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CM S Revenue in Last 5 Years
02 03 04 05 06
0
50
200
US$ million
92.8 94.7 97.3
128.4
158.2
100
150
VTech Holdings Ltd Annual Report 2006 17
of CMS sales, at 58.8% of total CMS
revenue. Europe remained the leading
source of revenue, accounting for
47.1% of the total, followed by the
United States at 29.5% and Asia Pacific
at 23.4% .
The strong order flow was supported by
continuous improvements in product
quality and customer service. VTech’s CMS
facilities have ISO14001 certification
and have achieved full compliance with
RoHS, the European environmental
directive, for all affected products.
Quality levels, as measured by
percentage failures per million units of
output (ppm) further improved to well
below 1,000 ppm, which meets or
exceeds customers’ requirements. The
R&D service continued to drive
business, increasing its direct
contribution to the total CMS revenue
and generating incremental orders.
The business was also successful in
maintaining margins through good
overheads control and efficiency
enhancements. Rising labour costs, the
appreciation of the Renminbi, and
higher raw material costs were all
factors leading to higher operating
expenses, while demands for price
reduction from customers also added to
pressure on margins. To counteract this
pressure, the business put a lot of effort
into improving process efficiency to
keep the increase in factory overheads
below that of business revenue.
While the cost structure of the business
has been well managed, VTech targets
to strengthen its competitiveness in the
EMS market by tightening customer
relationships through a new
organisational structure that allows
management to pay more attention to
individual customers. In this way,
flexibility and effectiveness of our
service will be enhanced despite the
continued expansion of the business.
CMS Revenue by Product Line
Professional Audio Equipment 29.9 47.3
Power Supplies 28.9 45.8
Others 17.3 27.4
Home Appliances 16.1 25.4
Wireless Products 7.8 12.3
Total 100.0 158.2
2006
% US$ million
The strong capability of the CMS business is supported by the certifications w e received.