

Lower raw material prices feeding into margin

Supported by efficiency enhancement measures

including higher automation and product design

optimisation

• Labour cost in China, however, will continue to

rise

• Continue to manage expenses very tightly

21 21

Outlook

• Foresee a rebound for TEL

products

• North America – Good momentum of

SMB and hotel phones will continue.

Sales of residential phones are expected

to recover

• Europe – Prospect is positive as

customers will restock in 1H. Gains in

market share are also expected

• Asia Pacific and Other Regions –

Expect to return to a growth path due to

further inroads in Australia and

encouraging progress in Latin America

22 22

Outlook

• Despite challenging retail environment

in Europe, healthy growth for ELPs is

expected

• North America – Platform products will

lead the way, with new versions of

InnoTab and MobiGo. New line of

standalone products, Switch & Go Dinos

will start to roll out also

• Europe – Good performances from

standalone and platform products are

expected to continue

• Asia Pacific and Other Regions –

Momentum is expected to continue

23 23

Outlook

• CMS will continue to outperform the

global EMS market

• New factory building – Raise capacity

by 40%. The enhanced facility supports

customers who target domestic sales in

China. The new set-up also allows

production of sophisticated products

• Professional audio – Will continue to

add new customers as reputation grows

• Wireless headsets – Will benefit from

further consolidation of supplier base

Global EMS

Market

VTech CMS

24 24

Outlook

• Switching mode power supplies –

Business should stabilise, though solar

power inverters may remain under

pressure

• Solid state lighting – Growth in

commercial solid state lighting will offset

an anticipated further decline in

consumer LED light bulbs

• Marine radio – A new product category

added in FY2012, will see rapid growth

over the next two years as customer

transfers more production to VTech

Global EMS

Market

VTech CMS

25

Conclusion

“Our proven strengths in product

development, a strong balance sheet,

market leadership position and

efficient operations should enable us

to achieve further growth in revenue

and hence deliver sustainable returns

to shareholders.”

26 26

Thank You