Vtech Holdings Limited · HKEX:303
Vtech — FY2015 Earnings Presentation
30 slides from Vtech's earnings presentation, May 19, 2015
Slide 1: FY2015 Annual Results Announcement
VTech Holdings Limited FY2015 Annual Results Announcement 19 May 2015
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) 2015 2014 Change Revenue 1,879.8 1,898.9 -1.0% Gross Profit 610.5 634.3 -3.8% Gross Profit Margin % 32.5% 33.4% -0.9% pts Operating Profit 220.1 226.6 -2.9% Operating Profit Margin % 11.7% 11.9% -0.2% pts Profit Attributable to Shareholders of
Slide 4: Revenue by Region
Revenue by Region For the year ended 31 March (US$ M) 2015 % 2014 Change North America 899.5 47.8 950.7 -5.4% Europe 812.3 43.2 791.8 2.6% Asia Pacific 117.6 6.3 108.9 8.0% Other Regions 50.4 2.7 47.5 6.1% Total 1,879.8 100.0 1,898.9 -1.0% 4
Slide 5: Working Capital
Working Capital (US$ M) 31/03/15 31/03/14 Stocks 290.2 265.9 Stocks Turnover Days 96 days 87 days Trade Debtors 221.9 208.6 Trade Debtors Turnover Days 57 days 54 days 5
Slide 6: Liquidity Position
Liquidity Position (US$ M) 31/03/15 31/03/14 Deposits and Cash 294.2 322.9 Total Borrowings -- -- Net Cash Position 294.2 322.9 6
Slide 7: Operations Review
vtech Operations Review >> > >> >INNOVATION BEYOND TECHNOLOGY 7
Slide 8: Operations Review - Costs
Operations Review - Costs • Cost of materials largely unchanged • Weaker RMB reduced costs • Despite wage inflation in China, higher productivity reduced labour costs and manufacturing overheads • Gross margin declined due to a change in product mix and weaker-than-expected tablets performance 8
Slide 9: North America
North America Revenue by Product Line (US$ million) • Revenue decreased 5.4% to US$899.5 million, 47.8% of Group revenue ELPs 300.0 • Lower revenues from ELPs and CMS (-16.2%) offset higher revenue from TEL products • ELPs revenue down 16.2% to US$300.0 million Sales declines in both platform and
Slide 10: North America (continued)
North America (continued) Revenue by Product Line (US$ million) • TEL revenue rose 4.4% to US$416.0 million ELPs Sales of commercial phones and other 300.0 (-16.2%) telecommunication products grew Sales of residential phones declined slightly Maintained no. 1 position in the US residential pho
Slide 11: Europe
Europe Revenue by Product Line (US$ million) • Revenue increased 2.6% to US$812.3 million, 43.2% of Group revenue ELPs 362.6 • Higher sales of TEL products and CMS (-6.0%) offset lower sales in ELPs • ELPs revenue decreased 6.0% to US$362.6 million Higher sales of standalone products failed to off
Slide 12: Europe (continued)
Europe (continued) Revenue by Product Line (US$ million) • TEL revenue up 2.0% to US$157.4 million ELPs Higher sales of commercial phones 362.6 (-6.0%) and other telecommunication products offset a sales decline in residential phones Maintained position as one of the leading cordless phone manuf
Slide 13: Asia Pacific
Asia Pacific Revenue by Product Line (US$ million) • Revenue increased 8.0% to US$117.6 million, 6.3% of Group revenue ELPs 25.9 (+21.6%) • ELPs revenue grew 21.6% to US$25.9 million, driven by growth in China, Hong Kong and Korea. Sales in Australia were down • TEL revenue increased 4.6% to US$43.0
Slide 14: Other Regions
Other Regions Revenue by Product Line (US$ million) • Revenue rose 6.1% to US$50.4 ELPs million, 2.7% of Group revenue 14.8 (+10.4%) • Other Regions include Latin America, Middle East and Africa • ELPs revenue increased 10.4% to US$14.8 million, as higher sales in Latin America and Africa offset low
Slide 15: VTech Strategy
vtech VTech Strategy >> > >> > INNOVATION BEYOND TECHNOLOGY 45
Slide 16: Growth Strategy
vtech | Growth Strategy _ GROWTH DRIVERS >> > INNOVATION BEYOND TECHNOLOGY 46
Slide 17: Product Innovation - ELPs
Product Innovation - ELPs GO! GO! SMART FAMILY BABY AMAZE/LITTLE LOVE STANDALONE PRODUCTS • Expansion of Go! Go! Smart • Launch Baby Amaze in the US • 100+ new products will be Family • Line extension of Little Love in launched globally • Nationwide distribution of Go! Europe Go! Smart Friends in th
Slide 18: Product Innovation - ELPs
Product Innovation - ELPs Smartwatch New Platforms Tablet Roll out a new generation of Launch of new innovative Stay in the children’s tablet Smartwatch platform products market 18
Slide 19: Product Innovation – TEL products
Product Innovation – TEL products Commercial Phones Commercial Other Telecommunication Products phones Baby monitors • Introduce new models of • Expansion of baby monitor range ErisStation and ErisTerminal • Launch wireless monitoring devices based on the ULE standard 19
Slide 20: Product Innovation – TEL products
Product Innovation – TEL products Residential Phones – Continue to launch feature-rich products with superior design 20
Slide 21: Product Innovation – CMS
Product Innovation – CMS 13th consecutive years Competency Competence in handling low of growth to medium volumes and a high mix of products Flexible Service Delivering flexible service and high quality products to customers DFM Continue to innovate in the area of Design for Manufacture Manufacturin
Slide 22: 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 • Deploying more standard and in-house custom-made machines •
Slide 23: Outlook
vtech Outlook >> > >> >INNOVATION BEYOND TECHNOLOGY 93
Slide 24: Outlook
Outlook • US continues a moderate recovery • Uncertain prospects in Europe • Depreciation of Euro • VTech plans for modest revenue increase in FY2016 24
Slide 25: Outlook - ELPs
Outlook ELPs • Business expected to be stable • Sales of platform products are forecast to decline Children’s tablet market remains challenging Kidizoom Smartwatch will continue to grow New innovative platform products to contribute additional revenue stream • Sales of standalone products are
Slide 26: Outlook - TEL products
Outlook TEL products • Expect to maintain the positive sales trend, led by commercial phones and other telecommunication products Full deployment of CAT-iq handsets Introduction of new conference phones and SIP phone models Strong momentum of baby monitors Global launch of wireless monitorin
Slide 27: Outlook - CMS
Outlook CMS • Expect sales to increase • Professional audio: on track to return to growth • Wireless headsets: will grow further • New product categories: smart hearable and wearable devices • Solid-state lighting: will remain stable • Power supplies: change of ownership of a customer creates uncert
Slide 28: Outlook - Gross margin
Outlook • Gross margin: do not anticipate any improvement given the strong US dollar Stable material costs RMB in a narrow range Labour costs and manufacturing overheads will rise further Continue to offset cost increases through automation, process improvement and product optimisation 28
Slide 29: Conclusion
Conclusion “VTech has a culture rooted in innovation and technology. Our market leadership, R&D capability, strong balance sheet and operational efficiency differentiate us from our competitors... We will continue to bring out innovative products, increase market share, expand geographically and str
Slide 30: Thank You
vtech Thank You >> > >> >INNOVATION BEYOND TECHNOLOGY 29