TCL Communication Announces 2016 Interim Results
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Total Sales Volume of Handsets and Other Products Reached 33.1 Million Units
Gross Profit Margin Maintained at Steady Level with Slight Increase to 20.4%
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Focus on Industry Buzz and Further Invest in VR Technology R&D
Continue to Promote Rebranding and Cultivate New Product Philosophy
(HONG KONG, 12 August 2016) – TCL Communication Technology Holdings Limited (“TCL Communication” or the “Company” which, together with its subsidiaries referred to as the “Group”; HKSE stock code: 2618) today announced the unaudited interim results of the Group for the six months ended 30 June 2016 (“the Period”).
The Group’s revenue saw a year-on-year decline of 17% to HK$10.9 billion for the six months ended 30 June 2016, while the total sales volume of handsets and other products was down by 2% year-on-year to 33.1 million units. Furthermore, the Group’s smartphones sales showed a slower growth, with total sales volume of smart devices declined by 12% year-on-year to 17.4 million units. During the Period, spending power and consumer sentiment was affected by the slowdown of global economic growth and continuing currency fluctuation in emerging markets, which led to the downturn of handsets industry. In the mean time, domestic mobile phone vendors were actively expanding overseas and local brands were making progress in the consumer market which intensify the competition in the global smartphone market. Despite the challenging business environment, the Group managed to increase its gross profit margin slightly to reach 20.4% through active product portfolio enhancement and market-oriented product development, as well as focusing on business areas with high profitability.
During the Period, the Group’s operating expenses (including research and development costs, selling and distribution expenses and administrative expenses) were HK$2,598 million. Net profit was HK$11 million. Basic earnings per share was 1.76 HK cents during the Period.
Dr. GUO Aiping, Chief Executive Officer of TCL Communication, expressed, “The Group continued to enhance its product portfolio and launched a number of smart devices equipped with the latest technology and features, which were widely recognised by the market and the industry. Such recognition not only showed the Group’s achievement in innovation, but also reflected the Group’s overall capability as a leading global smart devices manufacturer. As hardware development for virtual reality (VR) is currently in its initial stage, we will focus on the industry buzz and continue to invest further on VR technology and device development to capture the VR consumer market.”
The Group has been committed to improving users’ experience and achieving breakthroughs in technology innovation. During the Period, the flagship smartphone product series of the year, Alcatel IDOL 4, had already been launched worldwide, whereas TCL 750, the first product launched by the Group following the restructure in the China region, had also been launched to facilitate the promotion of the new brand philosophy in the region. In addition, the Group launched its first 2-in-1 tablet run on Windows 10 operating system, Alcatel PLUS 10, and BigPad Xess. The latter had even officially entered the North American markets. Meanwhile, the Group launched its third smart watch Alcatel MOVE TIME TRACK&TALK WATCH which possesses in-built GPS to ensure child safety.
During the Period, the Group continued to expand its investment in VR technology and equipment development, and announced its Alcatel brand as one of the first global handset brands committed to support Google’s Daydream platform.
As of 30 June 2016, the number of cumulative activated mobile users of the Group's mobile internet platform had almost doubled year-on-year to 34.5 million. During the Period, the Group completed a three-year mobile internet business plan and consolidated its existing product line, gradually strengthening the foundation with a focus on enhancing product core competencies and basic mobile internet operating capabilities. In addition, the settlement of the online financial services platform (third-party mobile payment gateway), which was jointly developed by the Group and TCL Corporation, recognised a settlement amount of HK$7.3 billion, an increment of over 3 times year-on-year, which connected nearly 460 e-commerce business users.
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Looking into the second half of 2016, the slowdown in growth of the global mobile communications terminal industry, instability of the global economy and the prevailing strong US dollar will further weaken the purchasing power of emerging markets. In addition, competition within the industry is getting fiercer, overseas markets not only need to face competition from Chinese mobile phone manufactures actively seeking overseas opportunities, but also the growing threat from local brands in various regions.
Dr. GUO concluded, “The operating environment is expected to remain challenging in the future. The Group will continue to enhance its core competences and continue to improve technological innovation capability and international management ability. The Group will actively expand in regional markets, consolidate and strengthen its dominant position in overseas markets, thereby preemptively capturing opportunities to expand market share. At the same time, the Group will also continue to promote the business transformation strategy of ‘Intelligence + Internet’ and ‘Products + Services’ to seize opportunities to develop new strategic businesses. In addition, the Group will further enhance its managing abilities, continue to implement efficient credit controls and currency hedging policies to maintain a healthy and stable financial position, thereby maximising shareholders’ value.”
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About TCL Communication
TCL Communication Technology Holdings Limited (“TCL Communication” or the “Company”; HKSE stock code: 2618) together with its subsidiaries and its affiliates (collectively the “Group”) designs, manufactures and markets an expanding portfolio of mobile and internet products worldwide under two key brands – Alcatel and TCL. The Group’s portfolio of products is currently sold in China and over 170 countries throughout North America, Latin America, Europe, the Middle East, Africa and Asia Pacific. According to telecommunication research firm Gartner and company’s data, the Group ranked No. 6 and No. 10 among global phone manufacturers and global smartphone manufacturers respectively in the first quarter of 2016. The Group also ranked No. 7 among global tablet manufacturers. Headquartered in Shenzhen, China, TCL Communication operates its highly efficient manufacturing plant and R&D centres in various provinces and cities of the PRC. It employs around 14,000 people in China, Hong Kong and overseas.
TCL Communication is one of the few companies in Hong Kong or China who owns or licenses 2G, 2.5G, 2.75G, 3G and 4G patented technologies. It is also able to independently develop products and solutions for the GSM, GPRS, EDGE, CDMA, WCDMA, TD-SCDMA and LTE. For more information, please visit its website at http://tclcom.tcl.com.
Issued by Cornerstones Communications Ltd. on behalf of TCL Communication. For further information, please contact:
Cornerstones Communications Limited
Prudence Lai / Sam Choi / Wendy Lau / Edward Siu
Tel: (852) 2903 9291 / 2903 9289 / 2903 9286 / 2903 9299
Email: tcl.comm@cornerstonescom.com