VTech reports profit drop

VTech has announced its first half results, reporting a profit drop due to exchange rates.
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Group revenue increased by six per cent to $778.5 million. Despite maintaining a stable gross profit margin, profit attributable to shareholders declined by 20.5 per cent to $68.8 million, due to an exchange loss of $11.2 million arising from the Group's global operations, as the Euro and Sterling weakened abruptly against the US dollar.

This fall is compared with an exchange gain of $8 million for the same period last year. Excluding the impact of exchange differences, profit attributable to shareholders increased $1.5 million or 1.9 per cent year-on-year.

Earnings per share decreased by 21.7 per cent to 28.2 cents and an interim dividend of 12 cents per share was declared, which is the same as the corresponding period last year.

Revenue at the electronic learning products (ELP) business rose 10.7 per cent to $290.1 million, accounting for 37.3 per cent of Group revenue.

Standalone products led the way, with strong increases in the infant category, benefiting from an enhanced product offering and more shelf space.

There were also good contributions from Kidizoom Camera and V- Motion. During the period, standalone products accounted for 68 per cent of total ELP revenue whereas platform products accounted for the remaining 32 per cent.

Geographically, all markets recorded sales growth during the period. In North America, revenue rose by 14.9 per cent to $138.4 million, representing 47.7 per cent of total ELP revenue. In Europe, revenue grew by five per cent to $129.1 million, accounting for 44.5 per cent of total ELP revenue.

Allan Wong, chairman and group CEO of VTech Holdings said:

"VTech posted higher revenue during the first half of the financial year 2009 while profit declined mainly due to exchange factors.

“Although we anticipated a slowdown of the global economy, the full extent is difficult to forecast. We are well prepared to manage through the downturn, as we have a solid net cash position, ample available liquidity, effective cost control and strong supplier and customer networks."

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