TCL Electronics' Profit Attributable to Owners of the Parent Increases 138% YoY and Global TV Sales Volume Hits a New High Again in 1H 2019
HONG KONG, Aug. 28, 2019 /PRNewswire/ --
Financial highlights for the six months ended 30 June 2019
TCL Electronics Holdings Limited ("TCL Electronics" or "the Company", stock code: 01070.HK) today announced its unaudited interim results for the six months ended 30 June 2019.
TCL Brand Business in Overseas Markets: Sales Scale Maintained Rapid Growth and Global Production Capacity Layout Achieved Remarkable Results
Continuous Significant Increase in Both Sales Volume and Turnover: With its persistent efforts to penetrate into key overseas markets and continuous expansion in emerging markets, sales volume of the TCL brand TV in overseas markets recorded significant growth of 49.8% year-on-year and reached 7.07 million sets in the first half of 2019. Turnover of TCL brand TV in overseas markets increased by 32.5% to HK$10.77 billion year-on-year.
The Market Share in Key Overseas Markets Continued to Increase: TCL Electronics adheres to its global brand strategy, and the overseas markets have become an important development engine for the Company. In the first half of 2019, the Company's sales volume in various regions in overseas markets maintained strong growth:
Sales Volume of Mid-to-high End Products Continued to Increase, Alongside the Continuously Optimizing Product Mix:
Notable Growth in Profitability: With the benefit of continuous optimized product mix, economies of scale, and advantages brought by the synergy of vertically integrated industrial chain, the gross profit margin of the Company's TCL brand TV in overseas markets rose by 1.0 percentage point to 15.1% in the first half of 2019. In the second quarter of 2019, the gross profit margin of its TCL brand TV in overseas markets rose remarkably by 3.3 percentage points sequentially to 17.1%. In the first half of 2019, the operating results of its TCL brand TV in overseas markets increased significantly by 132.1% year-on-year.
Realizing Global Production Capacity Layout and Effectively Mitigating Potential Risks: With global production capacity layout, the Company has factories in Mexico, Vietnam, Poland, India and South America. The Company's total production capacity layout in overseas exceeds 15 million sets per year, which is sufficient to meet its shipment demand in the North American markets and can effectively minimize potential risks of the global uncertainties.
TCL Brand Business in the PRC Market: Further Optimizing Product Mix and Improving Gross Profit Margin Quarter-on-quarter of Self-branded Products
Self-branded Products Increased Against the Industry Downward Trend: According to CMM's omni-channel data, the overall TV sales volume in the PRC market decreased by 4.3% year-on-year in the first half of 2019. However, the Company's sales volume of TCL brand TV recorded a positive growth despite the downward trend in the industry of the PRC market, with sales volume up by 6.9% to 3.24 million sets year-on-year, among which the sales volume of super-large TVs over 65 inches increased significantly by 114.6%. The turnover reached HK$6.22 billion.
The Proportion of Online Sales Continued to Increase: Through continuous optimization of sales channels in the PRC market, the proportion of the Company's online TCL brand TV in the first half of 2019 reached 37.7% of the total TCL brand TV sales volume in the PRC market, up by 2.7 percentage points from 35.0% in the same period last year.
Gross Profit Margin Increased Steadily: With the benefit of continuous product mix optimization, the gross profit margin of the Company's TCL brand TV in the PRC market in the first half of 2019 increased by 0.8 percentage point year-on-year to 24.3%. In the second quarter of 2019, the gross profit margin of TCL brand TV increased by 1.6 percentage points to 25.3% sequentially, representing a significant improvement from the first quarter.
The Product Structure of the Company's TCL Brand TV in the PRC Market Continued to Optimize in the First Half of 2019:
In the second half of the year, by focusing on its core strategy of product mix optimization, operating efficiency improvement and increasing market share, the Company will persist in developing its mid-to-high end products, increasing the proportion of high-margin products and optimizing its channel structure so as to improve its operating results.
Internet business: Sustainable Overseas Internet Business Revenue for the First Time and Falcon Network Technology's Commercial Monetization Ability Continued to be Enhanced
Internet Revenue Surged: In the first half of 2019, the Company's Internet business developed rapidly, thereby continuing to improve the business operation capability. In the first half of 2019, the accumulated revenue from Internet business reached HK$349 million, remarkably up by 125.2% year-on-year. For the first time, the revenue from overseas Internet business was included, further enhancing the commercial monetization ability of the Company's Internet business.
Overseas Internet Business Will Continue to Grow in the Future: In the first half of 2019, the Company deepened its cooperation with Roku in the North American markets and with Google in the European and South American markets to jointly enhance the user experience of TCL TV overseas. In the first half of 2019, the overseas Internet TV business contributed HK$96 million of sustainable revenue for the first time, accounting for 27.5% of the total revenue of the Internet business in the first half of the year. As a result, the Company has become the first Chinese enterprise in the industry to have large-scale and sustainable overseas Internet business revenue. With the rapid development of the global OTT industry and the fast growth of the Company's overseas TV sales volume, it is expected that the overseas Internet business will further enhance the overall profitability of the Company in the future.
Falcon Network Technology's Commercial Monetization Ability Continued to be Enhanced: In the first half of 2019, Falcon Network Technology (has been consolidated since April 2019), the Internet business operating platform of the Company that is mainly active in the PRC market and some overseas emerging markets, focused on strengthening user operations and enriching platform content. The Company continued to deepen the "1+1+N" strategic cooperation with Tencent, South New Media and other partners. The penetration rate of Falcon Network Technology's members has increased significantly and its business has developed rapidly. In the first half of 2019, Falcon Network Technology's revenue reached HK$253 million, up by 63.3% year-on-year, among which revenue from video-on-demand and membership increased by 45.7%, revenue from advertising business grew by 36.6%, and revenue from value-added business increased by 269.5%. Falcon Network Technology's net profit in the first half of the year reached HK$78 million, exceeding last year's annual net profit and the net profit margin was as high as 30.7%.
Internet Business User Base and Loyalty Have Further Improved: As of 30 June 2019, the global accumulated number of activated users reached 36.75 million, up by 34.3% year-on-year. The global average daily number of active users reached 17.07 million in June 2019. The average daily time of global users spent on TV increased to 5.66 hours.
Diversified Businesses: Actively Expand the Layout of AI x IoT Strategy and Explore the Further Development for New Businesses
Deepened the Diversified Business Layout: On the basis of reinforcing and upgrading the existing TV business, the Company will further expand diversified businesses, including smart AV, commercial display and smart home to explore further development for new businesses and to enhance its overall profitability.
Propelling AI x IoT Strategy: The Company has strengthened the R&D and application of AI, vigorously developed the intelligent loT field with "AI x IoT" as the core strategy in an endeavor to enhance personalized experience of users, insert innovation to all series product and proactively engage in AI and loT businesses. Through building its capabilities of cloud, channel and terminal, the Company will develop an open loT platform empowered by AI technology and centered on cloud platform to facilitate an interconnected, intelligent and healthy ecosystem, the Company is devoted to developing TV as the loT center of future households. To achieve the interconnection of hardware, software and IoT scenarios, the Company will also provide users with video calls, smart interaction, remote services and comfortable healthy smart home experience, and empower itself to become a global leading smart technology company.
In 2019, the Company adheres the strategic theme of "extreme efficiency, product leadership and user experience":
Starting from this year, China has launched several new policies including "The Ultra HD Video Industry Development Action Plan (2019-2022)", energy conservation and emissions reduction for home appliances policy and promoting the R&D and industrialization of Green Smart home appliances. The market scales of TV industry have great potential of expansion under the growing trend of 5G technology. The Company will continue to consolidate its leading position in the global layout, leverage the advantage in vertical integration of industrial chain, enhance its global product competitiveness and Internet business capability, deepen the implementation of diversified business layout and development strategy in the second half of 2019. The Company will also build a smart home ecosystem featuring "AI x IoT" and actively explore new profit growth opportunities. At the same time, the Company will vigorously make innovations in technologies, and actively propel digital transformation in order to continuously improve profitability and create greater value for shareholders.
About TCL Electronics
Headquartered in China, TCL Electronics Holdings Limited (stock code: 01070.HK, incorporated in the Cayman Islands with limited liability) is one of the leading players in the global TV industry, and is engaged in the research and development, manufacturing and distribution of consumer electronic products. Through a new product-and-user-oriented business model that focuses primarily on a "double +" strategy which includes "smart + internet" and "products + services" as the main direction, TCL Electronics strives to build a comprehensive ecosystem for smart TVs that provides users with smart and healthy living products and services, and is dedicated to becoming a global leading smart technology company. According to the latest Sigmaintell report, the market share of the Company in terms of sales volume ranked No.2 in the global TV markets in the first half of 2019. TCL Electronics is included in the eligible shares list of the Shenzhen-Hong Kong Stock Connect Scheme, Hang Seng Stock Connect Hong Kong Index, Hang Seng Composite MidCap & SmallCap Index and Hang Seng Corporate Sustainability Benchmark Index. For more information, please visit its website: http://electronics.tcl.com
Appendix: The Company's sales volume by regions and the number of TCL Internet TV users were as follows:
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