Vtech 2003 Annual Report Download - page 16

Download and view the complete annual report

Please find page 16 of the 2003 Vtech annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 54

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54

Review of Operations
VTech Holdings Ltd
14
The tele-
communication
products business
reported strong
growth in profits
on the back of higher sales of AT&T
and VTech branded models and
a shift in the product mix from
900MHz to 2.4GHz and 5.8GHz
cordless telephones. This
achievement testifies to the
dedication of the division’s
employees and the success of the
customer-centric strategy that is
now the corner stone of all
operations.
James C.KRALIK
Chief Executive Officer,
Telecommunication Products Business
Telecommunication
products
Strong
growth
in profit
While sales of the AT&T and VTech branded
products increased considerably during the
financial year 2003, total revenue for the
business declined by 9.0% to US$609.8
million.This was primarily driven by the
lower volume of ODM business as one of
our large ODM customers exited the North
America telephone market in 2002.
In North America, our new range of 2.4GHz
analog and digital phones, in particular our
AT&T branded phones, was well received by
our customers and end consumers.This
strong sales momentum was sustained by
the delivery of the world’s first 5.8GHz
cordless phone in August 2002 which
reaffirmed VTech's position in the industry
as not only one of the largest suppliers of
cordless phones in the United States, but
also the global leader in cordless phone
technology. As a result,VTech's overall
market share in North America continued
to increase.
The sustained shift from 900MHz cordless
models to 2.4GHz and 5.8GHz cordless
models also resulted in higher average
selling prices and margins.During the course
of the year, we were also able to lower the
cost of components, following
improvements to product design and an
improved procurement process that has
successfully leveraged our economies of
scale in purchasing. Enhanced efficiencies
in manufacturing by the implementation
of a cell-based manufacturing process also
contributed significantly to our improved
profitability.
At the same time, our customer-centric
strategy continued to be at the core of all
our business activities. A collaborative
planning, forecasting and replenishment
(CPFR) model was implemented, which
feeds weekly point-of-sale data directly into
our production planning process.This has
enabled us to reduce inventory levels and
working capital further. It has also helped
us to increase the quality and level of service
we offer customers, something that has
been recognized by a number of important
awards, including Sam’s Club’s “Supplier of
the Year Award”,Target’s“Electronics Instock
Award”, and BJ‘s “Partnership Award”.
Outlook
We are cautiously optimistic about
achieving both revenue and profit growth