TCL Communication Announces Q3 2015 Results

HONG KONG, Oct. 20, 2015 /PRNewswire/ --

• Sales Volume of Smart Devices Rose by 20% Year-on-Year
• Profit for the Period Increased by 4% Year-on-Year to HK$772 Million
• Continued Efforts to Implement "Double +" Transformation Strategy
• Stand Out as a Unique "Manufacturing + Internet" Enterprise

Financial Highlights

Revenue of handsets and other products by geographical breakdown

TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company", together with its subsidiaries referred to as the "Group"; HKSE stock code: 2618) today announces the unaudited results of the Group for the third quarter ended 30 September 2015.

During the period under review, an increase in sales of smart devices and efficient execution across all businesses meant the Group's overall revenue grew 1% year-on-year to reach HK$20.3 billion, net profit up by 4% year-on-year to HK$772 million. Affected by the persistently sluggish world economy, currency fluctuations and other factors, the overall ASP of the Group's products decreased by 10% to US$47.2 in the first three quarters of 2015. Even so, the Group managed to maintain its gross profit margin at a steady, healthy level, rising slightly to 20.2%, through continuing efforts in cost control and inventory management. Basic earnings per share increased 1% to 61.76 HK cents from 61.11 HK cents over the corresponding period of the previous year.

In order to optimise the product mix and improve brand awareness globally, the Group continued to increase its R&D and brand promotion investments. It successfully launched a series of smart devices equipped with the latest technology and high-tech features that won recognition from major global operators and distributors. During the period under review, total sales volume of handsets and other products grew 14% year-on-year to 55.4 million units, with 50.5 million units sold overseas and 4.9 million units sold in China. Sales volume of smart devices increased by 20% year-on-year to 31.1 million units, accounting for 56% of the Group's total shipments.

In the coming quarter, the Group will build on the strengths of different markets and adopt targeted strategies for each of its six designated business regions, which include deepening relationships with operators and launching more entry-level 4G smartphones, tablets and wearable devices. The Group will also strengthen its open market channels and e-commerce platforms in order to be well prepared for the upcoming festive peak seasons such as Christmas.

"The Group continues to take advantage of the growing market demand for cost-effective and multi-functional smartphones to broaden its worldwide market share," said Dr Guo Aiping, Chief Executive Officer of TCL Communication. "The Group also launched a variety of innovative products, including GO PLAY, a 3-Proof handset shockproof, waterproof and dustproof to IP67 grading, and Xess, an extra-large 17.3-inch- screen tablet, as well as GO WATCH, a 3-Proof smartwatch. It is the Group's second smartwatch supporting both Android and iOS operating system. Moreover, the Group continues to adhere to the 'Double +' business transformation strategy, and has worked to open up the mobile Internet application and cloud service market, with initiatives such as the upgraded mobile healthcare app Fortune Dr 2.0 and the enterprise cloud services platform Sky-tech WebEx."

"Double +" Transformation Strategy

With the implementation of the "Products + Services" strategy, the Group has strengthened its ability to provide content services for consumers through cultural and talent re-modelling, as well as harnessing technological innovation as its corporate development driver. To promote the implementation of the "Intelligence + Internet" transformation strategies, TCL Smart Home (a joint venture between TCL Group, the Group and TCL Multimedia) launched TCL Smart Cloud, TCL Smart Module and Super APP. The Group also intends to build a genuine smart living experience for its users through smart devices, smart household systems, smart community platforms and value-added services. The Group continues to develop various innovative applications, and has successfully launched Cooking Lady, a social platform with photos and videos for sharing recipes and menus, and Box of Memories, an application providing online image and video storage space, as well as editing and sharing functions. The developments of the Mobile Healthcare Business Centre and the enterprise cloud services platform are also progressing, and the Group continues to advance in this sector.

For the nine months ended 30 September 2015, the number of cumulative activated mobile users of the Group's mobile internet platform has grown to 18.1 million. Meanwhile, the online financial service platform jointly developed by the Group and its parent company (a third-party mobile payment gateway), recognised a settlement amount of HK$2.6 billion in the first three quarters of 2015.

In the fourth quarter of the year, the Group will further employ the core corporate competencies, gradually building up a service platform. The Group will continue to build on the "Internet +" trend, seizing the available opportunities to leverage its competitive advantages in design, R&D, production and sales, transforming itself into a multinational enterprise that specialises in the manufacturing of smart devices, Internet applications and services. To meet the demands of the present Internet revolutionary era, the Group will step up its R&D efforts and follow an Internet-thinking approach to promote its service solution plans ahead of its peers. It is committed to creating a unique open smart ecosystem anchored around "Smart devices + Cloud-based platform + Internet services".

Dr Guo Aiping concluded, "Driven by the combined engines of Internationalisation and the 'Double +' business transformation strategy, our competitive edge as an integrated manufacturing and Internet enterprise will become even more prominent. However, the persistently strong US dollar has devalued currencies in Europe and emerging markets, which together with the weakened macro economy has undermined purchasing power. This will continue to have a negative impact on product ASP, gross margin and consumer demand. The management of the Group maintains its revenue growth target for 2015 at 10% year-on-year. The Group will continue to exercise stringent cost and expense controls to optimise its operational efficiency. A lean organisation structure will help the Group adapt to market changes in an efficient and timely manner. We will also adhere to the long-standing and effective 'Step-Up' product strategy. Efforts will be made to establish the Group as a world-leading mobile Internet enterprise, and maximise the value for shareholders."

About TCL Communication

TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company"; HKSE stock code: 2618) together with its subsidiaries and its affiliates (collectively the "Group") designs, manufactures and markets an expanding portfolio of mobile and internet products worldwide under two key brands -- ALCATEL ONETOUCH and TCL. The Group's portfolio of products is currently sold in China and over 170 countries throughout North America, Latin America, Europe, the Middle East, Africa and Asia Pacific. According to telecommunications research firm Gartner and Company data, the Group ranked No. 5 and No. 8 among global phone manufacturers and global smartphone manufacturers respectively in the second quarter of 2015. The Group also ranked No. 6 among global tablet manufacturers. Headquartered in Shenzhen, China, TCL Communication operates its highly efficient manufacturing plant and R&D centres in various provinces of the PRC. It employs around 15,000 people in mainland China, Hong Kong and overseas.

TCL Communication is one of the few companies in Hong Kong or mainland China that owns or licenses 2G, 2.5G, 2.75G, 3G and 4G patented technologies. It is also able to independently develop products and solutions for GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA and LTE. For more information, please visit the company website at http://tclcom.tcl.com.