TCL Communication Continued to Achieve Sustainable Growthfor First Three Quarters of 2011

TCL Communication Technology Holdings Limited
2011-10-26 19:18 1061

Revenue and Net Profit Grew 33% and 34% YoY Respectively

HONG KONG, Oct. 26, 2011 /PRNewswire-Asia/ --


Unaudited results for the nine months ended 30 September 2011 
(HK$ ‘million)  2011  2010 Change (%)
Revenue 7,462  5,607 33%
Gross profit 1,611  1,247 29%
Gross profit margin (%) 22%  22% -
Profit attributable to owners of the parent 606  452 34%
Basic EPS (HK cents) 54.84  41.91 31%

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 three months and nine months ended 30 September 2011.

During the period under review, although the economic volatility worldwide and debt crisis have affected the purchasing power of consumers in some countries, which exerted impact on global handset demand at certain degrees, the Group continued to sustain strong growth momentum in the sales volume of handsets and other products. The remarkable results were attributable to the Group's continuous efforts in expanding into new and high-potential markets, as well as the successes of the Group's "step-up" product strategy and brand building efforts in open market. In the first nine months of 2011, a total of 30.5 million units of handsets and other products were sold, representing 28% surge year-on-year. Sales volume in overseas markets increased by 25% to approximately 27.5 million units, while sales volume in the China market increased by 71% year-on-year to 3.0 million units.

The Group's turnover for the third quarter and the first nine months of 2011 increased to HK$2,862 million and HK$7,462 million, respectively, both representing increase of 33% corresponding over the same period of 2010. The Group's continued its efforts in improving cost-control, as well as its enhanced product mix and high operational efficiency, gross profit margin remained stable at 22% for the first three quarters of 2011. Net profit for the third quarter and the first nine months of 2011 also increased by 7% and 34% to HK$215 million and HK$606 million, respectively. Basic earnings per share for the first nine months of 2011 increased to 54.84 HK cents from 41.91 HK cents in the corresponding period last year.

In September, the Group entered into an extended license fee agreement with Alcatel-Lucent. The Group would pay Alcatel-Lucent US$40 million (equivalent to approximately HK$312 million) license fee for the use of the "ALCATEL" brand for certain products from 1 July 2011 to 31 December 2024. The Group believes that this favorable arrangement will provide cost savings as the Group is expected to sustain its growth momentum and the scope of use will be extended beyond mobile phones to include smartphones, tablets, mobile broadband modems, wireless network appliance device and equipment.

Commenting on the performance, Dr. Guo Aiping, the Chief Executive Officer of TCL Communication, said, "In the first nine months of 2011, the Group was able to sustain strong growth momentum in spite of the fluctuating global economy and severe competition in the industry. We continued to achieve breakthroughs in terms of product diversification, global market expansion and brand building, and recorded sustainable growth in smartphone sales with our enhanced and strengthened efforts in promoting our smartphone products. However, in view of the global economic slowdown and recent currency fluctuations in some emerging markets that have led some customers to prolong orders, as well as reserve our own capacity for smartphones, we have adjusted our full year target sales volume for 2011."

During the first nine months of 2011, shipments to Europe, the Middle East and Africa ("EMEA") amounted to 11.6 million units, up 42% year-on-year. It was mainly driven by the robust sales of the Vodafone 555 Blue, the world's first prepaid handset with Facebook pre-installed, which is exclusively manufactured by the Group; as well as the ONE TOUCH 355 and ONE TOUCH 602. The Group's first tablet, the ALCATEL ONE TOUCH T60, also received positive response in European market. Meanwhile, shipments to the Americas increased to 14.3 million units in the first nine months of 2011, representing 14% increase year-on-year. Sales breakthrough was achieved in Brazil, Argentina and Chili, and the Group also successfully expanded its markets into New Pacific Islands such as Samoa, and Tonga, as well as its market in North America, Brazil and Caribbean during the review period. In the Asia Pacific region, sales volume surged by 22% to 1.6 million units, which was driven by the Group's open market development and its close and cooperative ties with major distributors and retailers. The Group has successfully expanded into new markets such as Indonesia, and intensified its penetration into existing markets such as the Philippines and India through its enhanced marketing initiatives.

The sales volume in the China market surged by 71% to 3.0 million units in the first nine months of 2011. The Group made an impressive breakthrough in sales of 3G and smartphone products, and a number of which, such as the A990, A890, S188 and TD100 received overwhelming responses from the market. As a result, the proportion of contribution from sales of mid- to high-end products has significantly increased. Supported by its robust cooperation with the country's three major telecommunication operators, the Group also achieved sales breakthrough in different regions such as Guangdong, Jiangsu and Shanghai, while the Group's new markets in regions such as Guangxi and Xinjiang began to record sales. The Group also deepened its cooperation with e-commerce business partners such as TaoBao, 360Buy and JoYo, paving the way for a new chapter of development in sales through e-commerce channels.

A total of 22 new models were launched during the third quarter of 2011, including the 3G Android product ONE TOUCH 910, ONE TOUCH 908 and so on. All the new products have received positive feedback from customers and have been selected by global major telecommunication operators such as Orange, Vodafone, Telefonica and America Movil. Meanwhile, the Group also launched its first tablet, the TCL Pad16 / ALCATEL ONE TOUCH T60, which has passed Google's certification in July this year. With its excellent design capability and its role in the development of China's telecommunication industry, the Group won several industry awards, including the "China Telecommunication Industry Enterprise Leadership" award at the "China Telecommunication Forum 2011". Also, the Group's 3G Android smartphone, TCL A990 won the "China Smartphones Outstanding Award 2011".

Looking ahead, the Group is confident that it will continue to sustain our growth momentum, its business in China and sales of smartphones being the main growth drivers. To further expand its market share in China, the Group will launch more high-quality products, especially smartphones, to deepen its market penetration. The Group will also step up its marketing efforts and continue to expand its distribution network so as to extend nationwide sales channels and to sustain growth. In addition, the Group maintained growth momentum in the sales of smartphones, with sales volume up 38% month-on-month in the single month of September. With our ongoing efforts in product-mix optimization and the development of higher-margin smartphones with advanced features, overall products sales and ASP are expected to rise further. The Group is confident that sales of smartphones will achieve another breakthrough in the coming year.

To maintain its strong growth momentum, the Group will also strive to gain more market share from competitors and step up its pace for market expansion. With its successful geographical expansion, its "Step-up" product strategy and brand building efforts, the Group is confident that it will continue to achieve remarkable performance and create greater value for the shareholders.

Sales volume breakdown by market

Handsets and Other Products Unit Sales for the Nine Months Ended 30 September  
(‘000 units)  2011  2010 Change (%)
Overseas 27,464  21,981 25%
The PRC 2,994  1,751 71%
Total 30,458  23,732 28%

About TCL Communication

TCL Communication Technology Holdings Limited (stock code: 02618.HK), together with its subsidiaries design, manufacture and market an expanding portfolio of mobile and internet products worldwide under two key brands - TCL and ALCATEL ONE TOUCH. The Group's portfolio of products is currently sold in the PRC and over 120 countries throughout the Americas, Europe, the Middle East, Africa and Asia Pacific. TCL Communication operates its highly efficient manufacturing plants and R&D centres in various provinces of the PRC with headquarters in Shenzhen, China. For more information, please visit its website at .

For further enquiries, please contact Hill & Knowlton Asia Ltd:


Crystal Yip Erica Liu
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Source: TCL Communication Technology Holdings Limited