Vtech 2014 Annual Report Download - page 14

EUROPE
As % of Group RevenueRevenue in Europe in Last 5 Years
Group revenue in Europe was up 2.8% to US$791.8 million in
the financial year 2014, as higher revenue from ELPs and CMS
compensated for lower revenue from TEL products. Europe
remained the second largest market of the Group, representing
41.7% of Group revenue.
ELPs revenue in Europe increased by 16.5% to US$385.8 million,
with sales growth across all major markets, especially France,
from both standalone and platform products. The growth
in standalone products was driven by the Toot-Toot Drivers®
range, infant products, Kidizoom and the Kidi line of products.
During the calendar year 2013, VTech was the number one
market player in the overall Infant Toys category in France, the
UK and Germany7. Furthermore, Toot-Toot Drivers garnered
a number of top industry awards. In France, Its Train Station
was given the “Toy Grand Prix 2013” award in the preschool
toy category by La Revue du Jouet magazine, while in the UK,
it was named “Preschool Toy of the Year” by the Toy Retailers
Association. Toot-Toot Drivers Garage was also ranked among
the top five best-selling infant items by retail value in France,
the UK and Germany8.
In platform products, children’s educational tablets led the
growth. The InnoTab range was updated for the UK market
through the introduction of InnoTab 3 and 3S, while Storio 2
was sold in all VTech’s major European markets. In the calendar
year 2013, Storio was the number one children’s educational
tablet in Europe for the second year in a row9.
7 Source: NPD Group, Retail Tracking Service
8 Source: NPD Group, Retail Tracking Service
9 Source: NPD Group, Retail Tracking Service. Ranking based on total retail sales of
Storio for the combined market of France, the UK, Germany, Spain and Italy
TEL products revenue in Europe decreased by 24.2% to
US$154.3 million. The decline was mainly due to lower sales of
residential phones. This resulted from the decline of the fixed-
line telephones market, a generally weak economy in Europe
and the Group’s decision to focus on higher margin business.
For commercial phones and other telecommunication
products, sales of baby monitors, connected home devices and
hotel phones were higher, offsetting lower sales of integrated
access devices. In January 2014, the Group began initial
shipments of its conference phone and SIP phones to the UK
and France. These new products have been very well received
by both customers and end-users.
CMS revenue in Europe increased by 7.1% to US$251.7 million.
Professional audio equipment, wireless headsets and home
appliances saw higher sales, offsetting lower revenue from
switching mode power supplies and medical and health
products. Professional audio equipment delivered robust
growth, as the Group benefited from new product launches
by existing customers. More orders from new accounts in
Germany also buoyed sales. Wireless headsets posted decent
growth, as VTech gained market share owing to better
service, while good sell-through of the client’s products also
contributed to higher revenue. Sales of home appliances rose
as the new Italian customer increased orders. Switching mode
power supplies and medical and health products, however, saw
sales decline as the switching mode power supplies customer
divested its solar power inverter business, while the product of
the medical and health client did not sell as expected, resulting
in lower orders.
US$ million
10
528.9
11
667.6
12
719.3 769.9 791.8
13 14
0
150
300
600
450
900
750
41.4%
FY2013 FY2014
41.7%
12 VTech Holdings Limited Annual Report 2014
Management Discussion and Analysis Review of Operations