HONG KONG, April 18 /Xinhua-PRNewswire-FirstCall/ -- Techtronic Industries Co. Ltd. ("TTI" or the "Group") (HKEx: 669; ADR: TTNDY) today announced that its profit attributable to equity holders of the parent for 2006 reached a record level of HK$1,072 million, an increase of 5.19% over the previous year, representing its twelfth consecutive year of growth.
Its leading brands, product innovations, and cost improvement efforts delivered a healthier net profit margin of 4.91%, up from 4.56% in 2005. Notably, its gross margin improved to 31.59% from 31.05% last year and profit margin from operation grew to 7.59% from 7.05% last year, benefiting from ongoing business integrations and Continuous Improvement Program (CIP) savings, which offset increases in global commodity prices and financing costs. Basic earnings per share, taking into account the full dilution effect of the share placement in September 2005, were at HK73.18 cents per share, marginally lower than the HK73.53 cents reported in 2005.
Mr. Horst Julius Pudwill, Chairman and CEO of TTI said, "2006 turnover for the Group was HK$21.82 billion, a small decline of 2.39% over 2005. We managed solid turnover growth in the first half of 2006, but the second half proved to be more challenging with a softer macro economic environment in the United States. However, the Group's expansion efforts outside of North America continued the first half momentum with near double digit turnover growth for the second half and consequently for the full year. Our floor care business rebounded with positive turnover growth in the second half. We announced the acquisition of Hoover(R) floor care business, which when combined with our existing floor care business will make TTI the leader in the global floor care industry."
Commenting on the Group's future plans, Mr. Pudwill said, "We are setting the stage for growth and profit margins enhancement. After a second year of consolidating the 2005 power tool acquisitions, we are starting to benefit from the integration synergies. We are moving decisively to consolidate our latest acquisition Hoover(R), and derive gains in marketing and operational efficiencies in 2007. Our attention will focus on both core business expansion and the search for strategic acquisitions that can enhance both our top line and bottom line.
"Our core strategy to build our business with exceptional people is being fueled by the introduction of a North American campus recruiting and Leadership Development Program. We target talented individuals with a passion to lead and deliver results. Additionally, we have strengthened our management team by creating new executive positions in our offices around the world and filling them with uniquely talented business leaders in important areas of sales, marketing, product development, operation, and senior management. We anticipate benefits in our dynamic and fast paced culture across product development, marketing, and best cost operational performance."
Review of operation
Power Equipment
The Power Equipment business, which includes power tools, power tool accessories, and outdoor power equipment, reported record profit from operations, with growth from its professional brands, Milwaukee(R) and AEG(R) as well as strong sales of RIDGID(R) professional power tools manufactured by TTI. Profit from operations was HK$1,462 million, a significant increase of 18.16% over 2005. Turnover reached HK$17.12 billion, accounting for 79% of total Group turnover. Full year turnover was marginally down 0.35% from last year due to a sluggish North American market in the second half of the year. The Group improved operating profit margins to 8.54% from 7.20% last year in a difficult economic environment of rising raw material costs. Innovative new products, quality improvement initiatives, global procurement activities, product transfer programs, and CIP have positively impacted TTI's operational performance.
The Group expects its North American business to rebound after a slowdown in the second half of last year and it has increased the consumer power tool promotion plans and marketing support. Innovative lithium-ion cordless products will be launched throughout the year, further enhancing TTI's leading position in the cordless category. European and the rest of world businesses are continuing to track healthy growth. New products are the primary drivers, but new distribution in core territories and new geographies are also adding incremental turnover. The Ryobi(R) branded One+(TM) System and Milwaukee(R) V18(TM) programs are notable product ranges that are feeding the expansion.
Floor Care
In 2006, the floor care business established the platforms for future growth, including the acquisition of the Hoover(R) floor care business. Its powerful brand portfolio now includes Hoover(R), Dirt Devil(R) and Vax(R). In addition to the brands, the business is competitively positioned with an increased new product development capability, best cost supply chain scale, and full product category coverage. Distribution reach outside of North America will continue to expand geographically with TTI's brands.
The floor care business completed the transition to focus on its own brands and as a result reported second half growth in North America and Europe. Turnover for the full year was HK$4.43 billion, down 2.16% from last year's, and accounting for 20% of the Group's total turnover. On the cost side, challenging raw material pricing was partially offset by the Group's global sourcing programs and CIP savings. TTI did drive its innovative products with increased advertising support in key markets. Profit from operations was down to HK$157 million, a margin of 3.54% of turnover.
2006 set the stage for growth in the floor care business. TTI now possesses the most recognized brands in virtually all floor care categories. Dirt Devil(R) is positioned to continue its introduction of unique products through its ease of use strategy and advantages in manufacturing scale and supply chain efficiencies. There are multiple new product introductions planned for 2007 including the KURV(TM) and the KRUZ(TM), both hand-held vacuums and a new "i"(TM) upright vacuum. The Group's contract business remained in transition in 2006 as it increased its commitment to its own leading brands. This is still on track to rebound in 2007 as the Group begins delivering the new line of Sears(R) Kenmore(R) brand of vacuums in the first half.
Laser and Electronics
The Laser & Electronics business result for 2006 was according to expectations, with a top line decline from the prior year due to the continuing correction in the laser based products market. Turnover in Europe was stable and infant care products delivered growth. Expenses were controlled through CIP programs while addressing the overhead expense structure. Consequently, turnover was HK$279 million, accounting for 1% of total Group turnover, and profit from operations was HK$37 million.
The text of the announcement and results presentation are available at http://www.ttigroup.com
Investor Presentation Broadcasting
Available at www.ttigroup.com from 7:00 pm, 19th April, 2007 (HK Time) for a month until 18th May, 2007
About TTI
Founded in 1985 and listed on the Stock Exchange of Hong Kong Limited in 1990, TTI is a world-class supplier of superior home improvement and construction tools with a powerful portfolio of trusted brands and a strong commitment to innovation and quality. The portfolio that TTI offers includes a full line of power equipment products, floorcare, laser and electronic products employing approximately 23,000 people worldwide. TTI's portfolio of global brands, among others, Milwaukee(R), AEG(R), Ryobi(R), Homelite(R), Royal(R), Dirt Devil(R), Regina(R), Vax(R) and Hoover(R).
TTI is one of the constituent stocks on the Hang Seng HK MidCap Index under the Hang Seng Composite Index, the MSCI Hong Kong Index, the FTSE All-World Hong Kong Index, the FTSE/Hang Seng Asian Cyclical Index and the Dow Jones Hong Kong Titans 30. For more information, please visit http://www.ttigroup.com .
Trademarks
All trademarks used are intellectual property of their respective owners and are protected under trademark law.
RIDGID(R) is a registered trademark of Ridgid, Inc., part of Emerson Professional Tools, a business of St. Louis-based Emerson (NYSE: EMR). The orange color used on these products and the combination of orange and grey are trademarks for RIDGID(R) brand power tools.
The use of the trademark Ryobi(R) is pursuant to a license granted by Ryobi Limited.
Sears(R), Craftsman(R) and Kenmore(R) brands are registered trademarks of Sears Brands, LLC.
Contact:
Jess Cheung
Tel: +852-2402-6683
Email: ir@tti.com.hk
