vtech fy2010 annual results announcement · 16.2 (32.9%) cms 0.3 (0.6%) • revenue down by 0.8% to...
TRANSCRIPT
VTech Holdings Ltd FY2010 Annual Results Announcement
14 June 2010
2
Shereen Tong
Group Chief Financial Officer
3
Financial Highlights
45.2% 154.3 224.1 Operating Profit
44.2% 143.2 206.5 Profit Attributable to
Shareholders of the Company
43.1% 58.5 83.7 Basic Earnings per Share (US cents)
Changes 2009 2010 (US$ M)
5.8% 1,448.2 1,532.3 Revenue
For the year ended 31 March
6.0% 527.5 559.4 Gross Profit
Dividend per Share (US cents)
33.3%
51.2%
12.0
41.0
16.0
62.0
• Interim
• Final
4
Revenue by Region
Total 1,532.3 100.0 1,448.2 5.8%
49.3 Others 3.2 49.7 0.8%
Europe 34.5 570.5 7.3% 528.9
North America 872.6 57.0 772.8 12.9%
Asia Pacific 81.5 5.3 55.2 47.6%
% Change 2009 2010 (US$ M)
For the year ended 31 March
5
Working Capital
Stocks 159.3
Stocks Turnover Days 75 days
Trade Debtors
Trade Debtors Turnover Days 61 days
185.7
31/03/10 (US$ M)
128.0
67 days
154.0
73 days
31/03/09
6
Deposits and Cash 382.6
Net Cash Position 382.6
31/03/10 (US$ M)
Liquidity Position
Currency-linked Deposits -
287.2
292.1
31/03/09
4.9
7 7
Allan Wong
Chairman and Group CEO
8
North America
TEL 515.2 (59.1%)
ELP 235.0 (26.9%)
CMS 122.4 (14.0%)
• Revenue up 12.9% to US$872.6
million, 57.0% of Group revenue
• Growth was driven by higher
sales of TEL products and CMS
• TEL revenue up 34.2% to
US$515.2 million
Higher sales of VTech DECT 6.0
and core AT&T range
Estimated market share in the US:
almost 50%
Launched SynJ, our first SMB
telephony system
Revenue by Product Line (US$ million)
9
North America (continued)
• ELP revenue down by 14.4% to
US$235.0 million
Revenue decrease mainly due to
lower sales of platform products
Standalone products sold well, led by
infant category
Jungle Gym line created a new
avenue for growth
• CMS revenue increased by 7.0% to
US$122.4 million
Sharp rebound in 2H
Sales increase from existing and
new customers in professional audio
equipment
Revenue by Product Line (US$ million)
TEL 515.2 (59.1%)
ELP 235.0 (26.9%)
CMS 122.4 (14.0%)
10 10
Europe
TEL 171.4 (32.4%)
ELP 241.7 (45.7%)
CMS 115.8 (21.9%)
• Revenue down by 7.3% to
US$528.9 million, 34.5% of Group
revenue
• Sales decline in all product lines
due to weak economy, despite 2H
improvement
• TEL revenue down by 11.5% to
US$171.4 million
Sales rebound in 2H unable to offset
decline in 1H
Full range of “T-Home / VTech”
products on shelves in Q4 FY2010
IAD appeared on the market in Q4
FY2010
Revenue by Product Line (US$ million)
11 11
Europe (continued)
• ELP revenue down by 6.5% to
US$241.7 million
Sales decline was due to declining
consumer demand and lower ASPs
Standalone products outperformed
platform products
• CMS revenue down by 2.0% to
US$115.8 million
Strong 2H cannot offset sales
decrease in 1H
Sales of power supplies and wireless
products declined
Professional audio equipment saw
sales increase
Revenue by Product Line (US$ million)
TEL 171.4 (32.4%)
ELP 241.7 (45.7%)
CMS 115.8 (21.9%)
12 12 12
Asia Pacific
TEL 22.9 (28.1%)
ELP 15.8 (19.4%)
CMS 42.8 (52.5%)
• Revenue up 47.6% to US$81.5 million,
5.3% of Group revenue
• AP outperformed other markets with
higher sales in all product lines
• TEL revenue rose strongly by 59.0% to
US$22.9 million, partly due to higher
sales brought by Telstra agreement
• ELP revenue increased by 23.4% to
US$15.8 million
• CMS revenue grew by 52.9% to
US$42.8 million, mainly driven by sales
increase in solid state lighting
Revenue by Product Line (US$ million)
13 13
Other Regions
TEL 32.8 (66.5%)
ELP 16.2 (32.9%)
CMS 0.3 (0.6%)
• Revenue down by 0.8% to
US$49.3 million, 3.2% of Group
revenue
• Other regions comprise mainly
markets in:
- Latin America
- Middle East
- Africa
• Sales drop was due to lower sales
of ELPs
• TEL revenue increased by 13.9% to
US$32.8 million
• ELP revenue declined by 22.5% to
US$16.2 million
Revenue by Product Line (US$ million)
14
King Pang
Group President
15
Proven Strategy
16
Proven Strategy
17
Strong industrial design, Bluetooth connectivity, enhanced user interface
SMB telephony systems, cordless headset
Core Product
Line
Design & Tech
Innovation
New Product
Categories
Product Innovation - TEL
Corded and cordless telephones
18
Standalone
Product
Platform
Product
Infant Preschool ELA
Reading Edu-gaming
Product Innovation - ELP
Bugsby V.Reader V.Smile Motion MobiGo
Jungle Gym & Bath Toys
19
US$59.99
3.0” TFT screen
MobiGo
Product Innovation - ELP
World’s First Animated
E-Book System for Children
4.3” TFT screen
Cartridge based (11 titles) +
download library + touch screen
Age 3-7
V.Reader
US$59.99
Age 3-8
Cartridge based (11 titles) +
touch screen + slide open keyboard
Available Now Available Now
Handheld Educational
Gaming System
20 20
Proven Strategy
21 21
Gains in Market Share - TEL
US Corded and Cordless Revenue Share Western Europe
Cordless Manufacturing Share
US
• US$1.2 billion market
• Significant market share gain in FY2010
• Expect continuous market share gain in
FY2011
Source: NPD & MZA
VTech ~ 22%
Western Europe
• Market size: 32 million base units
• Stable market
• Expect market share gain in FY2011
19.8%
28.8%27.1%
1.0%
14.9%
48.6%
0%
10%
20%
30%
40%
50%
60%
Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110
22 22
Proven Strategy
23 23
Asia Pacific
Geographic Expansion
Other Regions
Asia Pacific + other markets = Less than 10% of Group sales
Potential to grow
3.2% of Group sales
5.3% of Group sales
For the year ended 31 March 2010
24 24
Proven Strategy
25 25
Operational Excellence
Selling & Distribution Costs
as Percentage of Group Sales
* Excluding the effect of exchange differences
** Including the settlement and license fees together
with the legal and professional costs of a lawsuit
with Motorola Inc. related to infringement of six patents asserted against the Group
Administrative & Other Operating Expenses*
as Percentage of Group Sales
For the year ended 31 March
13.5
16.0 16.0 16.3 17.4
%
0
5
10
15
20
25
2006 2007 2008 2009 2010
4.6** 3.9 4.2 4.5
4.8
%
0
1
2
3
4
5
6
7
2006 2007 2008 2009 2010
26 26
Operational Excellence
Gross Profit Margin Operating Profit Margin
Net Profit Margin
For the year ended 31 March
36.5 36.4 37.6 36.9 37.1
%
0
10
20
30
40
50
2006 2007 2008 2009 2010
14.6
10.7
14.7 13.3
11.3
%
0
5
10
15
20
2006 2007 2008 2009 2010
13.5
9.9
13.9 12.5
10.7
%
0
5
10
15
20
2006 2007 2008 2009 2010
27 27
Outlook
28
Outlook - Overview
• See signs of recovery, but unsure of its
sustainability
• Weakness of EU currencies will pressure
revenue and profitability
• Rising costs will add to the challenges
• Cautiously optimistic – Expect to
deliver growth in FY2011
29 29
Outlook – North America & Europe
TEL products
• Growth will not be easy to achieve in NA
Strong performance last year
Expect further market share gains
SMB telephony systems add momentum
to sales
• Resume growth in Europe
More orders from existing customers
Gaining market share in Germany due to
DT agreement
Shipping more IADs
30 30
Outlook – North America & Europe
ELPs
• North America
Platform products return to
growth
Standalone products continue
its momentum
• Europe
New standalone and platform
products will stimulate sales
Growth is difficult to achieve
due to weak currencies
31 31
Outlook – North America & Europe
CMS
• Global EMS market on an uptrend
• VTech will continue to outperform
the market
• Expect additional businesses in
professional audio area
• Growth opportunities in switching
mode power supplies
Solar power inverters
Electric vehicle chargers
32 32
Outlook – Asia Pacific & Other Regions
TEL products
• Plan to enter China market
• Expect increased contributions from Telstra agreement
ELPs
• New team to develop products for China market
• Products to hit the shelves by the end of CY2010
• Step up efforts in other AP markets, notably Australia and
Japan
CMS
• Build on the success in solid state lighting in Japan
33 33
Conclusion
VTech is a company with
strong R&D, market leadership
position, a strong balance sheet
and a highly efficient operation…
…We will continue to pursue growth
through our strategy
34 34
Thank You