VTECH: Full year results out

VTech has announced full year results, reporting record revenue and profit.
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For the year ended 31st March 2008, revenue increased by six per cent over the financial year 2007 to $1.5bn. Profit attributable to shareholders rose 17.9% to $215.7m.

"Despite challenging economic conditions, VTech reported record revenue and profit and we were able to expand net profit margin for a third consecutive year. The solid result reflects the success of our strategy, with its focus on the four key areas of product innovation, gains in market share, geographic expansion and operational excellence," said Allan Wong, Chairman and CEO.

The electronic learning business achieved a record performance for the third consecutive year, with revenue increasing by eight per cent to $615.7m, equivalent to 39.7 per cent of total Group revenue, as innovative products supported by increased shelf space boosted growth. In Europe, revenue increased by 13.5 per cent to $296.1m, as VTech maintained its long-established leadership in its principal markets.

Sales in the US also posted gains, rising 3.5 per cent to $291.1m.

The V.Smile platform showed signs of a slow-down in sales of both consoles and cartridges. The contribution of the V.Smile range to total ELP sales declined to 40.7 per cent, compared to 51 per cent in the previous financial year. Nonetheless, the V.Smile console and cartridges continued to be the top selling platform items in the electronic preschool category in the UK, France and Germany in the calendar year 2007, according to the firm.

"It is prudent not to foresee growth for the financial year 2009, as economic conditions in our markets, especially the United States, are worsening. In addition, cost pressures will continue owing to the high oil price, rising labour costs and inflation in mainland China. Nevertheless, we remain positive about our future. Our track record in product innovation, dominant position in many markets, strong balance sheet and operational excellence should allow us to strengthen our competitive position. We will continue to manage costs closely and focus on our four strategic drivers for expansion," said Wong.

“For the ELP business, market conditions will be challenging. Not only is the US economy slowing, but competition is increasing, while the benefit the Group has reaped from an appreciating Euro is unlikely to continue.

“Nonetheless, the global toy business has historically performed relatively well during economic downturns. We also have a sound strategy that should allow us to grow the business. Continued innovation in products remains at the core of this strategy and this will help rejuvenate the V.Smile range. V-Motion, an interactive educational gaming system that engages both minds and bodies, is already on the shelves. It will be joined by Cyber Pocket, a new handheld version to complement the V.Smile Pocket. Both of these products feature USB connectivity, offering more value to consumers.

“Following the success of V.Smile, which brought a new dimension to the ELP business, the Group is working to create other new categories that can become major growth drivers. One of the new product lines to be launched during the financial year 2009 is the KidiCreative line, which offers high tech creative play for children.”

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