Vtech Holdings Limited · HKEX:303
Vtech — H1 FY2016 Earnings Presentation
33 slides from Vtech's earnings presentation, Nov 12, 2015
Slide 1: VTech Holdings Limited 2015/2016 Interim Results Announcement
VTech Holdings Limited 2015/2016 Interim Results Announcement 12 November 2015
Slide 2: Financial Review
vtech Financial Review >> > >> >INNOVATION BEYOND TECHNOLOGY 9
Slide 3: Financial Highlights
Financial Highlights For the six months ended 30 September (US$ million) 2015 2014 Change Revenue 928.1 900.8 3.0% Gross Profit 286.0 290.2 -1.4% Gross Profit Margin % 30.8% 32.2% -1.4% pts Operating Profit 111.0 113.2 -1.9% Operating Profit Margin % 12.0% 12.6% -0.6% pts Profit Attributable to Shar
Slide 4: Revenue by Region
Revenue by Region For the six months ended 30 September (US$ million) 2015 % 2014 Change North America 461.6 49.7 450.6 2.4% Europe 373.7 40.3 359.9 3.8% Asia Pacific 59.7 6.4 61.6 -3.1% Other Regions 33.1 3.6 28.7 15.3% Total 928.1 100.0 900.8 3.0% 4
Slide 5: Working Capital
Working Capital (US$ million) 30/09/15 31/03/15 30/09/14 Stocks 367.9 290.2 357.4 Stocks Turnover Days 115 days 96 days 114 days Trade Debtors 395.5 221.9 387.4 Trade Debtors Turnover Days 61 days 57 days 59 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ million) 30/09/15 31/03/15 30/09/14 Deposits and Cash 104.9 294.2 106.4 Total Borrowings ‒ ‒ ‒ Net Cash Position 104.9 294.2 106.4 6
Slide 7: Operations Review
vtech Operations Review >> > >> >INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Operations Review - Costs
Operations Review - Costs • Cost of materials rose on a change in product mix • Higher manufacturing overhead due to wage inflation and increased manufacturing capacity • Stable direct labour cost on reduced workforce through automation and process improvement • Gross margin declined due to deprecia
Slide 9: North America
North America Revenue by Product Line (US$ million) • Revenue up 2.4% to US$461.6 million, 49.7% of Group revenue ELPs 148.7 • Higher sales of ELPs and CMS offset lower (+5.3%) sales of TEL products • ELPs revenue rose by 5.3% to US$148.7 million Higher sales of standalone products offset lower sa
Slide 10: North America (continued)
North America (continued) Revenue by Product Line (US$ million) • TEL products revenue decreased by 7.0% to US$200.2 million ELPs 148.7 (+5.3%) Lower sales of residential phones on market contraction Strengthened no. 1 position in US residential phone market Sales of commercial phones and othe
Slide 11: North America (continued)
North America (continued) Revenue by Product Line (US$ million) • CMS revenue up 19.8% to US$112.7 million ELPs Higher sales of professional audio 148.7 (+5.3%) equipment and industrial products offset lower sales of solid-state lighting Professional audio: Good growth due to increased order fro
Slide 12: Europe
Europe Revenue by Product Line (US$ million) • Revenue up 3.8% to US$373.7 million, 40.3% of Group revenue ELPs 129.2 • Growth mainly driven by higher CMS sales (-8.7%) • ELPs revenue down 8.7% to US$129.2 million Sales decline due to depreciation of European currencies and lower sales of platform
Slide 13: Europe (continued)
Europe (continued) Revenue by Product Line (US$ million) • TEL products revenue declined by 4.1% to US$74.4 million ELPs 129.2 (-8.7%) Lower sales of residential phones on market contraction Sales of commercial phones and other telecommunication products rose significantly, despite weak Euro imp
Slide 14: Europe (continued)
Europe (continued) Revenue by Product Line (US$ million) • CMS revenue rose by 20.8% to US$170.1 million ELPs 129.2 Sales of hearables, professional audio (-8.7%) equipment and home appliances grew, while sales of power supplies remained stable Hearables: Higher sales due to revenue share gain w
Slide 15: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue decreased by 3.1% to US$59.7 million, 6.4% of Group revenue ELPs 20.7 (+63.0%) • Lower sales of TEL products and CMS offset growth in ELPs • ELPs revenue up 63.0% to US$20.7 million, driven by growth in mainland China, Japan and Australia
Slide 16: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue up 15.3% to US$33.1 million, ELPs 3.6% of Group revenue 8.8 (-12.0%) • Other Regions comprise Latin America, the Middle East and Africa • ELPs revenue fell by 12.0% to US$8.8 million. Growth in the Middle East was offset by lower sales in
Slide 17: VTech Strategy
vtech VTech Strategy >> > >> > INNOVATION BEYOND TECHNOLOGY 47
Slide 18: Growth Strategy
vtech | Growth Strategy i | GROWTH DRIVERS 7@)2): RA 7 EXCELL ON, ENCE >> > INNOVATION BEYOND TECHNOLOGY 4g
Slide 19: Product Innovation - ELPs
Product Innovation - ELPs GO! GO! SMART FAMILY BABY AMAZE/LITTLE LOVE CORE LEARNING • Expanded Go! Go! Smart Family • US launch of Baby Amaze • Launched 100+ new products • Began to sell Go! Go! Smart • Line extension of Little Love in globally Friends in US Europe FLIPSIES KIDIZOOM ACTION CAM • Rol
Slide 20: Product Innovation - ELPs
Product Innovation - ELPs Wearables Handheld TV game console 20
Slide 21: Product Innovation – TEL products
Product Innovation – TEL products Conference Phones 4 wireless mics 2 wireless mics SIP version SIP Phones 3 SIP lines 5 SIP lines 2 SIP lines Baby monitors 21
Slide 22: Product Innovation – TEL products
Product Innovation – TEL products Commercial phones New wireless monitoring system to hit the US and some AP markets in 2HFY16 Baby monitors 22
Slide 23: Product Innovation – TEL products
Product Innovation – TEL products Residential Phones – Continue to launch feature-rich products with superior design 23
Slide 24: Product Innovation – CMS
Product Innovation – CMS Competency Flexible Service DFM Manufacturing Know-how VTech CMS continued to outperform the global EMS industry Strong Reputation 24
Slide 25: Growth Drivers
Growth Drivers Market Share Gain Geographic Expansion • Australia • China • Japan • Korea Global no. 1 cordless phone • Selected markets in manufacturer Latin America and the Middle East Operational Excellence Global no. 1 player in ELPs • Automation • Process improvement • Product optimisation for
Slide 26: Outlook
vtech Outlook >> > >> >INNOVATION BEYOND TECHNOLOGY 96
Slide 27: Outlook - Overview
Outlook - Overview • Expects stable revenue and lower gross margin year-on-year, given the Group’s year-to-date financial results and the continued strong headwinds from currency movements 27
Slide 28: Outlook - ELPs
Outlook ELPs Revenue to be slightly lower year-on-year • Platform products sales to decline, but innovative new products to stabilise the business: Kidizoom Smartwatch DX DigiGo multi-function handheld device InnoTV educational gaming system 28
Slide 29: Outlook - ELPs
Outlook ELPs • Standalone products to achieve further growth: Good sell-through for infant products, Go! Go! Smart Family Incremental sales from Kidizoom Action Cam, Flipsies, Baby Amaze 29
Slide 30: Outlook - TEL products
Outlook TEL products Revenue to improve over 1H • Residential phones sales to remain slow worldwide • Commercial phones and other telecommunication products to grow: ErisStation, ErisTerminal, four-line small business phone system, CAT-iq handsets Baby monitors, IADs, wireless monitoring system
Slide 31: Outlook - CMS
Outlook CMS Good momentum to continue • Professional audio, hearables, home appliances to grow on orders from existing and new customers • Switching mode power supplies business to remain stable • Sales of solid-state lighting expected to decline • New manufacturing building commenced operations in
Slide 32: Conclusion
Conclusion “It has been a steady start to the financial year 2016… VTech will continue to focus on product innovation, increasing market share, expanding geographically and pursuing operational excellence to enhance shareholder value.” 32
Slide 33: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 33