Vtech Holdings Limited · HKEX:303
Vtech — H1 FY2024 Earnings Presentation
33 slides from Vtech's earnings presentation, Nov 15, 2023
Slide 1: VTech Holdings Limited 2023/2024 Interim Results Announcement
VTech Holdings Limited 2023/2024 Interim Results Announcement 15 November 2023
Slide 2: Financial Review
vtech Financial Review > >> > INNOVATION BEYOND TECHNOLOGY 2
Slide 3: Financial Highlights
Financial Highlights For the six months ended 30 September (US$ million) 2023 2022 Change Revenue 1,140.9 1,164.8 -2.1% Gross Profit 325.5 329.4 -1.2% Gross Profit Margin % 28.5% 28.3% 0.2% pts Operating Profit 110.3 99.0 11.4% Operating Profit Margin % 9.7% 8.5% 1.2% pts Profit Attributable to Shar
Slide 4: Revenue by Region
Revenue by Region For the six months ended 30 September (US$ million) 2023 % 2022 Change North America 489.4 42.9 530.5 -7.7% Europe 468.7 41.1 470.4 -0.4% Asia Pacific 171.5 15.0 152.2 12.7% Other Regions 11.3 1.0 11.7 -3.4% Total 1,140.9 100.0 1,164.8 -2.1% 4
Slide 5: Working Capital
Working Capital (US$ million) 30/09/23 31/03/23 30/09/22 Stocks 432.0 475.5 570.0 Stocks Turnover Days 120 days 128 days 140 days Trade Debtors 451.7 277.2 487.4 Trade Debtors Turnover Days 60 days 59 days 62 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ million) 30/09/23 31/03/23 30/09/22 Deposits and Cash 108.5 198.5 103.3 Total Borrowings ‒ ‒ (93.2) Net Cash Position 108.5 198.5 10.1 6
Slide 7: Costs
vtech Costs > >> > INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin improved to 28.5% from 28.3% • Improvement in gross profit margin: − Freight costs and inventory provisions fell − Direct labour costs and manufacturing overheads declined on Renminbi depreciation, increased automation and reduced factory workforce • These offset negative
Slide 9: Operations Review
vtech Operations Review > >> > INNOVATION BEYOND TECHNOLOGY 9
Slide 10: North America
North America Revenue by Product Line (US$ million) • Revenue decreased 7.7% to US$489.4 million, 42.9% of Group revenue ELPs 208.4 • Higher sales of CMS offset by lower sales (-21.8%) of ELPs and TEL products • ELPs revenue declined 21.8% to US$208.4 million − Primarily driven by lower sell-through
Slide 11: North America (continued)
North America (continued) • Sales of standalone and platform products decreased for both VTech and LeapFrog brands • Standalone Products: − VTech: Growth in Go! Go! Smart family of products, Switch & Go Dinos and Kidi line insufficient to compensate declines in infant, toddler and preschool products
Slide 12: North America (continued)
North America (continued) • Platform Products: − VTech: Lower sales of KidiZoom Smartwatches, Touch & Learn Activity Desk and KidiBuzz resulted in overall sales decrease − LeapFrog: Sales of children’s educational tablets, interactive reading systems and Magic Adventures Globe decreased − LeapFrog A
Slide 13: North America (continued)
North America (continued) • TEL products revenue fell 16.1% to US$103.9 million • Lower sales of residential phones, commercial phones and other telecommunication products • Residential phones: Sales declined as market contraction continued and shelf space at a major US retailer reduced • Commercial
Slide 14: North America (continued)
North America (continued) • CMS revenue grew 26.4% to US$177.1 million • Sales increased as improved materials supply enabled VTech to clear backlog of orders from customers • Higher sales of professional audio equipment and IoT products offset declines in industrial products, solid-state lighting a
Slide 15: North America (continued)
North America (continued) − Professional audio: Higher sales of power amplifiers, professional loudspeakers and wireless microphones − IoT: New smart home control systems customer − Industrial products: Customers faced over-inventory − Solid-state lighting: Sales declined as market demand softened −
Slide 16: Europe
Europe Revenue by Product Line (US$ million) • Revenue decreased 0.4% to US$468.7 million, 41.1% of Group revenue ELPs TEL 146.2 43.7 (-8.2%) (-5.6%) • Higher CMS sales insufficient to offset lower sales of ELPs and TEL products • ELPs revenue fell 8.2% to US$146.2 million − Lower shipments to custo
Slide 17: Europe (continued)
Europe (continued) • Sales of standalone and platform products decreased for both VTech and LeapFrog brands • Standalone Products: − VTech: Higher sales of preschool products, electronic learning aids, Marble Rush and eco-friendly products offset by lower sales of infant and toddler products, KidiZo
Slide 18: Europe (continued)
Europe (continued) • Platform Products: − VTech: Lower sales of KidiZoom Smartwatches, children’s educational tablets and KidiCom range of products − Sales of Touch & Learn Activity Desk held stable − LeapFrog: Lower sales of interactive reading systems and Magic Adventures Globe 18
Slide 19: Europe (continued)
Europe (continued) • TEL products revenue decreased 5.6% to US$43.7 million, with sales declines in residential phones, commercial phones and other telecommunication products • Residential phones: Growth in VTech branded phones offset by lower shipments to ODM customers • Commercial phones: Lower sa
Slide 20: Europe (continued)
Europe (continued) • CMS revenue rose 5.3% to US$278.8 million • Higher sales of professional audio equipment, smart energy storage systems, communication products and medical and health products compensated for declines in hearables, IoT products and automotive products − Professional audio: Growth
Slide 21: Europe (continued)
Europe (continued) − Medical and health products: Growth driven by higher sales of hearing aids as business activities continued to accelerate after pandemic − Hearables: Sales declined as market demand return to pre-pandemic levels − IoT products: Sales decreased as smart meters customer returned t
Slide 22: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue increased 12.7% to US$171.5 million, 15.0% of Group revenue ELPs TEL 35.0 11.6 • Higher sales of CMS offset lower ELPs and (-16.5%) (-16.5%) TEL products sales • ELPs revenue decreased 16.5% to US$35.0 million • Higher sales in mainland Ch
Slide 23: Asia Pacific (continued)
Asia Pacific (continued) • TEL products revenue declined 16.5% to US$11.6 million • Lower sales in Japan and Hong Kong offset higher sales in Australia − Japan: Residential phone sales were down as ODM customer reduced orders − Hong Kong: Lower sales of IADs and residential phones − Australia: Growt
Slide 24: Asia Pacific (continued)
Asia Pacific (continued) • CMS revenue increased 29.6% to US$124.9 million • Growth in professional audio equipment offset decline in communication products • Sales of medical and health products stable − Professional audio: Orders for DJ equipment grew significantly on improved materials supply, ma
Slide 25: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue fell 3.4% to US$11.3 ELPs million, 1.0% of Group revenue 6.6 (+3.1%) • Higher sales of ELPs offset by lower TEL products sales • ELPs revenue increased 3.1% to US$6.6 million. Higher sales in Latin America and Middle East offset lower sal
Slide 26: Outlook
vtech Outlook > >> > INNOVATION BEYOND TECHNOLOGY a3
Slide 27: Outlook
Outlook Uncertainty in global economy • Wars in Ukraine and Middle East • Volatile energy costs and high interest rates in US and Europe • Consumer spending and business investment being cut • Outside US, strong dollar pressuring retailers Positive factor • Pressure on raw materials and critical com
Slide 28: Outlook
Outlook • Group revenue for the full financial year expected to show a slight decline • Profitability remains on track to show improvement as materials prices and freight charges trend down year-on-year • Continuing strict control of inventory and operating expenses to bolster profitability further
Slide 29: Outlook: ELPs
Outlook ELPs • Full year revenue expected to decline despite sales improvement in 2H • Will benefit from the completed re- organisation of US operations • New US leadership team will monitor sell- through closely and react quickly with advertising and promotions to maximise sales • New standalone an
Slide 30: Outlook: TEL Products
Outlook TEL Products • Full year revenue forecast to be lower • Residential phones: Sales in North America anticipated to decrease for full financial year, but Europe to benefit from expansion of VTech branded products into new markets • Commercial phones: New product launches and addition of Snom a
Slide 31: Outlook: CMS
Outlook CMS • Full year revenue expected to increase following 1H outperformance of global EMS market • Sales in 2H anticipated to slow down as global economy is weakening • Customers cautious about placing orders and managing inventory tightly • Continued good performance expected from professional
Slide 32: Q&A
vtech Q&A >> > INNOVATION BEYOND TECHNOLOGY Pe
Slide 33: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 26