Teac profits slide 12%, blaming “competitive landscape”
ASX-listed TTA Holdings, which trades as Teac in Australia, has reported a 1% increase in revenue to $55.65 million, according to financials for the year ending 31 March 2013.
However, despite the slight sales jump, Teac profits fell 12% from $2.17m in 2011 to $1.92m over the year, due to margin erosion.
The profit decline has been attributed to “the more competitive landscape” and a fall in foreign exchange gains.
Electronics retail trade was “generally poor” during the financial year, according to Teac chairman Sng Sze Hiang, who also alluded to the demise of “major” customer Retravison, in the Directors Report.
The Toyko-based Teac sells audio, budget TVs under 50″ and DVR’s – its 21.5″ LED LCD TV costs as little as $266 at JB Hi-Fi.
Audio products like docking stations account for under 10% of Teac total sales, while 91% of its sales are TVs – in particular models with inbuilt DVR’s. Blu-rays are a “major strength”.
Hiang noted LCD/ LED TV demand has slumped 22%, but, says the company is “pleased” with its latest financials and retains volume market share in TVs.
Teac sales in Harvey Norman, JB Hi-Fi and the Good Guys account for 77% of all sales, mostly in the eastern seaboard.
The major retailers are “increasingly tightening the range of products they offer in their retail stores”, the Directors Report stated.
“In addition, most retailers have established centralised procurement and product ranging.”
However, customer confidence was “poor and discretionary spending curtailed as consumers increased savings and reduced debts”, despite the resource-driven economy and a strong Aussie dollar.
The mid-tier brand says it pushes brand recognition through TV commercials and sports sponsorship, including backing Ford Performance Racing (FPR) drivers Mark Winterbottom and Will Davison and catalogue activities by major retailers.
The report also notes the possible impact of the September federal election and says while it is “uncertain” if electronics retailing will turn around in the new financial year, says the forecast pick-up in the global economy “could improve customer confidence in Australia”.
Hiang revealed Teac’s plans to increase its visual products offering and “refresh” the audio line-up this financial year.
Teac Australia also “expects its distribution strength, its mid-market poison and value proposition” will be “key advantages” in the next financial year.
Teac Board recommended a dividend of 0.4cents fully franked, paid on 26 July.
Three executives in the company were paid salaries of over $200K and two received salaries of more than $300K, according to the Directors report.