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Group revenue for the year ended 31 March 2010 rose by 5.8% over the previous financial year, to US $ 1,532.3 million. The proportionally higher profit was mainly attributable to effective spending on advertising and promotions for electronic learning products (ELPs), as well as better foreign exchange risk management. “We have successfully managed our businesses through the adverse economic conditions, achieving an increase in revenue and a proportionally higher growth in profit,” said Mr. Allan Wong, Chairman and Group CEO of VTech Holdings Limited. “Our ability to make further progress across our business in the face of every difficult market conditions testifies to the strength of the Group.” North America North America remains VTech’s largest market, representing 57.0% of Group revenue. Despite the most severe downturn in the US economy since World War II, VTech managed to increase revenue by 12.9% to US $ 872.6 million in the financial year 2010. Sales of electronic learning products (ELP), affected by the poor economy in the region, declined by 14.4% to US $ 235.0 million. Platform products were the main contributor to this revenue decline. Standalone products sold well, by contrast, including popular products such as the Tote & Go Laptop™ and Move & Crawl Ball™. The infant category performed especially well. VTech’s very strong infant product line up has continued to gain support from retailers, including more shelf space and promotional activities. Europe Revenue from Europe declined by 7.3% to US $ 528.9 million in the financial year 2010, accounting for 34.5% of Group revenue. Electronic learning product sales to Europe decreased by 6.5% to US $ 241.7 million in the financial year 2010. As in North America, declining consumer demand and lower average selling prices depressed sales for the full financial year. Standalone products again fared better than platform products. In spite of the overall sales decline in this region, ELP sales in the UK and Germany were relatively stable. During the financial year 2010, the Kidizoom and Kidizoom Pro cameras were the top selling toys in Germany and the UK. Furthermore, Kidizoom camera was named Pre-School Toy of the Year 2009 by the Toy Retailers Associations in the UK for the second consecutive year. Asia Pacific and Other Regions Asia Pacific continued to outperform other markets during the financial year, as the region’s economies proved more resilient during the global downturn. Revenue rose by 47.6% to US $ 81.5 million, accounting for 5.3% of Group revenue. Sales from other regions were flat, with revenue for the financial year decreasing slightly, by 0.8%, to US $ 49.3 million. Other regions comprise mainly markets in Latin America, the Middle East and Africa, which the Group has been developing in recent years as potential new avenues of growth. Outlook Retail markets in most developed countries started to show signs of recovery towards the end of the calendar year 2009. This, coupled with the rebound in sales we have seen in the first three months of the calendar year 2010, gives some cause for optimism. Rising costs will add to the challenges in the financial year 2011. Leveraging our economies of scale and strong procurement power, VTech is working closely with suppliers to mitigate these impacts. Labour costs in mainland China are also affected by the increase in the minimum wage, which came into effect in May 2010. We will continue to re-engineer products for lower costs, and seek productivity gains through increasing automation and improving processes. Going forward, we are still cautiously optimistic that the Group will deliver growth in the financial year 2011. This will be achieved through pursuing our strategy of product innovation, gains in market share, geographic expansion and operational excellence. North America and Europe For ELPs, we expect platform products to return to growth in North America, while momentum for standalone products will continue. The two new platform products launched this financial year, V.Reader and MobiGo, have been well received by the trade. In Europe, the introduction of new standalone and platform products is expected to stimulate sales. MobiGo will be introduced in most European markets between late summer and fall, while V.Reader will appear in the UK in the summer. |
