Circuits Assembly Online Magazine - VTech Announces 2.8% Increase in Revenue YoY

HONG KONG – Revenue for the first half of 2008 was $734.1 million, an increase 2.8% year-over-year, VTech Holdings Ltd. said in its interim report.

Profit attributable to shareholders rose by 31.5% to $86.5 million, as the group countered cost pressures and improved margins, VTech reported.

“The group achieved increased revenue from its telecommunication products and electronic learning products businesses in Europe, and improved net margins further, despite continued cost pressures," said Allan Wong, chairman and group CEO.

Revenue at the TEL business was $356.1 million, a slight decline of 0.9%. During the period, the business accounted for 48.5% of revenue.

The North American market was weaker than expected, VTech said, with revenue at $253.6 million, a decline of 12.5%, as the US cordless phone market slowed in the face of declining housing starts and fewer promotions by retailers.

However, the company’s branded business in North America continued to gain market share as consumers responded well to the DECT 6.0 range of cordless phones.

Revenue in Europe was $86.7 million, an increase of 43.3%. In Asia Pacific and other regions outside North America and Europe, revenue surged by 118.8% and 68.5%, to $3.5 million and $12.3 million respectively.

Revenue from the ELP business increased to $262.1 million, up 17.4%.

The contract manufacturing services business saw revenue decline by 11.7% to $115.9 million, representing 15.8% of group revenue. Europe remained the leading source of revenue, representing 45.9% of the total, followed by North America at 39.8% and Asia Pacific at 14.3%.

The CMS business is forecast to achieve growth for the full year; sales appear set to pick up in the second half, VTech said.