Higher profit on improved gross margin and lower operating expenses HONG KONG, May 21, 2024 /PRNewswire/ -- Group revenue declined by 4.3% to US$2,145.7 million Gross profit margin improved from 28.3% to 29.6% Profit attributable to shareholders of the Company rose by 11.7% to US$166.6 million Final dividend of US48.0 cents per ordinary share, resulting in a full-year dividend of US65.0 cents per ordinary share, an increase of 10.2% from the previous financial year Successful acquisition of assets of Gigaset Communications GmbH Financial position remains strong VTech Holdings Limited (HKSE: 303) today announced its results for the year ended 31 March 2024. "VTech reported an increase in profit for the financial year 2024 despite a decline in revenue. Tighter economic conditions in North America and Europe resulted in lower sales of electronic learning products and telecommunication products. This offset record revenue at contract manufacturing services as the supply of materials improved. Profit was boosted by an improvement in gross profit margin and a decline in operating expenses," said Mr. Allan Wong, Chairman and Group CEO of VTech Holdings Limited. Results and Dividend Group revenue for the year ended 31 March 2024 declined by 4.3% to US$2,145.7 million, from US$2,241.7 million in the previous financial year. Lower sales in North America, Europe and Other Regions offset higher sales in Asia Pacific. Profit attributable to shareholders of the Company increased by 11.7% to US$166.6 million. The increase in profit was mainly due to an improvement in gross profit margin, supported by lower operating expenses resulting from a decline in selling and distribution costs. Basic earnings per share increased by 11.7% to US66.0 cents, compared to US59.1 cents in the financial year 2023.  The Board of Directors has proposed a final dividend of US48.0 cents per ordinary share, providing a full-year dividend of US65.0 cents per ordinary share, an increase of 10.2% from the US59.0 cents declared in the previous financial year. This represents a dividend payout ratio of 98.7%.  Costs The Group's gross profit margin in the financial year 2024 was 29.6%, as compared with 28.3% in the previous financial year. The improvement came as freight charges and inventory provision fell. Direct labour costs and manufacturing overheads also declined because of increased automation, a reduction in the factory workforce and the depreciation of the Renminbi against the US dollar. Partially offsetting these gains, cost of materials as a percentage of Group revenue rose despite lower materials prices because of a change in product mix. Segment Results North America Group revenue in North America decreased by 6.3% to US$922.6 million in the financial year 2024, as lower sales of electronic learning products (ELPs) and telecommunication (TEL) products offset an increase at contract manufacturing services (CMS). North America remained VTech's largest market, accounting for 43.0% of Group revenue. ELPs revenue in North America decreased by 11.8% to US$415.9 million. Sales decreased in both the US and Canada as consumer demand weakened and the toy markets contracted. Standalone and platform products both registered lower sales, as did both the VTech and LeapFrog brands. Despite the challenges, VTech retained its leadership in electronic learning toys from infancy through toddler to preschool in the US and Canada in the calendar year 2023[1]. In the standalone products, at VTech higher sales of the Go! Go! Smart family of products, preschool products, Switch & Go® Dinos and the Kidi line were insufficient to offset lower sales of infant products, KidiZoom® camera, Marble Rush® and eco-friendly toys. LeapFrog managed to achieve higher sales of eco-friendly toys, while the successful roll-out of Magic Adventures™ Telescope contributed additional revenue. However, this was offset by lower sales of infant, toddler and preschool products, LeapLand Adventures™ and Magic Adventures Microscope. Platform products also saw declines for both brands. The decrease at VTech was attributable to lower sales of KidiZoom Smartwatch, KidiBuzz™ and Touch & Learn Activity Desk™. LeapFrog saw lower sales of educational tablets, interactive reading systems and Magic Adventures Globe, while subscriptions to LeapFrog Academy™ also declined. The Group's range of innovative ELPs achieved widespread recognition in North America throughout the financial year 2024, garnering more than 90 industry awards from trusted parenting websites, toy industry experts, toy advisory boards and major retailers. Storytime with Sunny™ was included in Walmart Canada's "2023 Top Toys List", while Drill & Learn Workbench™ made Walmart's "2023 Top Toys List" in the US. Magic Adventures Telescope was named among the "Best Inventions of 2023" by the prestigious Time magazine. It was also selected as a finalist in "The Toy Foundation's Toy of the Year Awards" in the STEAM (science, technology, engineering, the arts and mathematics) category. TEL products revenue in North America fell by 16.2% to US$201.0 million in the financial year 2024, with declines in all three product categories. Growth in Canada was offset by a decrease in the US. A continuing market contraction saw sales of residential phones decline, while less shelf space from a major US retailer led to lower sales of AT&T branded phones. The Group did, however, increase its sales in Canada. During the financial year 2024, VTech maintained its leadership position in the US residential phones market[2]. Commercial phones registered an overall sales decline. There were higher sales of hotel phones and Snom branded SIP (Session Initiation Protocol) phones, but this was unable to offset declines for headsets and multi-line analogue phones. The Group revitalised its go-to-market strategy for SIP phones, driving the sales increase in this product line. A range of Snom D7 desksets designed for hotel administration led to the growth in hotel phones. New thermostats for the hotel channel also started to make a sales contribution. Headsets, meanwhile, declined as a customer placed fewer orders. Sales of multi-line analogue phones decreased as the products made the transition to a new generation. Sales of other telecommunication products also declined. Baby monitors saw sales decrease due to keen competition. A reduction in orders led to lower sales of CareLine® residential phones and IADs (integrated access devices). VTech launched several important new products during the financial year 2024, including in September 2023 the V-Care VC2105 Smart Baby Monitor, which uses AI (artificial intelligence) to provide sleep analytics and real-time alerts. The popular range of V-Hush™ Sleep Training Soothers was expanded with new models. These are equipped with a touch night light offering over 250 colour choices and up to six ceiling projection frames. In the financial year 2024, the Group maintained its number one position in the baby monitor market in the US and Canada[3]. LeapFrog's LF2936FHD Baby Monitor was named "Touch Screen Monitor Product of the Year" in the "2023 Baby Innovation Awards" in the US. CMS sales in North America increased by 11.8% to US$305.7 million in the financial year 2024. The main driver was professional audio equipment. Power amplifiers, mixers and wireless microphones benefited from improved materials supply, clearing the accumulated backlog of orders. The full revival of music concerts and related activities following the pandemic, along with new product launches, further ...