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Annual Results 2013
2014-03-19 / Corporate news

Goodbaby International Holdings Limited Announces 2013 Annual Results

Actively Responded to Market Conditions and Continued to Strengthen Core Competencies. Grasp Opportunities to Promote Future Growth. Gross Profit Margin Stayed on Uptrend to reach 22.9%.

(19 March 2014, Hong Kong) Goodbaby International Holdings Limited (“Goodbaby International” or the “Company”, SEHK stock code: 1086, together with its subsidiaries, the “Group”), an international durable juvenile products company headquartered in China, today announces its annual results for the year of 2013.

The unfavorable global economic environment and continued slowdown in the China economy posed huge challenges for business operations. With sales spanning the European and North American regions, China and other overseas markets, Goodbaby International was affected by the economic fluctuations in different regions, which led revenue to fall 8.0% to HKD4,188.8 million during the year ended 31 December 2013. Although market demand somewhat softened, the Group’s market strategy was progressing steadily. Gross profit margins increased significantly by 3.8 percentage points from 19.1% to 22.9%, while gross profit rose 10.2% to HKD960.6 million. The profit for the period amounted to HKD171.1 million, representing decline of 6.5%. Basic earnings per share reached HK17.0 cents. The Board of Directors recommended a final dividend of HK5 cents per ordinary share.

During the year under review, the China market’s business maintained growth and recorded revenue of HKD1,357.5 million, representing an increase of 4.2% year-on-year.

The Group implemented downward penetration into lower-tier cities, and achieved initial penetration into rural markets. In 2013, the number of maternity and childcare specialty stores covered by the in-depth distribution management system increased from 11,984 from the end of last year to 15,056. At the same time, the Group strengthened the depth of coverage to fully penetrate into nationwide counties and cities at prefecture and below levels, and then further downward to towns and villages. As of 31 December 2013, among the 333 prefectural-level cities in China, the Group’s coverage rate reached 85%.

Apart from the conventional brick and mortar store network, the Group’s online sales also developed rapidly. In 2013, the Group realized revenue from e-commerce channels of HK$267.8 million, representing 19.7% of the Group’s total revenue from the China market. Towards of the end of 2013, the Group realized the all-channel structure of e-commerce, covering the official Goodbaby online flagship store store, Tmall retail outlet, internet wholesale platforms (including JD.com and Dangdang.com) while dominating a key position in major categories of the e-commerce platform of Tmall retail outlets and JD.com. The Group also covered over 761 retail terminals on Taobao.com, of which 483 were franchise stores and 278 were consignment stores. The scale of the Group’s online-exclusive products continued to increase. Over 320 online-exclusive products were launched during the year, and were well-received by the market. Daily sales of the Group’s products amounted to HKD51.1 million during Taobao’s “November 11” online shopping campaign, securing the top position amongst its peers.

During the year, the Group continued to focus on the development of the car seats and accessories business, which achieved rapid growth. Revenue derived from car seats in the China market reached approximately HKD84.9 million, representing growth of approximately 101.6%.

On the overseas markets front, the sluggish global economy weighed on market demand led sales to slow down in the overall European and North America markets. However, the extent of decrease in revenue derived from overseas markets narrowed substantially in the second half of the year compared to the first half, attributed to the initial realization of strategic upgrade in Group’s overseas market business model as it pursued a two-pronged direct sales and blue-chip strategy. During the year, the Group commenced strategic cooperation with the major retailers in the North American market, initiated direct sales and own-brand business, and started to launch its products from the fourth quarter of 2013. To compensate for the drop in demand of individual customers, the Group proactively expanded its new blue-chip customer base while further strengthening its existing blue-chip customer base. This effectively moderated the downward trend in revenue of the European and American markets.

In January 2014, the Group successfully acquired CYBEX, a renowned durable juvenile products seller and brand-owner headquartered in Germany, which effectively strengthened the Group’s active marketing capability in the overseas market to grasp the booming opportunities in the global car seat market. CYBEX’s marketing-driven and premium brand is complementary with Goodbaby International’s research- and product-driven model and is in line with the Group’s strategy to reinforce its leadership status in the global juvenile products market.

Although the Group experienced unprecedented market difficulties, new products development embodied its significant value under the adverse circumstance. It continued to capitalize on its research and development capabilities and broke through industry norms in strollers and durable juvenile goods. In 2013, the Group’s sales revenue derived from new products in overseas markets represented over half of its sales revenue in overseas markets, accounting for 51.4%. During the year, the Group launched the “Hummingbird”, the world’s most lightweight stroller. Through the research and development of new materials and new technical process, the stroller weighs only 3.5kg. Together with the automatic folding function, the product was widely popular in the market. Since its launch in the second quarter of 2013, its total sales volume reached 29,848 units in the PRC market. In addition, the self-owned brand stroller EPOC and car seat Origin developed by the Group in 2013 both received the “Red Dot Design Award”. Prior to wining such award, EPOC was also awarded the “IF Product Design Award”. The accolades testify to the Group’s research and development capabilities, which continued to be highly recognized in the international industrial design industry. The Group launched a total of 663 new products, 90 of which were brand new products. As at 31 December 2013, 473 new products were under research and development, 195 of which were brand new products.

Looking ahead, Goodbaby International’s Chairman and CEO Mr. Song Zhenghuan said, “Although the global economies remained uncertain, the China market presents immense domestic demand potential. We will implement direct sales and strengthen our brand strategy in the China market, continue to promote in-depth distribution management, and capture market opportunities through our marketing model and further implementing our internet strategy. In the overseas markets, we will establish and develop localized marketing service platforms, step up our efforts in the implementation of proactive marketing strategies to broaden our customer base, targeting the full spectrum of sales channels and customer base in order to fully cover all market segments. The Group will also grasp the distinct opportunity through the strategic acquisition of CYBEX and reap mutual benefits, capturing the booming growth opportunity in the Chinese car seat market. We will strengthen ties with key customers, actively promote marketing strategies, and flexibly utilize branding, customer, channel and product strategies. Goodbaby International aims to capture larger market share and reinforce the market position of our self-owned brands, as well as strengthen our core competencies in response to the ever-changing market environment.”

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