IDT INTERNATIONAL LIMITED For Immediate Release
(Hong Kong, 27 November 2014) - Consumer electronic products manufacturer and brand distributor IDT International Limited ('IDT International' or the 'Group') (HKEx code: 167) announced its interim results for the six months ended 30 September 2014 ('review period').
The Group's total turnover was HK$603.1 million. The revenue from the Value Manufacturing Services Division ('VMS') - a combination of the ODM/OEM business was HK$427.3 million while the revenue from Oregon Scientific ('OS')-branded products was HK$175.8 million.
Gross profit was HK$157.4 million with gross profit margin increasing to 26.1% from 25.7% during last year. The increase in gross profit was mainly as a result of the changes in product mix and discontinuation of the production of low-margin MEEP! products.
Furthermore, with the implementation of stringent cost control and streamlining measures, the total operating expenses of the Group declined by HK$42.2 million from HK$209.3 million to HK$167.1 million, a reduction of 20.2% against the same period last year. These expenses included research and development costs, distribution and selling expenses, and general administrative expenses. Total operating expenses against turnover was 27.7%, also down from 28.9% for the same period last year. Loss had narrowed down to HK$6.8 million, an improvement of 22.7% compared to a loss of HK$8.8 million for the same period last year. The Group has therefore maintained its healthy financial position, with a cash and bank balance amounting to HK$210.2 million as of 30 September 2014.
A Summary of Business Review and Outlook Oregon Scientific ('OS')The Group made a strategic decision to discontinue production of low-margin MEEP! products under the Smart Learning Products category ('SLP') in view of strong market competition for kid's tablets in the American and European markets. Sales revenue from OS totaled HK$175.8 million, accounting for 29.1% of the Group's total sales revenues.
The Group's commitment and strength in product innovation has been further demonstrated by its launches of well-known and well-respected products. Among the four product categories, Time and Weather ('T&W') was the key sales revenue contributor accounting for 50.5% of total OS sales. The 'Weather@Home' Collection, equipped with Bluetooth Smart connectivity and
'PRYSMA,' a series of colorful stylish designer projection clocks, have been well received by customers since their initial launch.
SLP accounted for 23.9% of the total OS sales revenue. A new 'Smart Globe Discovery' product, which combines the characteristics of the original SmartGlobes with enhanced features and enriched content, has been introduced to tap the younger age group market. Meanwhile Sport, Fitness and Health ('SFH') and Wellness and Beauty ('W&B') accounted for 12.2% and 10.9% of total OS sales revenues, respectively.
Leveraging its past successes and core competencies, together with the latest technological developments in internet-connected devices and mobile apps, OS has plans to develop a range of smart home and health monitoring devices via a joint collaboration between its T&W and SFH product teams. While within the W&B category, OS will expand the product range by introducing a new line of sleep aid devices, specifically, 'DreamScience,' which is a brainwave-oriented sound device to be launched in spring 2015 as well as to develop and further expand its collection of aroma diffusers and air purifiers.
Geographically, OS will continue to develop business with new customers in existing territories and explore new markets, such as Eastern Europe, and Central and South America. In addition, the fast-growing South East Asian market offers heretofore untapped opportunities for OS. Subsequent to entering Singapore, the Group has successfully penetrated the Indian market through partnership with local distributors during the period under review; and efforts will be made to develop markets in Thailand and the Philippines during the second half of financial year 2014/15.
Apart from traditional domestic and distribution businesses, resources will also be allocated to the e-commerce division for growing the on-line retail business in European markets and further developing ASEAN markets. The Group's ultimate goal is to achieve O-to-O integration in order to foster growth in a fast moving and competitive business environment.
Sales revenue contributed by VMS totaled HK$427.3 million, representing 70.9% of the Group's total sales revenue, a modest decline of 3.6% as compared to HK$443.4 million for the same period last year. However, the profit margin improved as more emphasis has been placed on promoting higher priced high margin products.
With respect to the business volume by product category, SFH accounted for 74.4%, T&W and Telecommunication products for 20.4%; while the other product categories accounted for 5.2% of total VMS sales. During the review period, SFH remained the major product category and contributed HK$318.0 million in sales revenue to the Group, representing an increase of 2.2% over the same period last year. The Group expects sales from this product category to pick up in the second half of financial year 2014/15, given its strong technical competence and engineering support, as well as the strong market demand for SFH products.
The Group will continue to exercise stringent cost controls in respect of the VMS manufacturing operation by implementing a wide range of initiatives aimed at improving production efficiency and productivity, strengthening negotiation power achieving greater overall operational cost effectiveness. At the same time, the Group will continue to invest in the research and development of new technologies and innovative products, as well as to explore new business opportunities with potential customers in core product categories.
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IDT International is a holding company whose shares are publicly listed on The Stock Exchange of Hong Kong Limited. Headquartered in Hong Kong, IDT International is a leader in the design, development, manufacturing, marketing and distribution of lifestyle products created through the application of innovative LCD, microprocessor and sensor applications with wireless technologies. Its core businesses include the Value Manufacturing Services and the Oregon Scientific-branded products, with major product categories including Sports, Fitness and Health, Electronic Learning, Time & Weather, Telecommunications and Wellness & Beauty. Marketing is globally managed through its marketing and distribution offices in the US, Italy, the UK, Spain, France, Germany, Australia, Brazil, China, Japan and Hong Kong. Research and development resources have been established in both Hong Kong and China while its manufacturing facilities are centred in Xixiang, Shenzhen, China.
For more corporate and product information on the IDT Group and Oregon Scientific, please access our websites at http://www.idthk.com or http://www.oregonscientific.com
Strategic Financial Relations Limited
Eveline Wan | Tel: (852) 2864 4822 | Email: eveline.wan@sprg.com.hk |
Joanne Lam | Tel: (852) 2864 4816 | Email: joanne.lam@sprg.com.hk |
Becky Liu | Tel: (852) 2864 4864 | Email: becky.liu@sprg.com.hk |
Fax: (852) 2527 1196
Website : www.sprg.com.hk
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