TCL Communication Continued to Achieve Sustainable Growth in Q1 2011

Revenue and Net Profit increased 44% and 159% respectively

HONG KONG, April 29, 2011 /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 quarterly results of the Group for the three month ended 31 March 2011.

During the period under review, the Group achieved breakthroughs in terms of sales and operational performances and sustained strong growth momentum. A total of 8.7 million units of handsets and accessories were sold in the first quarter of 2011, representing an increase of 51% over the same period of 2010. The growth is attributable to the continuing geographic expansion, "Step-up" product strategy, brand building in open market and complementary Original Design Manufacture ("ODM") strategy.

The Group's revenue increased to HK$2,124 million in the first quarter of 2011, 44% stronger than the corresponding period of the previous year. Due to ODM business shipment, the average selling price fell from US$32.6 a year ago to US$31.2 in the first quarter of 2011, while the average selling price of own-branded products remained stable at US$33. However, thanks to better cost control and a more diversified product mix, gross profit margin improved to 22.3% from 19.8% in the same period of 2010.

Moreover, net profit increased 159% to HK$180 million, attributable to strong sales, improved operational efficiency, and the continued success of "Step-up" product strategy. Basic earnings per share jumped to 16.38 HK cents from 6.54 HK cents over the corresponding period in the previous year.

Commenting on the Group's exceptional performance, Dr. Guo Aiping, Chief Executive Officer of TCL Communication, said, "The Group is off to a great start in 2011. We achieved good progress in product development and further expanded into mid to high-end market in the first quarter of 2011 on the back of strong R&D and design capabilities, and positioned the Group well to capitalize on growing consumer demand brought by a strong recovery in the global economy. We also achieved numerous breakthroughs in the PRC Market and strengthened our brand globally."

The Group delivered significantly improved performance in overseas markets during the period under review. Sales volume in overseas markets topped 8.3 million units, representing an increase of 56% over the first quarter of 2010. Specifically, sales in Europe, the Middle East and Africa ("EMEA") showed strong growth momentum in 2011. Shipments to EMEA increased 62% from the same period last year to 3.3 million units. The impressive sales performance was primarily due to the diversified product portfolio which received very positive feedback from operators and also won opportunities from distributors. In addition, sales in the Americas in the first quarter of 2011 recorded a year-on-year increase of 60% to 4.4 million units, driven by enhanced product mix featuring mid to high-end handsets and a successful expansion in the open markets and distribution channels. In the Asia Pacific ("APAC") region, the Group's sales volume reached 0.6 million, representing a 5% year-on-year growth following its successful expansion into new markets such as Bangladesh and a stronger presence in existing markets such as the Philippines, Vietnam, Singapore and India.

In the PRC market, sales volume remained stable at 0.4 million.  A highlight during the period under review was the successful launch of a number of major popular products, including the highly successful Sina-Twitter handset TCL i898, as well as the TCL A906, a competitive product which kick-started the Group's cooperation with China Unicom recently. In addition, during the period under review, the Group made an impressive breakthrough by successfully cooperating with the three main telecommunications operators, namely China Unicom, China Mobile and China Telecom, in the PRC. By increasing spending on advertising and marketing resources on brand building in the PRC market to further expand sales channels, the Group is confident that its products will be made more readily available in the open market, in particular, in key markets such as Sichuan, Liaoning, Guangzhou and Jiangsu.

The Group continued to step up efforts in product development in the first quarter of 2011. A total of 19 new models were launched during the quarter. The popular models launched during the quarter included TCL A906, a highly competitive WCDMA-mode 3G smartphone in the PRC market, which is a major step forward in the Group's strategic development of 3G Android smartphones and through which the Group has recently entered into an alliance with China Unicom; ONE TOUCH 803, a key product particularly popular among key overseas operators; VF-252, an ODM project and one of the Group's strategic projects in cooperation with operator for emerging markets; and ONE TOUCH 306, an ULC Camera phone that is popular among key operators in emerging markets. In addition, the Group's products have won recognition from both customers and the industry, including the "Reddot Design Award: Product Design 2011" for ONE TOUCH 818 and ONE TOUCH 355 PLAY. Furthermore, the Group successfully developed 3G data card and received a warm welcome in the APAC region as well as from operators in Europe.

During the period under review, the Group established TCL Ningbo R&D Centre for the development of high-end smartphone in view of the Group's business development strategy so as to further penetrate into the mid to high-end mobile phone market.

Riding on the market demand for "Integrated Products", "Cross-over Products" and "One-stop Services", the Group will also step up its efforts on the design and manufacturing of wireless telecommunication equipment in order to capture this growth market.

Mr. Li Dongsheng, Chairman of TCL Communication, said, "Looking ahead, we are confident that our growth momentum will continue, riding on our continued geographical expansion, strengthening R&D and product design capabilities, and "Step-up" product strategy.  The Group will continue to consolidate its leading position in the existing markets, while further expanding its presence in the PRC and emerging markets. The Group will consolidate is leadership position in the low-end handset market while exploring the mid to high-end market through providing more stylish and intelligent products in the future. In the second quarter of 2011, there are 37 competitive new models to be launched, including 3G Android smartphones and a series of tablets. Moreover, the Group will further deepen and expand its strategic cooperation with major telecommunication operators worldwide and continue to expand into the open markets. At the same time, the Group will further strengthen ALCATEL ONE TOUCH brand-building strategy and enhance the communication platform for customers. For example, the Group is one of the key official sponsors of Le Tour de France 2011, which is scheduled to take place in the coming quarter. The event is set to further enhance the ALCATEL ONCE TOUCH brand. In addition, in view of its sustained and extraordinary growth, the Group is going to upgrade its infrastructure, including the construction of a new production plant, in order to further increase annual production capacity up to 130 million units to accommodate future business developments. The Group will also seek to continue to improve its operating results, thereby laying a solid foundation for new growth going forward."

Sales volume breakdown by market

About TCL Communication

TCL Communication Technology Holdings Limited (stock code: 02618), 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 http://tclcom.tcl.com.

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