Page 4 - VTech Holdings Limited 2014/2015 Interim Report

Chairman’s Statement

TEL products revenue in Europe declined by 2.0% to US$77.6
Revenue in North America by Product Line
million. Sales of residential phones were lower due to the
for the six months ended 30 September 2014
weak economies and a declining market. This was partially
offset by higher sales of commercial phones and other
Electronic Learning Telecommunication
Products
Products
telecommunication products. Since January 2014, the Group has
31.3%
47.8%
been shipping its conference phones with wireless microphones
US$141.2 million
US$215.3 million
and SIP phones to customers in the region, who have responded

Contract Manufacturing positively to these new products. Sales of baby monitors were
Services
also higher, as the Group expanded the product line. Signs
20.9%
of improvement were seen in residential phones, as the sales
US$94.1 million
decline in the UK, France and Germany narrowed.

Total: US$450.6 million
CMS revenue in Europe was up 6.7% to US$140.8 million. Growth
was achieved in most product categories. Sales of switching

mode power supplies were higher, as an existing customer
Europe
increased orders in a new business area for data centres, and
Group revenue in Europe in the first six months of the financial in response to the upgrade from 3G to 4G technology. Wireless

year was up 2.0% to US$359.9 million, mainly due to higher headsets also saw growth, owing to strong demand for a
sales of CMS. Europe is the second largest market of the Group, customer’s products and gains in market share. In contrast,
representing 40.0% of Group revenue.
sales of professional audio equipment were lower as a customer

transferred products requiring custom configuration to
ELPs revenue in Europe was US$141.5 million, the same as the manufacturing in-house. This was partially offset by higher sales
corresponding period last year. Higher sales of standalone to other professional audio equipment customers.
products offset lower sales of platform products. Among VTech’s

key Western European markets, sales in France, Germany, Revenue in Europe by Product Line
Belgium and Spain were higher, while sales in the UK declined.
During the first nine months of the calendar year 2014, VTech for the six months ended 30 September 2014

further strengthened its position as the number one infant toy Electronic Learning Telecommunication
manufacturer in France, the UK and Germany2.
Products
Products
39.3%
21.6%
US$141.5 million
US$77.6 million
Among standalone products, infant products saw higher sales.
Toot-Toot Drivers®, VTech’s line of smart infant vehicles and Contract Manufacturing
playsets, achieved robust growth as customers continued to Services
respond well to its expanding range of vehicles, playsets and 39.1%
US$140.8 million
tracks. In the UK, the new Toot-Toot Animals Safari Park was one
of the two VTech products selected as the “Top 12 Dream Toys
2014” by The Toy Retailers Association. In France, VTech won
Total: US$359.9 million
five “2014 Grand Prix du Jouet” awards presented by La Revue du
Jouet magazine, the highest among all toy manufacturers. The
awards for Little Love: My Baby Learns to Talk and My Stroller Asia Pacific
Group revenue in Asia Pacific increased by 16.9% to US$61.6
3-in-1 Interactive were especially significant as they mark the
Group’s success in expanding into the dolls aisle.
million, with growth in all three product lines. The region
accounted for 6.8% of Group revenue.

VTech also introduced its pioneering Kidizoom Smartwatch in
Europe. The product has been on the shelves in the Group’s major ELPs revenue in Asia Pacific was up 6.7% to US$12.7 million,
European markets since June 2014 and it has been well received driven by sales increases in China. In mainland China, the full
by customers. In the UK, Argos and Hamleys named it one of the distribution of Switch and Go Dinos® and the launch of Go! Go!

top toys for Christmas 2014. It was also selected as one of the “Top Smart Wheels contributed to higher sales. In the Hong Kong
12 Dream Toys 2014” by The Toy Retailers Association.
Special Administrative Region, core infant products and
Go! Go! Smart Wheels were the main growth drivers.

In contrast to the success of standalone products, sales of
platform products decreased. This was mainly due to lower TEL product revenue in Asia Pacific rose 16.1% to US$22.3 million
sales of educational tablets and MobiGo. The children’s tablet as sales trended higher in Australia, Japan and China. In Australia,
the Group gained market share in residential phones, while
market is getting more competitive in Europe owing to the
weak economies and new entrants, resulting in high channel further gains were made following the launch of VTech branded
inventory. This led to heavy discounting and reduced shipments. baby monitors. In Japan, sales of residential phones increased
as the Group added a new customer, while further inroads were
In addition, MobiGo is approaching the end of its product life
cycle in the European markets.
made into the China market.

2 Source: NPD Group, Retail Tracking Service

2 VTech Holdings Limited 2014/2015 Interim Report