TCL unit profit up 120pc on overseas sales

PUBLISHED : Saturday, 01 March, 2008, 12:00am
UPDATED : Saturday, 01 March, 2008, 12:00am

TCL Communication Technology Holdings, the mobile handset unit of TCL Corp, reported a rise in net profit of 120 per cent to HK$33 million last year on strong overseas sales growth, despite a slump in domestic turnover.

Operating profit jumped 246 per cent to HK$52 million, excluding a loss of HK$19 million stemming from convertible bonds. However, sales fell 10 per cent to HK$4.97 billion in the year ended December, compared with HK$5.5 billion a year ago.

The company sold about 11.9 million handsets last year, 4 per cent up from the previous year. Overseas shipments rose 9 per cent to 10.8 million units due to strong growth in Europe, the Middle East, Africa, Latin America and the Caribbean but local sales declined 31 per cent to 1.08 million units.

'We are not happy with our performance on the mainland,' said TCL Communication chief executive Liu Fei. 'Due to deregulation of the mainland's handset manufacturing market, the flood of handset supply from over 100 players triggered a messy price war last year.'

'From July 2006 to December 2007, we were recovering from the previous restructuring.

'We will change to a growth mode in 2008.'

The company, which has been using the Alcatel label outside the mainland since 2004, will launch 15 models under the Alcatel brand and 52 models for TCL this year.

TCL Communication expects to turn a profit in its home market and targets the shipment of 16 million handsets this year.

In December, the firm began shipping Research In Motion's BlackBerry handsets, made under the Alcatel brand, to China Mobile.

However, Mr Liu declined to estimate how many BlackBerry handsets would be shipped this year, as it was dependent on China Mobile's sales strategy.

'TCL Communication will have to face intensifying competition in the domestic and overseas markets this year,' said Kenny Tang Sing-hing, an associate director at Tung Tai Securities. 'Big brands such as Nokia and Sony Ericsson are now expanding to emerging markets, in which TCL performed quite well last year.'

The company did not recommend the payment of a final dividend.

TCL Communication's shares rose 5.5 per cent to close at 29 HK cents yesterday.