Vtech 2004 Annual Report Download - page 14

T
he electronic learning products business
achieved marked progress during the financial
year 2004 in revitalising its business. Profitability
improved dramatically despite there was a 19.3%
decline in revenue to US$130.7 million.
The reduction in revenue had been expected by
management at the beginning of financial year 2004
and was mainly due to our underperformance in the US
market in the previous year. Shelf space allocated by our
retail customers to VTech products decreased in 2003,
which directly caused reduction in sales revenue,
despite the fact that our 2003 product range achieved
solid demand from consumers and satisfactory sell-
through situation in the US market. Sales in Europe
continued to be strong with especially good
results in the United Kingdom,
France, Germany and Spain, enabling
VTech to continue its leadership position
in major electronic learning products
segments in Europe. These segments are:
Electronic Infant Toys, Electronic Pre-
school Toys and Electronic Learning Aids.
The improvement in profitability was
mainly supported by a much leaner
operating structure that was
implemented by the present
management in late 2002. The savings in
operating expenses were dramatic, as we
rationalised advertising and promotional
expenses as well as selling and
administrative overhead to make them
proportionate to the scale of our present
operations.
Our new approach to R&D is more
efficient and responsive to the demands
in the market. This new approach brings
a much tighter integration between our
overseas marketing experts and our R&D
professionals, design engineering and
product development teams, located in
Hong Kong SAR and mainland China. In
this new approach, substantial market
information and data are fed to the R&D
professionals to facilitate innovation and
development of our new products that
meet the demands in our target market
The new and revamped
product lines have
successfully enabled
VTech to regain shelf
space in the US market
Electronic Learning Products
“The three-year strategic plan which was initiated in late 2002 to revitalise
our electronic learning products business has proven to be successful. We
have achieved good results in the financial year 2004 and are moving
confidently to accomplishing the plan, i.e. to achieve significant growth
in both revenue and profitability with exciting new product lines, part of
which feature the world’s most famous children’s cartoon characters.”
Electronic Learning Products Revenue
in Last 5 Years
US$ million
0
130.7
161.9
193.7
291.2
348.3
100
200
300
400
00 01 02 03 04
Awards
Fly & Discover Globe was
awarded Dr. Toy’s ”100 Best Toys
of 2003” in the US.
Edwin YING Lin Kwan
Chief Executive Officer
Electronic Learning Products Business
Review of
Operations
Review of Operations
V. Smile was given ” Seal of Approval”
by the National Parenting Center in
the US.
12
VTech Holdings Ltd Annual Report 2004