On Mar. 26th2008, TCL Multimedia (HKEX 1070) released its operating results. While the global multimedia and electronics industry has been showing weakened performance due to the financial crisis worldwide, TCL Multimedia achieved efficient growth, steady development and continued improvement of operation capacities in 2008 which benefited from enhanced risk management and operating efficiency and integration of upstream and downstream businesses.
LCD TV leads with steady performance growth in domestic and overseas markets
Disclosed data show that within the report period, TCL Multimedia gained RMB 22.931 billion of sales revenue with 10.68% of year-on-year increase which would be 21% if calculated based on Hong Kong dollars; the profit excluding influence of convertible bonds was HK$ 41 million; sales volume of color TV was 14.366 million units, accounting for 5.9% of global market share as the fifth largest TV manufacturer. LCD TV achieved rapid year-on-year sales growth of 233.1% to 4.184 million units and the ranking in global market share was updated from the 13th position in 2007 to the 8th in 2008, which provide substantial foundation for improving core competitive advantages of its main businesses.
TCL Multimedia stated that the steady performance growth of the company mainly resulted from the enhanced core competitiveness of its main businesses and improved risk management and operation efficiency within the company. With unique functionalities and its fashionable appearance design, the company had continued profitable growth in the Chinese market. As the leading TV manufacturer in five successive years, TCL Multimedia sold 6.848 million units of TV sets within the report period with market share of 17.1%. Due to the “Home Appliance to Rural Area” and economical policies aimed to stimulate domestic demands, sales amount of LCD TV products swelled 84.6% over the same period last year.
In the North American market, although influenced by the diminished consumption demands and credit crisis, the change of consumption structure and price drop of large screen TCL TV products spurred rapid growth of demand for LCD TVs.
Moreover, growth of sales volume in emerging markets slowed down due to the influence of the financial crisis. TCL Multimedia said the company will focus on its basic strategies on customer structure, goals and market branding in emerging markets, adjust cost structure through vertical integration of domestic manufacturing facilities and take advantage of its product portfolio to increase the market share of the company.
With emerging beneficial results from investment in LCD production capacities, new orders from international customers increased and operating profit from strategic OEM businesses showed healthy growth trend within the report period.
Outstanding risk management results in promising future prospects
Although it is difficult to change the trend of the global economical slowdown in a short period of time and expenses of consumer are also diminishing, the company maintains steady operational performance in the financial crisis due to its risk management, especially cash flow management in recent years and its steady status in domestic market.
The company bought back its convertible bonds within the report period, which removed the restriction of financial terms and significantly improved the financial status with current ratio of 1.2 and HK$ 2.158 billion cash. This will further enhance the ability of the company to deal with financial crisis and stimulate the development of the company.
TCL Multimedia also strengthened its independent innovation in the development of multimedia functionalities applied to TV sets. Within the report period, TCL Multimedia has launched various new LCD products such as X9, E9, M9 and N9 series which were well-recognized in international markets. In 2009, TCL Multimedia will continue to increase its investment in new product development to maintain its competitive capability in global market.
"The Financial crisis is mainly influencing European and North American markets, showing greater impact on high-end than on low-end products. As TCL products target towards mass market to meet the basic needs of consumers, we suffered less influence,” said Mr. Li Dongsheng, the Chairman of TCL Multimedia, “We hope to seize the opportunity of business integration during the financial crisis, and accelerate the establishment of industrial chain for LCD flat TV products to acquire greater competitive capability in future global color TV industry."
According to various sources, the company has started the Complete Unit Integration Program to facilitate the implementation of the LCD module project conducted by TCL. The program can complete the production process for the whole unit of color TVs and directly reduce intermediate steps to decrease logistic and packaging costs, make quicker turnovers and enhance operation efficiency. At the same time, the program also improves capabilities in key component design, management and control. Introduction of domestic components and parts improves comprehensive cost control and helps the company establishes core competitive advantages in emerging flat TV market and implements an industrial upgrade. The annual production capacity of the project is 3 million complete units and 2 million SKD/CKD parts.
Relevant information shows that in China the installed base is around 400 million units for CRT TVs and 30 million units for LCD TVs. DisplaySearch forecasts that the sales volume of LCD TV products will be 18.90 million units in China in 2009 in spite of global economic slowdown, increasing by 44.5% compared with 13.20 million units in 2008. Moreover, favorable policies like Home Appliance to Rural Area, reform of value-added tax and export rebate will provide new development opportunities for the adjusting color TV industry in China.
"The company is positive about the future."Mr. Leong Yue Wing, the CEO of TCL Multimedia, added the company will mainly launch LCD TV products including flat color TV, super-thin LCD, HD digital TV, 3-D TV, and net TV in the future, leverage the national Home Appliance to Rural Area policy to explore rural markets, and strengthen the exploration of B2B TV market to increase sales volume of overall TCL TV products.
