2004 Annual Results. Corporate Presentation 18 April 2004

Transcript

1 2004 Annual Results Corporate Presentation 18 April 2004

2 Agenda Financial Highlights Business Review Company Outlook 2

3 Financial Highlights FY2004 FY2003 Change (HK$ mil) (HK$ mil) Turnover 25,600 15, % Gross profit 4,375 2, % Gross profit margin (%) 17.1% 16.4% + 0.7% Operating profit % Operating profit margin (%) 1.9% 3.3% -1.4% Net profit % Net profit margin (%) 1.2% 4.2% -3.0% Basic EPS (HK cents) % DPS (HK cents) % 3

4 Financial Highlights Excluding Thomson Impact FY2004 (HK$ mil) FY2003 (HK$ mil) Change Turnover 17,915 15, % Gross profit 3,073 2, % Gross profit margin (%) 17.2% 16.4% + 0.8% Operating profit % Operating profit margin (%) 3.4% 3.3% + 0.1% 4

5 Net Profit Analysis HK$ mil FY TCL PRC Operating Profit +48 TCL Overseas Operating Profit +6 PC & AV Operatng Profit Ex-Thomson TV Operating Loss -116 Mobile Business Contribution -245 Others -107 FY Net profit decline reflected the following factors: 1) Contribution from mobile handset business decreased by HK$245 mil 2) Ex-Thomson business recorded an operating loss of HK$116 mil 3) Schneider business recorded an operating loss of HK$130 mil 5

6 Key Financial Ratios ROE Inventory turnover (days) * A/R turnover (days) A/P turnover (days) Current ratio Net borrowings/equity FY % FY % N/A The above turnover days are calculated on the average balance of the year. * Finished goods only 6

7 Turnover Breakdown by Products TV - The Major Revenue Stream TV Turnover Breakdown by Profit Centres PC 5% AV 4% Others 1% N. America 25% Emerging Markets 7% OEM Business 3% The PRC 34% 4Q 2004 TV 90% 4Q 2004 Europe 31% 7

8 Margins Overview by Product Lines Gross Margin (%) TVs Domestic TVs Overseas PCs FY % 15.2% 9.0% FY % 12.0% 8.0% Operating Margin (%) TVs Domestic TVs Overseas PCs FY % -0.3% 3.1% FY % 2.9% 1.8% 8

9 Business Review 9

10 TTE - Key Restructuring Initiatives North American profit centre Started to consolidate its manufacturing activities in Mexico and leverage on the manufacturing platform in China to have a more competitive cost structure European profit centre Re-defined the activities of Schneider in Germany - shifted manufacturing activities to the Poland plant and turned Schneider into a sale and marketing office targeting the German market R&D activities Re-defined the roles of each R&D centres located in different countries 10

11 TV Unit Sales Performance FY2004 * FY2003 Growth Total TV M M + 43% - PRC 8.88 M 7.83 M + 13% - Europe - North America 1.49 M 1.60 M 0.10 M - Not comparable Not comparable - Emerging Market 3.05 M 2.33 M + 31% - Strategic OEM 1.70 M 1.39 M + 22% Thomson s TV shipment in Jan-Jul 2004 is not part of TTE, and therefore not included in the above TV shipment numbers 11

12 TV Business Review PRC Sales revenue increased by 8% Split between TCL and Rowa: 93% Vs 7% Maintained market leadership in the PRC TCL and ROWA in aggregate captured a 20% share in the PRC market (Source: MII & Company data) Established its presence in LCD TV Enhanced product mix led to stable ASP High-end TV represented 12-13% of sales revenue in

13 TV Business Review Europe THOMSON Market share of THOMSON: 6% (Source: GFK Panel) Gross margin increased to 18% attributable to product mix enhancement High-end TV represented 33% of sales revenue in 2004 SCHNEIDER Unit sales increased by 108% to 225,000 sets Recorded an inventory write-off of HK$31 million Launched restructuring plan of moving manufacturing activities to Poland 13

14 TV Business Review North America Market share of RCA: 8% (Source: Synovate) Began using TCL-designed chassis to lower costs Continual product mix enhancement Gross margin increased to 16% High-end TV accounted for 48% of sales revenue in

15 TV Business Review Emerging Markets and Strategic OEM EMERGING MARKET Sales revenue increased by 38% to HK$2,152 million Ranked among the top three brands in certain markets such as Vietnam, the Philippines, Chile and Argentina with double-digit market share (Source: market estimate) Branch offices established in India, Thailand, Australia and Mexico STRATEGIC OEM Sales revenue increased by 17% to HK$1,025 million Consolidated relationship with existing key accounts Continued to explore new business opportunities with international brands 15

16 PC Business Review Sales revenue increased by 11% to HK$1,977 million Split between consumer and commercial PC: 49% Vs 51% Maintained position in the PRC market Captured 4% market share, ranked No. 5 in the PRC desktop PC market Explored new opportunities in notebook PC, which accounted for 8% of total revenue of the year Improved operating efficiency and enhanced product mix resulted in margins improvement Launched customized PCs such as Game PC and Ladies PC, which commanded higher prices and enjoyed higher margins Component standardization, continued cost-down campaign and closer relationship with suppliers translated into lower operating expense 16

17 Company Outlook

18 TTE - Business Outlook WHAT TO EXPECT IN 2005 PRC European North American Emerging Markets Strategic OEM TTE Overall To consolidate leading position in conventional TVs And become a major player in flat TV segment Flat panel TV may undergo price volatility, posing us a challenge To broaden product range and strengthen CRT product ASP may be under pressure Growth momentum to continue, forming a driving force for future growth Closer relationship with existing customers New accounts to be signed up High-end Product Mix to rise further 2004 TTE: High-end TV represented 26% of sales revenue 18

19 2005 Sales Targets FY2005 FY2004 * Expected Growth Total TV M M + 46% - PRC M 8.88 M + 23% - Europe - North America 3.26 M 2.50 M 1.49 M 1.60 M Not comparable Not comparable - Emerging Market 4.50 M 3.05 M + 48% - Strategic OEM 3.30 M 1.70 M + 94% Thomson s TV shipment in Jan-Jul 2004 is not part of TTE, and therefore not included in the above TV shipment numbers 19

20 Open Forum