Annual Sales Volume of Handsets and Other Products Reached Record High of 80 Million Units, Anchoring Top 5 Position in 2015 Global Total Handsets Ranking
Sales Volume of Smart Devices Break New Records to 44.5 Million Units
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Annual Gross Profit Margin Surged to 21.1%
High Full Year Dividend Payout Ratio of 40%
(Hong Kong, 23 March 2016) - TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company" which, together with its subsidiaries referred to as the "Group"; HKSE stock code: 2618) today announced its audited results for the year ended 31 December 2015.
Amidst a challenging global economy and fluctuating exchange rates, consumer sentiment was weak, which exerted pressure on the prices and profit margins of handsets in 2015. For the year ended 31 December 2015, the Group reported total sales volume of handsets and other products reaching 80.0 million units, representing a year-on-year increase of 9%, of which that of smart devices increased by 7% year-on-year to 44.5 million units. Owing to the slowdown in smartphone growth and the better-than-expected feature phone sales, the overall average selling price ("ASP") of the Group's products decreased from US$53.5 in 2014 to US$46.0 in 2015. During the year, the Group's overall revenue was down 7% year-on-year to HK$28.6 billion. Face with these market trends, the Group reformed its sales strategy to focus on businesses with high profitability. The Group applied stringent controls on costs and expenses and adhered to its effective "Step Up" product strategy, continuing to enhance operational performance. During the year, gross profit increased by 2% year-on-year to HK$6,032 million, with gross profit margin increasing to 21.1%, compared to 19.3% in 2014.
The Group's operating expenses (including research and development ("R&D") costs, selling and distribution costs and administrative expenses) were HK$5,371 million, representing an operating expenses ratio of 18.8%. Net profit was down by 5% year-on-year to HK$1,057 million, while net profit margin was 3.7%. Basic earnings per share decreased to 84.60 HK cents from 91.58 HK cents in the previous year. The Board has recommended payment of a final dividend of 21.00 HK cents per ordinary share, which together with the interim dividend of 12.80 HK cents, represents a dividend payout ratio of 40%.
Dr. GUO Aiping, the Chief Executive Officer of TCL Communication, said, "With the combination of internationalisation and the 'Double +' business transformation strategy, the Group applied 'Internet +' vision as a driver of change and incorporated 'Intelligence + Internet' to its products. By implementing the new 'Product + Service' business model at full speed, an integrated product and service platform will be formed step by step to position the Group to be a global leader both as a manufacturer of smart devices and internet application service provider."
According to the international telecommunications research firm Gartner and Company data, the Group ranked no. 5 among global handset manufacturers in 2015 and was no. 1 among Chinese brands in overseas markets. The Group also ranked no. 8 among global smartphone manufacturers. During the year, the Group launched a number of smart devices equipped with the latest technology and innovative features, including alcatel IDOL 3 series, the award-winning flagship smartphones, the 3-Proof alcatel GO PLAY smartphone, which is certified shockproof, waterproof and dustproof to IP67 grading, and alcatel POP STAR, the Group's first smartphone customised for open-channel markets. The Group ranked no. 7 among global tablet manufacturers in 2015 and launched a very price-competitive and lightweight tablet alcatel POP 10 during the year. In addition, the Group launched outstanding wearable devices, including alcatel WATCH, the world's first smart watch supporting both Android and iOS operating systems, and 3-Proof alcatel GO WATCH.
On the mobile internet application services front, the number of cumulative activated mobile users of the Group's mobile internet platform had grown more than 2 times year-on-year to 23.6 million as of 31 December 2015, while the number of cumulative application downloads amounted to nearly 226.3 million. In addition, the Group and its parent company TCL Corporation jointly developed an online financial service platform (third-party mobile payment gateway) which recognised a settlement amount of HK$3.6 billion with an increase of almost 1.5 times year-on-year. During the year, through the in-depth integration of internet and hardware, the Group successfully launched its first enterprise cloud product "Sky-tech WebEx". These outstanding results cited the Group's full efforts in developing the new "Product + Service" business model.
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Looking ahead to 2016, the slowdown in the global mobile phone market coupled with significantly intensified competition will further exert pressure on product selling prices and gross margins. The Group will continue to invest in product development and brand building, which may result in a rise in expenses/revenue ratios of research and development, and sales and marketing, and accordingly, it may result in significant year-on-year decline in net profit for the 1st quarter. Nevertheless, management believes that the financial position of the Group remains healthy and is confident in the long-term outlook for the Group. In the 2nd quarter, the Group expects improvement in smart device sales with the new range of smart devices coming on stream.
Dr. GUO Aiping concluded, "Though facing many challenges, management believes that 2016 will also be a year of both challenges and opportunities. The Group will continue to maintain efficient credit controls and currency hedging policies. The Group will also further enhance its core competencies and promote the 'Products + Services' new business model to unleash the potential for future business growth. The Group is committed to maintain a healthy balance between sales and operation amidst market challenges, thereby maximising shareholders' value."
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About TCL Communication
TCL Communication Technology Holdings Limited ("TCL Communication" or the "Company"; HKSE stock code: 2618) together with its subsidiaries (collectively the "Group") designs, manufactures and markets an expanding portfolio of mobile and internet products worldwide under two key brands - alcatel 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 telecommunication research firm Gartner and company's data, the Group ranked No. 5 and No. 8 among global phone manufacturers and global smartphone manufacturers respectively in 2015. The Group also ranked No. 7 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 14,000 people in China, Hong Kong and overseas.
TCL Communication is one of the few companies in Hong Kong or China who owns or licenses 2G, 2.5G, 2.75G, 3G and 4G patented technologies. It is also able to independently develop products and solutions for the GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA and LTE. For more information, please visit its website at http://tclcom.tcl.com.
Issued by Cornerstones Communications Ltd. on behalf of TCL Communication. For further information, please contact:
Cornerstones Communications Limited
Prudence Lai / Mona Chow / Wendy Lau / Edward Siu
Tel: (852) 2903 9291 / 2903 9289 / 2903 9286 / 2903 9299
Mobile: (852) 9465 3856 / 9174 0633 / 6108 3875 / 9848 6556
Email: tcl.comm@cornerstonescom.com
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