VTech has revealed that group revenue increased 9.5% to a record $2,372.3m, despite global supply chain disruptions and other challenges.
The company’s results for the financial year ended 31st March 2021 show record revenue and profit. Group revenue increased by 9.5% to $2,372.3m, as higher sales in North America, Europe and Asia Pacific offset lower sales in other regions. Group revenue in Europe rose by 22.6% to $1,086.3m, making Europe VTech’s largest market, accounting for 45.8% of Group revenue. Electronic Learning Products revenue in Europe increased by 5.4% to $351.2m, with sales increasing in the UK, France, Germany and the Netherlands. In the calendar year 2020, VTech remained the number one infant and toddler toy manufacturer in the UK, France, Germany and the Benelux territories.
Both the VTech and LeapFrog brands achieved higher sales. For the VTech brand, growth was led by electronic learning aids, KidiZoom cameras, other Kidi line products and Switch & Go Dinos, while sales of infant, toddler and pre-school products were largely stable. LeapFrog saw rising sales of infant, toddler and pre-school products, with strong sell-through of Learning Friends 100 Words Book and 100 Animals Book.
The Group’s gross profit margin in the financial year 2021 was 30.6%, unchanged year-on-year. The lower-than-expected gross profit margin was attributable to a marked increase in materials prices in the fourth quarter of the financial year, a change in product mix, rising freight costs and higher direct labour costs. These increases offset lower manufacturing overheads and a further improvement in productivity for the full financial year.
Allan Wong, chairman and Group CEO of VTech Holdings Limited, commented “In the financial year 2021, VTech delivered record revenue and profit, as the Group’s businesses benefited from work-from-home and stay-at-home orders during the coronavirus pandemic. The positive result came despite global supply chain disruptions during the first half and increasing shortages of semiconductors and other electronic components in the final quarter.”
A statement accompanying the results admits that the Group’s revenue for the financial year 2022 remains difficult to predict. All of its product lines have a solid order book, but despite the Group’s best efforts, the fluid situation in global material supplies may yet affect its ability to meet demand. There is currently a global shortage of electronic components, in particular of semiconductors and LCD screens. Foundries are struggling to meet a huge increase in demand and not only are lead times much longer, but order fulfilment is said to be erratic. Despite long-term relationships with suppliers and their full support, the statement admits that some of the Group’s confirmed orders may not be fulfilled on time.
Gross profit margin is also said to be under pressure, with higher raw material prices, rising freight costs and a stronger Renminbi. VTech has taken steps to mitigate the effects through diversifying sources of supply, re-engineering products, negotiating new shipping contracts and price increases.