Vtech Holdings Limited · HKEX:303
Vtech — FY2017 Earnings Presentation
36 slides from Vtech's earnings presentation, May 16, 2017
Slide 1: VTech Holdings Limited FY2017 Annual Results Announcement
VTech Holdings Limited FY2017 Annual Results Announcement 16 May 2017
Slide 2: Financial Review
vtech Financial Review >> > >> >INNOVATION BEYOND TECHNOLOGY 9
Slide 3: Financial Highlights
Financial Highlights For the year ended 31 March (US$ M) 2017 2016 Changes Revenue 2,079.3 1,856.5 12.0% Gross Profit 689.4 583.3 18.2% Gross Profit Margin % 33.2% 31.4% 1.8% pts Operating Profit 200.0 202.3 -1.1% Operating Profit Margin % 9.6% 10.9% -1.3% pts Profit Attributable to Shareholders of
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2017 % 2016 Change North America 1,016.2 48.9 878.3 15.7% Europe 867.8 41.7 795.9 9.0% Asia Pacific 148.6 7.2 129.0 15.2% Other Regions 46.7 2.2 53.3 -12.4% Total 2,079.3 100.0 1,856.5 12.0% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/17 31/03/16 Stocks 324.9 285.4 Stocks Turnover Days 96 days 93 days Trade Debtors 275.4 230.3 Trade Debtors Turnover Days 64 days 63 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/17 31/03/16 Deposits and Cash 268.8 273.0 Total Borrowings (1.7) -- Net Cash Position 267.1 273.0 6
Slide 7: Operations Review
vtech Operations Review >> > >> >INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin improved from 31.4% to 33.2% Change in product mix Relatively favourable cost environment Productivity gains 8
Slide 9: Strategic Acquisitions: LeapFrog
Strategic Acquisitions LeapFrog Completed in April 2016 Leading developer of educational entertainment for children Strong educational toy brand Allows VTech to offer broadest portfolio of products, positioning it for higher growth LeapFrog’s industry-leading teams retained at its US offic
Slide 10: Strategic Acquisitions: Snom
Strategic Acquisitions Snom Completed in November 2016 German company which is a pioneer in VoIP phone development Strong synergies from combining Snom’s technical expertise and European sales channels with VTech’s engineering and manufacturing capabilities Enables VTech to become a major pl
Slide 11: Strategic Acquisitions: High precision metal tooling and parts
Strategic Acquisitions High precision metal tooling and parts Signed agreement in October 2015 and completed the acquisition in FY2017, VTech established its own facilities in Liaobu, Dongguan with the acquired fixed assets Entirely new expertise for VTech Extends the supply chain vertically,
Slide 12: North America
North America Revenue by Product Line (US$ million) • Revenue increased by 15.7% to US$1,016.2 ELPs million, 48.9% of Group revenue 454.9 (+44.7%) • Higher ELPs and CMS sales offset lower revenue from TEL products • ELPs revenue rose by 44.7% to US$454.9 million Driven by sales contribution from L
Slide 13: North America (continued): Standalone products
North America (continued) Standalone products: Growth driven by higher sales of core VTech infant, toddler and preschool products, augmented by contribution from LeapFrog standalone toys VTech Sit-to-Stand Learning Walker, Smart Shots Sports Center were top two best selling infant and toddler to
Slide 14: North America (continued): Platform products
North America (continued) Platform products: Growth driven by new VTech and LeapFrog product launches, together with the combined VTech and LeapFrog educational tablet offerings Touch & Learn Activity Desk Deluxe and LeapStart hit US shelves in August and favourably received Sales of Kidizoom
Slide 15: North America (continued): TEL products
North America (continued) • TEL products revenue decreased by 1.5% to US$365.7 million Growth in commercial phones and other telecommunication products insufficient to offset lower sales of residential phones Residential phones: Sales decline reflected further contraction of fixed-line telephone
Slide 16: North America (continued): Commercial phones
North America (continued) Commercial phones and other telecommunication products: • Growth driven by baby monitors, hotel phones, headsets, wireless monitoring systems, conference phones and VoIP phones Baby monitors: Benefited from more placements and new products launches Hotel phones: Won new
Slide 17: North America (continued): CMS
North America (continued) • CMS revenue up 1.6% to US$195.6 million • Higher sales of industrial products, solid-state lighting and home appliances offset lower sales of professional audio equipment and communication products 17
Slide 18: North America (continued): CMS products
North America (continued) Industrial products & home appliances: More orders from existing customers, with additional business from their parent companies Solid-state lighting: Contribution from new customer, transfer of products from existing customer Professional audio: Major customer delaye
Slide 19: Europe
Europe Revenue by Product Line (US$ million) • Revenue up 9.0% to US$867.8 million, 41.7% of Group revenue ELPs 357.4 (+9.8%) • Higher sales of ELPs and CMS offset a decline in TEL products • ELPs revenue up 9.8% to US$357.4 million, driven by: Growth in VTech standalone products and LeapFrog sale
Slide 20: Europe (continued): Standalone products
Europe (continued) Standalone products • Growth driven by: Higher sales of core VTech infant, toddler and pre-school products Kidizoom Camera, Kidi line and Little Love Consolidation of LeapFrog sales • Sales of Toot-Toot family of products were down • 30 awards including three 2016 Grand Prix
Slide 21: Europe (continued): Platform products
Europe (continued) Platform products: • Sales grew slightly on new product launches and sales contribution from LeapFrog • Second generation of Kidizoom Smartwatch rolled out to all major European countries • LeapStart launched in UK • Sales of children’s educational tablets held steady, with LeapFr
Slide 22: Europe (continued): TEL products
Europe (continued) • TEL products revenue decreased by 5.5% to US$128.9 million Lower sales of residential phones due to contraction of fixed-line telephone market Commercial phones and other telecommunication products saw further growth 22
Slide 23: Europe (continued): Commercial phones
Europe (continued) • Commercial phones and other telecommunication products: VoIP phones: Sales increased on contribution from Snom Hotel phones: Higher sales on growing reputation IADs: Sales increased due to new product launches by customers in 2H CAT-iq handsets: Lower sales as a major cu
Slide 24: Europe (continued): CMS
Europe (continued) • CMS revenue increased by 14.2% to US$381.5 million • Growth driven by higher sales of hearables, industrial products, medical and health products Hearables: Benefited from rising sales of world’s first wireless smart earphones and customers’ other products being well received
Slide 25: Europe (continued): CMS products
Europe (continued) Medical and health products: Began shipping hearing aids Professional audio: Sales were stable. More orders for USB audio interface products offsetting lower demand for mixers Switching mode power supplies: Sales declined as customer ownership change led to production being
Slide 26: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue increased by 15.2% to US$148.6 ELPs million, 7.2% of Group revenue 52.7 (+28.9%) • Higher sales in all product lines • ELPs revenue up 28.9% to US$52.7 million, driven by growth in Australia, South Korea and mainland China, which offset de
Slide 27: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue down 12.4% to US$46.7 million, ELPs 2.2% of Group revenue 13.3 (+15.7%) • Other Regions comprise Latin America, the Middle East and Africa • ELPs revenue up 15.7% to US$13.3 million. Sales to Latin America, the Middle East and Africa impr
Slide 28: Outlook
vtech Outlook >> > >> > INNOVATION BEYOND TECHNOLOGY 998
Slide 29: Outlook - Overview
Outlook - Overview • Expect higher revenue in FY2018, with sales increases across all three product lines • Gross margin more difficult to predict: Foreign exchange headwinds likely to be strong Higher cost of materials Direct labour costs and manufacturing overheads as a percentage of Group r
Slide 30: Outlook: ELPs
Outlook ELPs • Growth driven by higher sales of standalone and platform products • Standalone products to be boosted by: Expansion of VTech baby, infant, toddler and preschool lines Launch of more LeapFrog learning toys 30
Slide 31: Outlook: ELPs platform products
Outlook ELPs • Platforms products: Growth driven by introduction of new platforms VTech: New children’s communication devices and Kidizoom Smartwatch LeapFrog: LeapPad Ultimate, Epic (Academy edition), LeapStart LeapFrog Academy 31
Slide 32: Outlook: TEL products
Outlook TEL products • Expected to achieve growth • Commercial phones and other telecommunication products to see higher sales: VoIP phones: Snom a key driver CAT-iq handsets: Sales to be boosted by migration from PSTN to VoIP telephony 32
Slide 33: Outlook: TEL products (continued)
Outlook TEL products Baby monitors: Strong momentum Hotel phones & conference phones: Positive trend • Residential phones Sales decline will moderate 33
Slide 34: Outlook: CMS
Outlook CMS • Sales expected to rise • Increasing orders from existing customers in professional audio, hearables, industrial products, solid-state lighting as well as medical and health products, offsetting further sales decline in switching mode power supplies 34
Slide 35: Outlook: CMS (continued)
Outlook CMS • Medical and health products showing particular promise on diagnostic ultrasound systems and hearing aids • Full-year sales contribution from the newly acquired high precision metal parts business 35
Slide 36: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 36