Sales of ELPs in the financial year 2015 are forecast to increase
as the strong momentum in standalone products carries
through. Innovative products including Go! Go! Smart
Animals and Switch & Go Dinos Turbo, as well as new core
learning products, will drive growth. Despite the introduction
of Kidizoom Smart Watch, sales of platform products are
still expected to be challenging. InnoTab will face rising
competition as more low-cost tablets are being introduced to
the consumer electronics aisles.
TEL products revenue is also expected to increase. Growth will
be driven by commercial phones and other telecommunication
products, as the Group introduces new products and makes
higher shipments of continuing products. Sales of residential
phones in Europe and Other Regions are expected to recover,
while in Asia Pacific growth will continue. In the US, although
the residential phone market will shrink further, VTech will
continue to increase its share.
CMS is expected to grow further in the financial year 2015.
Business with existing customers will increase, as the Group
continues to take market share from the competition. New
customers will add a further stimulus to growth. To cope
with higher expected demand over the next three years, the
Group plans to add a new CMS factory building. This will raise
manufacturing capacity by 25% once it enters operation in the
middle of the calendar year 2015.
Regarding costs, material prices are expected to hold broadly
steady, although labour costs and manufacturing overheads
in China will continue to rise. However, the Group’s gross profit
margin is expected to be stable as efficiency gains through
automation, process improvements and product optimisation
should offset higher costs in China.
As a global company that is part of the communities in which
it operates, VTech recognises the need to step up its effort
to achieve sustainable development. The goal is to design,
manufacture and supply innovative and high quality products
in a manner that minimises any impact on the environment,
while creating value for stakeholders and communities. To this
end, VTech will continue to incorporate sustainability concepts
into product design, improve energy and resource efficiency
in operations, and upgrade employees’ living and working
environments.
VTech’s product innovation and operational efficiency have
given it market-leading positions in a number of areas. It
continues to gain market share and expand geographically,
while maintaining a strong financial position. The Group will
continue to implement its sustainability strategies, while
exploring every avenue of potential growth to generate higher
returns for shareholders.
Finally, I wish to thank all the Group’s employees worldwide for
their dedication to ensuring another successful year for VTech,
my fellow directors for their counsel and all shareholders,
customers and suppliers for their support.
AllanWong Chi Yun
Chairman
Hong Kong, 22 May 2014
VTech’s product innovation and
operational efficiency have given it
market-leading positions in a number
of areas. It continues to gain market
share and expand geographically, while
maintaining a strong financial position.
The Group will continue to implement
its sustainability strategies, while
exploring every avenue of potential
growth to generate higher returns for
shareholders.
6 VTech Holdings Limited
Annual Report 2014
Letter to Shareholders
