TCL set to fight back in wake of profit tumble

PUBLISHED : Friday, 27 April, 2012, 12:00am
UPDATED : Friday, 27 April, 2012, 12:00am

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Hong Kong-listed TCL Communication Technology plans to roll out dozens of new smart phone models from the second quarter, aiming for 30 per cent revenue growth this year.

Shenzhen-based TCL Communication, the handset manufacturing unit of mainland consumer electronics giant TCL, said net profit dropped 86 per cent in the first quarter due to weaker demand for basic phones and higher costs in promoting smart phones.

The company's gross profit margin eased to 20 per cent in the first quarter from 22 per cent a year earlier, and earnings per share fell significantly to 2.3 Hong Kong cents from 16.3 Hong Kong cents.

'Growth momentum will come from smart phone sales this year,' chief executive Dr Guo Aiping said. The company said it would ship new smart phone models in the second quarter.

A total of 7.8 million units were sold worldwide in the first quarter, down 10 per cent year-on-year.

'We are not satisfied with sales volume,' said chief finance office Thomas Liu, predicting that gross profit margins would recover along with sales in coming quarters.

Guo said its average selling price (ASP) would rise, reflecting the increasing proportion of smart phones in its handset portfolio. In the first quarter, the company's ASP improved to US$34.60 from US$31.30 in the year-earlier period.

Smart phones accounted for 9.5 per cent of total shipments in the first quarter, up from just 0.3 per cent a year earlier, Guo said.

The company sold a total of 1.3 million units in China, up 211 per cent year-on-year. But in Europe, Africa and the Middle East, sales dropped 26 per cent to 2.5 million units because of the euro-zone debt crisis and regional political instability.

The company said China was another growth driver and TCL would boost its domestic market penetration by launching products customised for local consumers and expanding its distribution network.

Meanwhile, television maker TCL Multimedia, a sister company, said net profit surged 808.8 per cent to HK$309 million in the first quarter year on year, and turnover rose 26 per cent to HK$8.3 billion.

The company forecast that market demand for liquid crystal display [LCD] TVs would remain strong in 2012, driven by urbanisation on the mainland and a trend to upgrade from traditional televisions.

Its quarterly sales volume of LCD TVs increased 67 per cent year-on-year to 3.22 million sets.