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Goodbaby International Holdings Limited Announces 2017 lnterim Results

2017-08-28 20:56
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-Key Strategic Brands Maintained Strong Growth Momentum
-Gross Margin Significantly Improved by 2.9 Percentage Points to 36.3%
-Profit for the Period Increased by 14.4% to HK$126 Million

HONG KONG, Aug. 28, 2017 /PRNewswire/ --

For the six months ended 30 June 2017

2017

HK$ million

2016

HK$ million

Change

 

Revenue

3,295.6

3,214.9

+2.5%

Gross profit

1,195.1

1,074.5

+11.2%

Gross profit margin

36.3%

33.4%

+2.9 p.p.

Operating profit

179.4

169.1

+6.1%

Profit for the period

125.9

110.1

+14.4%

Profit for the period attributable to owners of the parent

124.7

107.1

+16.4%

Goodbaby International Holdings Limited ("Goodbaby International" or the "Company", SEHK stock code: 1086, together with its subsidiaries, the "Group"), an international, vertically-integrated durable juvenile products company headquartered in China, today announces its interim results for the six months ended 30 June 2017 ("the Period").

Goodbaby International Holdings Limited management with brand product displays.
Goodbaby International Holdings Limited management with brand product displays.

 

Goodbaby International Holdings Limited management with brand product displays.
Goodbaby International Holdings Limited management with brand product displays.

The Group's revenue for the period increased by 2.5% to approximately HK$3,295.6 million from approximately HK$3,214.9 million in the first half of 2016. During the period, the Group's strategic brands recorded strong growth of 17.4%. In particular, key strategic brands Cybex, gb and Evenflo recorded revenue of approximately HK$758.9 million, HK$574.8 million and HK$898.1 million respectively, representing growth of 26.8%, 24.8% and 6.7% respectively compared with those in the first half of 2016. A year-on-year decrease of 19.1% was recorded in the Blue-Chip business, which was better than expected and mainly due to the steady business development the Group maintained with its key Blue-Chip customers. The Group recorded growth in revenue across markets in all regions during the period. Due to increased revenue contribution from the Group's key strategic brands and improvement in cost efficiency, the Group's gross margin ncreased by 2.9 percentage points to approximately 36.3% in the first half of 2017, from approximately 33.4% in the corresponding period in 2016.

For the six months ended 30 June 2017, the Group recorded growth in net profit, up 14.4% to approximately HK$125.9 million, while the increase was primarily driven by an improvement in gross profit, which was up from HK$1,074.5 million for the six months ended 2016 to HK$1,195.1 million in the first half 2017. The Board does not recommend the payment of interim dividend for the six months ended 30 June 2017 (for the six months ended 30 June 2016: Nil).

Commenting on the Group's interim results 2017, Goodbaby International's Chief Executive Officer Mr. Martin Pos said, "Leveraging our brand-driven, one-dragon, vertically integrated business model, we recorded growth in both revenue and net profit in the first half of 2017. Following implementation of our acquisition plan of China's leading self-owned brand businesses of product development, brand management and distribution of maternity and babycare goods and apparel products, coupled with the largest retail network of maternity and baby care goods in China, we are confident that this strategic move will drive the Group to greater peaks with our comprehensive adoption of our BOOM strategy to further strengthen our leading position in the industry."

Region APAC

In China's market, the growth momentum continued since late 2016 and the Group recorded a revenue increase of 13.1% (18.6% in renminbi ("RMB")) to approximately HK$745.4 million in the first half of 2017 from approximately HK$658.8 million in the first half of 2016. The increase was primarily attributable to a 26.6% growth in RMB in gb brand sales and a more than double growth in Cybex brand sales, offset by a slight decline in the Happy Dino brand. The strong growth in sales under the gb and Cybex brands was driven by such brand-building efforts as media advertising, celebrity endorsement and fashion events, and a rebound in offline sales.

Revenue outside China declined by 22.7% to approximately HK$172.3 million in the first half of 2017 from approximately HK$222.8 million in the first half of 2016, mainly resulted from the closure of the Group's Geoby brand business in 2016.

Region EMEA

Led by the strong growth in sales under the brands Cybex and the gb Platinum and Gold ranges, revenues in EMEA grew by 20.0% to approximately HK$816.9 million in the first half of 2017, from approximately HK$680.7 million in the first half of 2016.

While the Group's own brand business experienced solid growth in Germany, all other core European market realised significant revenue growth of 75%. The strong growth in sales under the Cybex brand was due to the consistently solid performance of the portfolio of the Group's car seat products and the rapid development of its stroller products such as Priam, Mios and Balios M. Another milestone that the Cybex brand passed in the first half of 2017 was that the number of its Facebook fans reached more than 1 million. The momentum of gb Platinum and Gold range's rapid business expansion in 2016 continued in the first half of 2017, supported by the strong performance of the Pockit and Qbit strollers and a trilogy of completely new car seats that comprised the Idan, Vaya I-Size and Elian-FIX.

Region Americas

Following Evenflo's appointment of a CEO in January 2017, the Group focused its investments on brand-building and the development of products and distribution channels. To adapt promptly to a seismic shift in customer purchase preference towards online retail channels, the Group strengthened partnerships with key online retailers, which was supported by a more flexible supply chain. A strong market demand in the second quarter boosted the revenues from Evenflo (including Exersuacer) by 6.7% to approximately HK$898.1 million in the first half of 2017 from approximately HK$841.4 million in the first half of 2016. The Group's new product development process has been streamlined to focus on the most important needs put forward by consumers and to stimulate substantial market demand upon product launch. The Group's effort to relaunch the brand was underway with emphasis on a new, aesthetically pleasing design and a new positioning. The new products under a new brand image will be unveiled in 2018. The Group expects the fundamental improvements to boost sales and to sustain the growth.

Blue Chip

While developing its own brands, the Group successfully maintained close relationships with its key blue-chip customers who recognize and value the Group's excellent manufacturing and Research and Development (R&D) capabilities. As a result, the decrease in revenues from such customers was smaller than expected: the Group recorded a reduction in Blue Chip revenue of 19.1% to approximately HK$561.8 million in the first half of 2017 from approximately HK$694.2 million in the first half of 2016, which was mainly due to the planned decrease in sales from a long-standing customer.

Innovation and Technology

With seven R&D centres worldwide and a team of more than 400 specialists, the Group is able to combine world-class engineering with iconic aesthetics in its products. The Group's organization of its technical teams is highly agile and the Group is developing regional competence centres and autonomous teams to respond faster to market developments and accelerate product development. In the first half of 2017 alone, the Group ob­tained 184 patents, bringing the total number of historically obtained patents to more than 7,500.

In 2017, the Cybex MIOS stroller won the "Best of the Best" Red Dot Design Award and seven Cybex and gb car seats were rated "Best in Test," with the highest overall scores in their respective groups. The Group also achieved six Red Dot Design Awards, one iF Design Award, one China Excellent Industrial Design Reward, one Guinness World Record and one China Industrial Design Gold Award.

Production and Supply Chain

The Group continues to enhance the Goodbaby Excellence System which was created in 2016 through management and technology projects. The Group combines Lean Manufacturing principles with management training and advanced quality tools developed in the automotive industry. To offset the increases in raw material costs, a set of tactical purchasing solutions were applied to achieve a leaner and more efficient supply base. As the business continues to expand, the Group will pursue further supply chain integration, supplier consolidation, procurement and logistic organisation to achieve world-class efficiency and competitiveness.

Organisation

The Group is continuously strengthening its global management structure and improving operational integration, while preserving its unique culture, values and entrepreneurship. A Triangular Management System has been introduced to ensure a centralized vision, strategy and standards while regional execution remains decentralized. Within the Group's business units, designated leaders now define functional strategies, standards and processes. These business unit leaders have full executional and operational responsibility for their areas and are now mentored by regional chairmen, who serve as ambassadors of the Group's mission and cultural values.

Outlook

Looking ahead, Goodbaby International's Chairman Mr. Song Zhenghuan said, "Our positive financial results in the first half of 2017 are a direct outcome of our One Dragon Vertically Integrated Business Model. The initiative in integrating operations on a large scale that we carried out in the past three years has now yielded notable results. All aspects of our business now feature flexible strategy and scalability that can sustain the growth in revenue and profit. Looking forward, we will continue to implement our BOOM strategy, create our ecosystem of the maternity and baby care business and enhance the Group's value to strive for sustainable returns of our shareholders."

About Goodbaby International Holdings Limited

Goodbaby International is one the world's leading global durable juvenile products companies, headquartered in China. We adopt a vertically integrated business model. The Group's core capabilities lie in research & development, design and quality manufacturing, branding, marketing and sales of juvenile products, such as strollers, children's car safety seats, juvenile household products (e.g. cribs, safety gates, high chairs and infant seats), as well as juvenile toy vehicles (e.g. stationary activity centers, tricycles, e-cars and scooters).

Goodbaby International has over 11,000 employees worldwide. It owns 7 research & development centers globally, including Americas, Europe and Asia and manages sales, marketing and distribution offices in 11 countries. With this global presence, localized operations and strong capabilities in brand building, the Group has a leading position in the juvenile goods industry. Every day, millions of parents count on the quality, reliability and performance of our products.

On 24 July 2017, the Group entered into an agreement to purchase the entire issued share capital of Oasis Dragon Limited, where its core businesses consists of: (i) the product development, brand management and distribution of leading self-owned brands in maternity and baby-care products and apparel products; and (ii) one of the largest retail networks for MBC products in China, a leading omni-channel sales platform that provides customers with its self-owned brands in maternity and baby-care products, apparel products and the Group's durable juvenile products.

Photo - https://photos.prnasia.com/prnh/20170828/1928488-1-a
Photo - https://photos.prnasia.com/prnh/20170828/1928488-1-b

Source: Goodbaby International Holdings Limited

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