Vtech Holdings Limited · HKEX:303
Vtech — FY2023 Earnings Presentation
33 slides from Vtech's earnings presentation, May 17, 2023
Slide 1: FY2023 Annual Results Announcement
VTech Holdings Limited FY2023 Annual Results Announcement 17 May 2023
Slide 2: Financial Review
vtech Financial Review > >> > INNOVATION BEYOND TECHNOLOGY 2
Slide 3: Financial Highlights
Financial Highlights For the year ended 31 March (US$ M) 2023 2022 Change Revenue 2,241.7 2,370.5 -5.4% Gross Profit 633.7 669.1 -5.3% Gross Profit Margin % 28.3% 28.2% 0.1% pts Operating Profit 180.5 203.8 -11.4% Operating Profit Margin % 8.1% 8.6% -0.5% pts Profit Attributable to Shareholders of t
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2023 % 2022 Change North America 984.8 43.9 1,068.5 -7.8% Europe 917.0 40.9 1,025.1 -10.5% Asia Pacific 315.8 14.1 255.0 23.8% Other Regions 24.1 1.1 21.9 10.0% Total 2,241.7 100.0 2,370.5 -5.4% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/23 31/03/22 Stocks 475.5 553.3 Stocks Turnover Days 128 days 131 days Trade Debtors 277.2 325.4 Trade Debtors Turnover Days 59 days 65 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/23 31/03/22 Deposits and Cash 198.5 195.8 Total Borrowings - - Net Cash Position 198.5 195.8 6
Slide 7: Costs
vtech Costs > >> > INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Costs
Costs • Gross profit margin of 28.3% • Slight increase mainly attributable to: − Lower cost of materials and freight charges − Increased selling prices − Lower direct labour costs and manufacturing overheads • Gains offset by: − Lower Group revenue, depreciation of the major currencies against the U
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 7.8% to US$984.8 million, 43.9% of Group revenue ELPs 471.4 (-15.2%) • Lower sales of ELPs and TEL products offset increase at CMS • ELPs revenue declined 15.2% to US$471.4 million − Sales decreases in US and Canada − Lower sale
Slide 11: North America (continued)
North America (continued) • Standalone Products: − VTech: Higher sales of Marble Rush and Kidi line offset by lower sales of infant, toddler and preschool products, KidiZoom cameras, Switch & Go Dinos and Go! Go! Smart family − LeapFrog: Growth for LeapLand Adventures and eco-friendly toys and added
Slide 12: North America (continued)
North America (continued) • TEL products revenue fell 12.7% to US$239.9 million • Lower sales of residential phones, commercial phones and other telecommunication products • Residential phones: Sales declined due to market contraction and lower shipments • Commercial phones: Lower sales of multi- li
Slide 13: North America (continued)
North America (continued) • CMS revenue increased 14.9% to US$273.5 million • Higher sales of professional audio equipment and industrial products offset decline for solid- state lighting − Professional audio: Higher demand for power amplifiers and loudspeakers − Industrial products: More orders for
Slide 14: Europe
Europe Revenue by Product Line (US$ million) • Revenue decreased 10.5% to US$917.0 million, 40.9% of Group revenue ELPs TEL 330.1 96.4 (-12.0%) (+2.8%) • Lower sales of ELPs and CMS offset higher sales of TEL products • ELPs revenue decreased 12.0% to US$330.1 million − Declines for standalone and p
Slide 15: Europe (continued)
Europe (continued) • Standalone Products: − VTech: Higher sales of Marble Rush, ELAs and eco- friendly toys offset by lower sales of infant, toddler and preschool products, KidiZoom cameras, Kidi line and Toot-Toot family − LeapFrog: Slight sales increase as growth in eco- friendly toys and LeapLand
Slide 16: Europe (continued)
Europe (continued) • TEL products revenue rose 2.8% to US$96.4 million • Residential phones: Sales increased as VTech branded phones grew in UK and Germany while several ODM customers increased orders • Other telecommunication products: Sales rose as higher sales of CAT-iq handsets offset lower sale
Slide 17: Europe (continued)
Europe (continued) • CMS revenue declined 11.8% to US$490.5 million • Lower orders of hearables and communication products offset gains in other categories − Hearables: Lower orders for Bluetooth and commercial headsets − Communication products: Orders for Wi-Fi routers decreased − Professional audi
Slide 18: Europe (continued)
Europe (continued) − IoT products: Sales grew as installation of smart meters resumed in UK, demand for internet connected thermostats and air-conditioning controls rose − Medical and health products: Higher sales of hearing aids offset decline in hair removal products − Home appliances: Sales stabl
Slide 19: Asia Pacific
Asia Pacific • Revenue rose 23.8% to US$315.8 million, Revenue by Product Line (US$ million) 14.1% of Group revenue TEL • Higher sales of TEL products and CMS ELPs 28.4 79.4 offset lower ELPs revenue (+2.5%) (-5.4%) • ELPs revenue decreased 5.4% to US$79.4 million • Growth in Japan unable to offset
Slide 20: Asia Pacific (continued)
Asia Pacific (continued) • TEL products revenue increased 2.5% to US$28.4 million, as higher sales in Japan offset lower sales in Australia and Hong Kong − Japan: Growth from more orders of CareLine products from existing customer − Australia: Residential phones declined as market shrank while baby
Slide 21: Asia Pacific (continued)
Asia Pacific (continued) • CMS revenue rose 45.0% to US$208.0 million • Higher sales of professional audio equipment, medical and health products, and communication products − Professional audio: Rebound in sales of DJ equipment as Malaysian facilities returned to full production − Medical and healt
Slide 22: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue grew 10.0% to US$24.1 ELPs million, 1.1% of Group revenue 10.5 (-3.7%) • Higher sales of TEL products offset lower sales of ELPs and CMS • ELPs revenue decreased 3.7% to US$10.5 million. Higher sales in Middle East unable to offset declin
Slide 23: Reorganisation of ELPs and TEL Products Operations
Reorganisation of ELPs and TEL Products Operations 23
Slide 24: Reorganisation: ELPs
Reorganisation • Goal: To create a stronger, leaner and more efficient organisation • ELPs − Structural reorganisation of US business − New leadership team, reduce management layers, downsize operations − Increase product productivity − Strengthen product planning and marketing − Rebuild e-commerce
Slide 25: Reorganisation: TEL Products
Reorganisation • TEL Products − Streamline R&D function in mainland China − Tighten management − Accelerate new product launches − Revitalise go-to-market strategy for commercial phones, with dedicated teams to refocus telecommunication service provider and VAR businesses 25
Slide 26: Outlook
vtech Outlook > >> > INNOVATION BEYOND TECHNOLOGY a3
Slide 27: Outlook
Outlook Macro-economic outlook for FY2024 uncertain • Challenges from persistent inflation and high interest rates will continue • Consumers remain price-sensitive and reluctant to make purchases • Customers cautious about placing orders and managing inventory • Group revenue target to be flat year-
Slide 28: Outlook: Costs
Outlook Costs • Appear favourable in FY2024 • Cost of materials: Expected to decrease • Direct labour costs: No longer rising in mainland China • Manufacturing overheads: Expected to improve • Freight costs: Back to pre-pandemic levels • Exception: High domestic transportation costs in US and Europe
Slide 29: Outlook: ELPs
Outlook ELPs • Striving to achieve growth • Sales in North America and Europe to recover • Extend geographical reach • Asia Pacific: − Expected to grow in Australia and strong sales recovery in mainland China 29
Slide 30: Outlook: TEL Products
Outlook TEL Products • Revenue projected to be higher • Commercial phones: Sales expected to increase, driven by Snom D8 SIP desksets, multi-cell SIP DECT mobility system, work- from-anywhere series and hospitality category • Residential phones: Growth in Europe expected to offset decline in US • Ot
Slide 31: Outlook: CMS
Outlook CMS • Revenue forecast to be stable • Sales of professional audio equipment, industrial products and medical and health products expected to remain largely stable • Growth from smart energy storage systems and smart home control systems • Sales of hearables expected to stabilise • Work to co
Slide 32: Q&A
vtech Q&A >> > INNOVATION BEYOND TECHNOLOGY Pe
Slide 33: Thank You
vtech Thank You >> > >> > INNOVATION BEYOND TECHNOLOGY 26