HTC 2011 Annual Report Download - page 20

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Analysis of Business Results
2011 marked a year of strong growth for HTC. Sales and profit figures hit new highs,
net profits after tax for the year reached NTD62.0 billion to set a new all-time record.
2011's remarkable growth in smartphone sales benefited from strong consumer
demand worldwide. Dedicated to making products that fit the way users live, work
and play, HTC continued to launch a new stream of products, including HTC Desire
S, HTC Incredible S, HTC EVO 3D and HTC Wildfire S, HTC Sensation family which
sparked consumer enthusiasm. Unit sales of many of these models are in the multiple
millions, giving rise to HTC's industry-leading operational performance. Having long
been known to be striving in the middle to high-end market segments, HTC extended
its product portfolio to the affordable, compact and playful smartphone in 2011 with
HTC Wildfire S, HTC ChaCha and HTC Salsa. These HTC phones achieved impressive
results during the year through its powerful combination of social networking
functions and attractive price point.
HTC continues to streamline operations and optimize cost structures. The slight 1.8
percentage point decline in our gross profit margin to 28.3% was due primarily to
exchange rate volatility, product mix changes and market competition. In terms of
operating expenses, we continue to devote significant funds to building value and
recognition for the HTC brand and to strengthening point-of-sale marketing in our
major markets. HTC's consolidated selling and marketing expense in 2011 rose to
NT$40.4 billion, up 86% from 2010. Consolidated operating expenses for the year
totaled NT$63 billion. Benefitting from economies of scale, HTC's consolidated
operating expense ratio declined by 0.7 percentage points for the year to 13.5%,
which boosted the consolidated operating profit margin (OPM) to 14.8%. Earnings per
share (EPS) saw a robust leap to NT$73.32, up significantly from 2010's NT$46.18.
31.9 30.1 28.3 17.0 15.8 14.8
26.04
46.18
73.32
Gross Margin (%) Operating Margin (%) EPS (NT$)
2009 2010 2011
Business Scope
Smartphones based on Android and Windows Phone operating systems represent
HTC's core product offering. After its 2007 brand launch, HTC focused on sales
through telecom operators and retail channel partners in Europe, the Americas and
Asia. This focus has since gradually expanded to include emerging smartphone
markets in the Middle East, Central and South America and Russia.
Early emphasis on research and development has been bolstered through the
years by strategic partnerships with Microsoft, Google and Qualcomm. HTC has
consistently developed and launched groundbreaking new product models. Global
sales and after-sales service networks support and extend the market success of
each new HTC model in order to fulfill its brand promise to both consumers and
shareholders.
HTC sales to Europe, the Americas and Asia rose sharply in 2011, highlighting broad-
based global consumer acceptance of the HTC brand. We will continue to expand
our share of the global mobile phone market by continuing to introduce new HTC
products that closely fit the way users work, live and play.
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