China woes pull down TCL profit
TV maker hit by twin challenges of internet television and weaker mainland sales growth
First-half net profit at TCL Multimedia Technology, the world's third-largest maker of flat-screen televisions, plunged 41.6 per cent to HK$254 million as the firm faces challenges from internet television and slower sales growth on the mainland.
The expiry at the end of May of central government subsidies on home appliances has added to the woes of the firm, which has suffered an erosion of its profit margin due to slowdown in mainland economic growth.
Mounting competition from internet television operators, which offer programmes from local and overseas channels via the web, is also threatening the business of TCL and its rivals.
TCL's sales grew 22.4 per cent year on year to 18 billion yuan (HK$22.8 billion) in the first half. However, operating profit plummeted 47 per cent to 331 million yuan as expenses for selling and distribution, administration and research and development rose.
Underlying net profit, stripping out a one-off gain in the year-earlier period, slumped 21 per cent to HK$193 million.
The firm sold 7.82 million LCD televisions worldwide, up 21 per cent year on year. Mainland sales jumped 36 per cent to 4.54 million sets, while overseas sales edged up 4 per cent to 3.2 million.
Sales volume in the first half amounted to 43 per cent of its full-year target of 18 million sets. However, the firm said it was striving to meet its target.
TCL has pressed hard to develop smart televisions - which combine the functions of the personal computer, smartphone and television in one set - to fend off competition from the internet television operators. The firm is also strengthening its co-operation with internet service providers and video content suppliers.
It will also enhance its marketing efforts, such as co-marketing with Hollywood movies, and further improve its high-end products, such as ultra-high-definition televisions.
TCL had a 7.3 per cent share of the global market in the first quarter, up from 5.8 per cent for all of last year, according to the latest report by DisplaySearch, a global display research firm. TCL had a leading 20 per cent share of the mainland market.
TCL shares dropped 0.9 per cent to HK$4.41 yesterday.