New products and sales growth help lift Techtronic profit 50.7pc
Power tool maker Techtronic Industries will focus on lithium-ion related products in the next three years as it seeks to climb the technology ladder to undercut rivals, chief executive Joseph Galli said.
Products powered by lithium-ion batteries and those that are cordless and lightweight would be the highlight of the group's three-year plan to 2013 after new products helped lift its turnover by 10 per cent to HK$26.38 billion last year, Galli said yesterday.
The company's attributable profit jumped 50.7 per cent to HK$740 million, including a one-off provision of HK$208 million related to relocation of its manufacturing activities from Germany to relatively lower-cost regions of Czech Republic and Dongguan in Guangdong province.
'Techtronic is a new-product machine,' Galli said. 'Yuan is appreciating, wages and raw material prices are inflating, but we have plans to raise productivity to contain costs.'
The manufacturing relocation to its Dongguan production hub, which was completed last year, meant a global headcount reduction of 22.1 per cent to 18,444 employees from 2007. Sales, however, jumped 6.4 per cent over the three years.
The group sought to have 'high single-digit' sales growth in each of the next three years, Galli said.
After ploughing US$65 million into research and development last year, the group earmarked about 2 per cent of its turnover this year in this area, executive director Frank Chan Chi-chung said.
To cut its reliance on the US market, the firm planned to expand into emerging markets such as Russia, China and Latin America, Galli said.
Some analysts said the manufacturing relocation cost was larger than they expected, but it was non-recurring in nature.
'The company has to climb further the technology ladder,' Quam analyst Michael Ting said. 'Its competitors are lagging behind now, but are catching up soon.'
Ting pointed out that the weak housing market in the US continued to cast uncertainty on the group, which generated 70 per cent of its sales there.
Techtronic shares fell 1.02 per cent to close at HK$9.74 yesterday.