Results for the six months ended 30th September show an increase in revenue and profit, as well as an improvement in margins.
“The first six months of the financial year 2020 saw VTech achieve an increase in both revenue and profit. Revenue rose on higher sales to North America, Europe and Asia Pacific, while lower costs and higher operational efficiency boosted profits. The US tariffs had no negative impact on the financial results in the period,” said Allan Wong, chairman and group CEO of VTech Holdings Limited.
Group revenue for the six months ended 30th September increased by 12.0% to US$1,124.1m, as higher sales in North America, Europe and Asia Pacific offset lower sales in Other Regions.
Profit attributable to shareholders of the company rose by 31.0% to US$118m. This was attributable to higher revenue and gross profit, lower operating expenses as a percentage of group revenue, as well as a fair value gain on an investment in a company that designs and distributes integrated circuit products. Basic earnings per share increased by 31.0% to US46.9 cents, compared to US35.8 cents in the first six months of the previous financial year.
Group revenue in Europe increased by 10% to US$440.6m in the first six months of the financial year 2020, as higher sales of ELPs and CMS offset lower revenue from TEL products. Europe was VTech’s second largest market, accounting for 39.2% of Group revenue.
ELPs revenue in Europe rose by 12.9% to US$145.7m, with higher sales of both standalone and platform products. Despite weak European currencies, growth was supported by new product lines, which have been well received by the market. With the logistics issues that affected the business in continental Europe in the first half of the previous financial year resolved, France, Germany and Spain all recorded higher sales. In the UK, the uncertain political and economic environment, along with tough market conditions, resulted in lower sales in the country. In the first nine months of the calendar year 2019, VTech was the No. 1 infant and toddler toy manufacturer in France, the UK, Germany, Spain and the Benelux countries.
In standalone products, both the VTech and LeapFrog brands posted growth. Growth in VTech came from higher sales of infant, toddler and pre-school products, Kidizoom Camera and the Kidi line of products. These increases compensated for declines in the Toot-Toot family of products. LeapFrog also saw rising sales of infant, toddler and pre-school products in the first half of the financial year 2020, owing to new product launches.