Vtech Holdings Limited · HKEX:303
Vtech — FY2014 Earnings Presentation
30 slides from Vtech's earnings presentation, May 22, 2014
Slide 1: VTech Holdings Limited FY2014 Annual Results Announcement
VTech Holdings Limited FY2014 Annual Results Announcement 22 May 2014
Slide 2: Shereen Tong, Group Chief Financial Officer
Shereen Tong Group Chief Financial Officer 22
Slide 3: Financial Highlights
Financial Highlights For the year ended 31 March (US$ M) 2014 2013 Changes Revenue 1,898.9 1,858.0 2.2% Gross Profit 634.3 597.8 6.1% Gross Profit Margin % 33.4% 32.2% 1.2% pts Operating Profit 226.1 223.9 1.0% Operating Profit Margin % 11.9% 12.0% -0.1% pts Profit Attributable to Shareholders of th
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2014 % 2013 Change North America 950.7 50.1 933.4 1.9% Europe 791.8 41.7 769.9 2.8% Asia Pacific 108.9 5.7 99.8 9.1% Other Regions 47.5 2.5 54.9 -13.5% Total 1,898.9 100.0 1,858.0 2.2% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/14 31/03/13 Stocks 265.9 276.9 Stocks Turnover Days 87 days 90 days Trade Debtors 208.6 224.9 Trade Debtors Turnover Days 54 days 62 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/14 31/03/13 Deposits and Cash 322.9 308.6 Total Borrowings -- -- Net Cash Position 322.9 308.6 6
Slide 7: King Pang, Group President
vtech King Pang Group President >> > >> >INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Operations Review - Costs
Operations Review - Costs Gross margin improved in FY14: • Lower material costs more than offset higher labour costs and manufacturing overheads • Material costs declined due to: Subdued global demand VTech’s effort in product re-engineering • Productivity raised through automation and process i
Slide 9: North America
North America • Revenue increased by 1.9% to Revenue by Product Line (US$ million) US$950.7 million, 50.1% of Group ELPs 358.1 revenue (-1.1%) • Higher TEL products and CMS revenue offset lower ELPs revenue • ELPs revenue declined by 1.1% to US$358.1 million Lower sales of platform products, inclu
Slide 10: North America (continued)
North America (continued) Revenue by Product Line (US$ million) • TEL products revenue rose by 2.4% to ELPs US$398.6 million 358.1 (-1.1%) Maintained No.1 position in US residential phones market Sales of residential phones grew as brands consolidated Increased sales of commercial phones and o
Slide 11: Europe
Europe Revenue by Product Line (US$ million) • Revenue increased by 2.8% to ELPs US$791.8 million, 41.7% of Group 385.8 revenue (+16.5%) • Higher revenue from ELPs and CMS offset lower TEL products revenue • ELPs revenue increased by 16.5% to US$385.8 million Higher sales in all major markets, esp
Slide 12: Europe (continued)
Europe (continued) Revenue by Product Line (US$ million) • TEL products revenue decreased by 24.2% to US$154.3 million ELPs 385.8 Revenue decline due to lower sales of (+16.5%) residential phones Higher sales of baby monitors, connected home devices and hotel phones Began shipments of conferen
Slide 13: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue increased by 9.1% to ELPs 21.3 US$108.9 million, 5.7% of Group (+9.2%) revenue • ELPs revenue increased by 9.2% to US$21.3 million, with growth in China and Korea • TEL products revenue grew by 8.7% to US$41.1 million, mainly due to higher
Slide 14: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue declined by 13.5% to ELPs US$47.5 million, 2.5% of Group 13.4 revenue (-28.0%) • Other regions comprise Latin America, the Middle East and Africa • Revenue decline due to lower sales of TEL products and ELPs • ELPs revenue dropped by 28.0
Slide 15: Allan Wong, Chairman and Group CEO
Allan Wong Chairman and Group CEO 15
Slide 16: Growth Strategy
vtech | Growth Strategy : GROWTH DRIVERS EXCELLENCE >> > >> >INNOVATION BEYOND TECHNOLOGY 46
Slide 17: Product Innovation - ELPs
Product Innovation - ELPs • Will be launched in the US and Europe • More playsets and vehicles will be added • New Switch & Go Dinos Turbo • Adding 9 new models to the range • 100+ new standalone products will be introduced globally 17
Slide 18: Product Innovation - ELPs
Product Innovation - ELPs World’s first children’s Will be upgraded with new smartwatch with a camera versions, including InnoTab Max 18
Slide 19: Product Innovation – TEL products
Product Innovation – TEL products Conference • New conference phone model with wireless microphones Phone • New SIP phones SIP-based • A 4-line, SIP-based telephone system products catering to the needs of small businesses Baby • More video and audio models monitors • A new family of home monitoring
Slide 20: Product Innovation – TEL products
Product Innovation – TEL products Residential phones New CAT-iq handset 20
Slide 21: Product Innovation – CMS
Product Innovation – CMS CMS • Offer DFM, flexible services and manufacturing know-how in a number of product categories • Dedicated manufacturing facility for China market • Quality control and experienced staff for low to medium volumes and high mix of products 21
Slide 22: Growth Strategy
Growth Strategy Gains in Market Share Geographic Expansion Operational Excellence Operating Cost • More emphasis on • Global leader in ELPs expanding AP and Other • Continue to work on from infancy to preschool Regions process improvement and product optimisation • World’s largest cordless • AP: Chi
Slide 23: Outlook
vtech Outlook >> > >> >INNOVATION BEYOND TECHNOLOGY 93
Slide 24: Outlook - Overview
Outlook - Overview • US economic recovery on a sustainable footing • Economies in Western Europe are improving Targeting revenue growth in FY2015 with a stabilised market environment and new products ready to be launched 24
Slide 25: Outlook - ELPs
Outlook ELPs • Sales are forecast to increase as strong momentum in standalone products carries through • Standalone products: Go! Go! Smart Animals, Switch & Go Dinos Turbo and new core learning products will drive growth • Platform products: Sales are expected to be challenging despite the int
Slide 26: Outlook - TEL products
Outlook TEL products • Revenue is expected to increase • Growth will be driven by commercial phones and other telecommunication products • Residential phones: Sales in Europe and Other Regions expected to recover Growth will continue in Asia Pacific Market share gains in US 26
Slide 27: Outlook - CMS
Outlook CMS • Expected to grow further • Business with existing customers will increase • New customers add stimulus to growth • New factory building to cope with higher expected demand will enter operation in mid CY2015 27
Slide 28: Outlook - Costs
Outlook - Costs Gross profit margin is expected to be stable • Materials prices are expected to hold broadly steady • Labour costs and manufacturing overheads in China will continue to rise • Efficiency gains through automation, process improvements and product optimisation offset higher costs in Ch
Slide 29: Conclusion
Conclusion “VTech’s product innovation and operational efficiency have given it market-leading positions in a number of areas… …The Group will continue to implement its sustainability strategies, while exploring every avenue of potential growth to generate higher returns for shareholders.” 29
Slide 30: Thank You
vtech Thank You >> > >> >INNOVATION BEYOND TECHNOLOGY 39