TCL Electronics (01070) announced its 2023 annual results, with net profit of HK$744 million to mother, an increase of 66.4% year-on-year, and a steady increase in profitability

According to the Zhitong Finance App, TCL Electronics (01070) announced its annual results for the year ended December 31, 2023. The group's revenue reached HK$78.986 billion, up 10.7% year on year; thanks to the continuous optimization of TCL's smart screen product structure, the “middle and high-end plus big screen” strategy promoted steady business expansion, and the scale effect was increasing. Gross profit increased 12.5% year on year to HK$14.756 billion, and overall gross margin increased 0.3 percentage points to 18.7% year on year. In terms of expenses, on the one hand, the Group insisted on reducing costs and increasing operating efficiency, and the administrative expenditure rate decreased by 1.1 percentage points to 5.1% year on year; on the other hand, while strengthening its own brand power, the Group insisted on precise marketing control investment to achieve a 0.4 percentage point to 10.0% year-on-year reduction in sales expenses; ultimately driving the Group's overall expenses rate down 1.5 percentage points to 15.1% year on year.

In 2023, the Group will continue to promote the rapid development of innovative businesses such as distributed photovoltaics, all-category marketing, and AR/XR smart glasses based on the brand power accumulated in the display business, global channel resources and vertical integration advantages of the entire industry chain. Through the Internet service as a value-added service, the “smart IoT ecosystem” is consolidated in all categories, creating a higher value brand competitiveness, and driving the Group's profit after tax to increase by 49.3% year on year to HK$827 million, net profit to mother of HK$744 million, up 66.4% year on year, and adjusted net profit to mother increased 14.0% year on year to HK$803 million. To give back to shareholders for their unremitting support, the board of directors recommended a final dividend of HK16.00 HK cents per share, with a dividend payout ratio of 50.0% of adjusted net profit to mother.

During the year, the Group's overall financial situation remained at a steady level. As of December 31, 2023, the Group's capital debt ratio (total amount) was 37.2%; the Group insisted on efficiency first, optimized supply chain, logistics and service capabilities and cooperative ecology through a global layout, and operational efficiency improved. The Group's inventory turnover period was 69 days during the year, 9 days faster than the previous year; the number of cash turnover days was 33 days, an increase of 14 days over the previous year.

In 2023, the Group continued to launch market-leading smart terminal products to occupy the market mentality, with accurate marketing and promotion to promote the continuous increase in the popularity and reputation of the Group's brand. The TCL Smart Screen Global Brand Index increased 5.4% to 85 year-on-year; at the same time, the Group adapted to the “middle and high-end plus large screen” market demand, driving continuous breakthroughs in the scale of display business shipments. In 2023, TCL Smart Screen shipments bucked the trend and rose 6.2% year on year to 25.26 million units. TCL Smart Screen's global shipment volume and sales market share increased 0.8 percentage points to 12.5% year on year and 1.3 percentage points to 10.7% respectively, ranking among the top two and top three in the world respectively. Among them, shipments of 65-inch and above TCL smart screens increased 35.3% year on year, and its share of shipments increased 5.3 percentage points to 24.6%. The average size of TCL Smart Screen increased 2.7 inches to 51.1 inches year on year.

The Internet business and innovative business continue to be a blue ocean of profit growth for the Group and continue to grow strongly. During the year, the Group's Internet business revenue reached HK$2,763 billion, up 20.2% year on year, gross margin increased 4.6 percentage points year on year to a high level of 55.1%, and profit contribution continued to expand. Revenue from the Group's innovation business in 2023 increased sharply by 78.5% year on year to HK$18.640 billion, of which the PV business revenue in 2023 reached HK$6.299 billion, up 1820.3% year on year and achieved profit; the scale of all categories of marketing business continued to expand, and revenue in 2023 increased 26.3% year on year to HK$10.409 billion; the Group's smart connectivity and smart home business revenue increased 3.2% year on year to HK$1,932 billion, of which the gross margin of the smart connectivity business increased 11.0 percentage points year on year to 25.4% year on year.

In 2023, the Group's R&D expenses were HK$2,327 million. The Group continues to invest in R&D capital in smart terminals, including Mini LED technology to achieve 10,000-level zonal light control, supporting the Group's Mini LED smart screen sales and sales to rank first in the domestic market and second in the global market with industry-leading technical advantages; in terms of image quality engines, it uses algorithms to unleash hardware potential, uses precise light control as the core gripper, leads the industry in terms of bright and dark details, and realizes AI image quality optimization strategies that adapt to content; In terms of XR glasses, the waveguide technology platform developed by the Group has the highest resolution zero-distortion light engine in the industry, and uses the highest resolution zero-distortion light engine in the industry. The self-developed SLAM algorithm with light-effect diffraction light waveguide and agile response creates more realistic virtual and real fusion effects for Thunderbird X2 real AR glasses users, further explores intelligent interactive scene applications, and enhances consumers' product experience.

In addition, during the year, various products launched by the Group, including Mini LED smart screens, tablets, AR/XR glasses, refrigerators, washing machines, etc., received international recognition: in terms of display business, TCL X11 QD-mini LED TV won the “2022 to 2023 Mini LED Display Technology Innovation Award”, TCL X11G Lingyao QD-mini LED TV won the “Iplan Innovation Award”, and the TCL C845 4K Mini LED TV won the “2022 to 2023 Mini LED TV” The “2023 Next Generation Display Technology Gold Award” and the TCL NXTPAPER 12 Pro tablet won the “2022 to 2023 Eye Care Science and Technology Innovation Award”; in terms of innovative business, TCL Fresh Air Conditioner Little Blue Wing III won the “Apland Excellent Product Award” and the TCL G160Q10-HDY twin cabin duplex zone washing machine won the “Iplan Excellent Product Award”; in terms of AR/XR smart glasses, Thunderbird X2 won the “China Electronics Fair Information Fair Innovation Award”. The Group's various new smart products have received numerous awards, reflecting the Group's leading strength in cutting-edge display technology and intelligence.