TCL Communication Reaps 2010 Solid Half-Yearly Profit After Sales Volume and Revenue Soar 181% and 160% YOY

HONG KONG, Aug. 26 /PRNewswire-Asia/ -- 

FINANCIAL HIGHLIGHTS

TCL Communication Technology Holdings Limited (“TCL Communication,” or “The Company”, together with its subsidiaries referred to as “the Group”; HKSE stock code: 02618) today announced the unaudited results of the Group for the six months ended 30 June, 2010.

2010 has been a breakthrough year for the Group.  During the first half of the year, the Group reported revenue of HK$3.5 billion, a 160% increase over the same period last year, and a net profit of HK$250 million. This represents a significant improvement compared to the first half of 2009, when the Group suffered a loss of HK$104 million.

Sales during the reporting period were exceptionally strong so far this year, due in part to the gradual economic recovery in most parts of the world.  Sales volume of handsets and accessories reached 14.2 million units, an increase of 181% over the same period last year.  Of this, total sales excluding the PRC reached 12.9 million units, soaring 226% from a year ago, while the PRC market grew 20% year-on-year.

In view of these results, the board of directors has recommended paying an interim dividend of HK 8 cents per share.

Commenting on the performance, Mr. Guo Aiping, the Chief Executive Officer of TCL Communication, said, “The Group has accomplished an amazing turnaround since June 2009.  The gradual global economic recovery certainly helped, but this turnaround is in large part a validation of our sales strategy and product development efforts, as well as the hard work of all our staff.  In the first half of 2010, the Group saw record performance in virtually all aspects of its business in terms of sales and profit.  We are one of the fastest growing handset manufacturers in the world as named by Strategy Analytics, and our TCL-Alcatel brand was ranked among the top ten global brands in terms of handset and accessories shipments in the first quarter of 2010, according to iSuppli.”

“These numbers prove that our coordinated efforts to offer attractively priced products to targeted customer segments, such as our launch of mobile internet handsets in the Americas region, have really paid off.  We have reached new users and geographies across the globe, and have further expanded our brand awareness and sales network, in particular in the open market.  We have also worked hard to move up the value chain by selling more TCL and Alcatel-branded handsets and by coming up with original designs for products that we white-label. Our brand is just going to get more valuable in the future, and customers will associate us with cutting edge but competitively priced products.”

While the Group continued to lead in its traditional market of low- to mid-end products, its constant investment in and focus on R&D also enabled it to offer an even stronger mid- to high-end handset portfolio during the period under review.  The Group’s strategy to advance into Original Design Manufacture (ODM) handset business was also a success, with the business now accounting for a significant portion of the total revenue.  This helps the Group realize greater economies of scale in procurement and production cost reduction. As a result, the overall gross profit margin also bounced back to 21% from 15% a year ago.

Being one of the top handset providers in the Americas region, the Group’s showed robust sales of 6.9 million units in the first half of 2010, up 335% over the same period in 2009.

Sales volumes in the EMEA region were up 128% over the same period last year to 5 million units, notwithstanding the sovereign debt crisis in Europe, risks of which the Group mitigated through effective currency hedging contracts.  Shipments in the PRC market increased a healthy 20% to 1.3 million units, while sales volumes across the entire APAC region soared about five-fold year-on-year to 1 million units.

In the first six months of 2010, the Group rolled out a total of 17 new GSM models, and six data card products.  OT-980, a QWERTY touch screen slider-type smart phone and the Group’s first foray into the Android space, as well as a series of 3G handset products based on TD-SCDMA and WCDMA platforms, have also been developed and will be launched in the second half of 2010.

Looking ahead, Mr. Li Dongsheng, Chairman of TCL Communication, said, “The world economy is continuing to cautiously recover from the recent downturn, and consumer confidence is rising around the world.  We will work relentlessly to further extend our cooperation with major telecommunications operators across the globe and work with distributors in the open market to capture emerging business opportunities.  The APAC region, in particular, will remain one of the key marketplaces for growth in the handset industry, in light of the PRC’s embrace of 3G technology and move towards tri-network integration.”

“We have every confidence in fulfilling and even exceeding our sales target set for the full year.  The improving market environment, our healthy sales pipeline and our appealing product mix are all positive factors enabling the Group to achieve strong performance in the second half of 2010 and beyond.  Our affordable handsets appeal to a wide range of consumers, and the Group’s prospects, as well as the outlook for shareholder returns, are promising.”

About TCL Communication

TCL Communication engages in design, manufacture and marketing of a variety of mobile handsets and accessories in the PRC and international markets.  Its handsets and accessories are marketed in the PRC Market, the European, Middle East and African Markets (“EMEA”) and the Americas Markets under the “TCL” and “Alcatel” brands.  For more information, please visit the Company’s website: http://tclcom.tcl.com.

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