Techtronic Indus Ltd Adr

It gives me great pleasure to welcome all of you to TTI's Group 2024 Annual Result Announcement. I would like to start by introducing our Group CFO, Mr. Steve Richman. And today, the presenter will be our President from Milwaukee Power Tools, Mr. Shane Mall. Thank you. And our RYOBI Power 2 president, Mr. Bobby Shaw. Bobby, welcome. We had an outstanding 2024 with sales outperforming the market and delivering double-digit growth with strong free cash flow, as we will present to you later in this meeting. It is always more easy for me to welcome you with good and strong results. It's understandable. Our group vice-chairman, Mr. Stefan Putville, will continue with my opening remarks before they elaborate our results. Stefan, please.

Thank you, Chairman. So as the chairman highlighted, we had an outstanding 2024. With revenue up 6.5%, net profit up 14.9%, and 1.6 billion of free cash flow, I think it's safe to say we had a great year. Now, at the foundation of this success is innovation. And in order to innovate, you need great culture. and exceptional people. So we have spent years assembling what we believe is the greatest team in the industry. And it is this team what sets TTI apart from the competition. So I'm extremely excited to have Steve, Shane, and Bobby with us today to walk us through not only the 2024 results, but also the outlook and to talk about all the exciting opportunities that lie ahead of us in the future. And believe me, there are a lot of opportunities. Now, before I hand the floor over to our group CFO, Mr. Frank Chan, I would like to mention that TTI was founded by our chairman, Mr. Horace Pudwell, in 1985. So 2025 marks our 40th anniversary. And actually going back in 2024, that was the 100th anniversary of Milwaukee. But what I can tell you is that if you think the last 40 years was exciting, the best is yet to come. Thank you.

Thank you, Mr. Chairman, and Stephan. For the year 2024, as Chairman and Seven said, we've continued to deliver outstanding results with our sales at US$14.6 billion, an organic growth of 6.5% or 6.8% in local currencies. Milwaukee continues to extend its dominant market leadership position with a sales growth of 11.6% in local currencies, while Ryobi Power Tools and other products also outperformed the market and grew by 6.7%. Gross profits increased by $476 million to $5.9 billion, with margin increased by 85 basis points to 40.3%. higher mix of margin-accretive Milwaukee business, aftermarket battery sales, high-margin innovative products, our focus in improving productivity, efficiency, and cost across all our global manufacturing operations, and our outstanding procurement team making sure we get the best terms and cost from suppliers, all contributed to the improvements to our gross margin. As our gross margin increased it by 85 basis points and we've only reinvested 45 into SG&A, our EBIT increased it by 11.9% or $136 million to $1.27 billion, with margin increased it by 40 basis points to 8.7%. With the increase in EBIT and the reduction in net finance costs, despite effective tax rates increased by 30 basis points, we have delivered record net profits of $1.12 billion, an increase of 14.9%, with net profit margin improved to 7.7%, a 60 basis points increase. Earnings per share increased by 15.1% to 61.43 US cents per share. The Board recommended a final dividend of HK$118 per share, a 20.4% increase as compared to HK$98 per share in 2023. Together with the HK$108 interim dividend paid, subject to shareholders' approval to the recommended final dividend, total dividend for the year 2024 will be HK$226 per share, an increase of 17.1% over 2023, representing a payout ratio of 47.5% as compared to 46.7% in 2023. Power Equipment Division account for close to 94% of the group's sole revenue, grew by 7.3% or 7.6% in local currencies to $13.7 billion. Operating profits of this division increased by 12.1%, with margins improved by 30 basis points to 9%. Floor care and cleaning division's revenue was down 4.5% in local industry as we focused on improving the profitability of this division and exited non-performing SKUs. Despite lower sales, the operating profits of this division increased by 4.73% with margins also improved by 30 basis points to now 3.2%. From a geographic perspective, all regions delivered outstanding growth. North America accounts for close to 76% of our revenue, grew by 5.5% in local currencies. Europe, approximately 16% of the group's business grew by over 10% in local currencies, while the rest of the world, led by Australia, delivered an impressive local currency growth of 12.5%. As mentioned earlier, we've continued to reinvest our gross profits into SG&A. SG&A as a percentage to sales was at 31.7%, an increase of 40 basis points as compared to 2023. The increase mainly due to our continual investment in R&D, which increased it by over 40 basis points to now 4.4% of sales, while selling and administrative expenses as a percentage to sales remained comparable to that of last year. We believe investing in new innovative products, category expansion and technology is most important and strategic for us to continue to be the market leader and outperform our competitors in our industry. Net finance costs reduced by 32% or over $25 million as we continue to apply the free cash flows generated from operations and from our very disciplined working capital management to pay down higher cost debts. Under this challenging uncertain economic environment, we will continue to execute our prudent financial management to further drive our net finance costs down. Effective tax rates was at 7.8%, 30 basis points higher than that of last year as we've taken a prudent approach strategizing and executing our tax plans. We continue to maintain that the current effective tax rate is sustainable long-term, mid-term. Our balance sheet continued to be very strong and healthy. Shareholder's equity was at $6.4 billion, an increase of 10.7% as compared to $5.7 billion in 2023. Net current assets increased by $440 million, or 18.9%, to now close to $2.8 billion. We have implemented rigorous control over our working capital and as a percentage of sales, improved it by 322 basis points to 14.4% as compared to 17.7% in 2023. Despite sales increased by 6.8%, our inventory level remained comparable to 2023. Inventory days therefore improved by seven days to 102 days. The days of improvement mainly came from raw materials and WIP, demonstrating the success of our vendor localization program and the effectiveness and efficiency of our supply chain management. Finish good stays remains the same as that of last year. Trade receivables was at 47 days, two days higher than 2023. The increase was mainly due to the higher level of sales in Q4 2024. Payable days was at 97 days as compared to 90 days last year, as we continue to leverage our volume and financial strength for the best trade terms with our suppliers. As previously explained during interim results presentation, our infrastructure and capacity expansion projects for future growth been mostly completed. CapEx for the year was 292 million, 42% lower than that of 2023. Our CapEx for 2025 will focus on improving productivity, efficiencies, qualities, and automations, and projected to be in the range of around mid-300 million range. With the improvements in profit and working capital, we have generated close to US$1.6 billion free cash flows in 2024, 23% higher than the US$1.3 billion we delivered in 2023, representing a 142% conversion of our net profits. Gearing. As a result, improved it to 0.7% from 17.1% in 2023. Our target this year, 2025, is to be in a net cash position. The 32% reduction in net finance costs is a direct result of us paying down high-cost debts, and we will continue to do so. During 2024, we have been able to reduce our total net debts by over 95% to now only 45 million at year end. Floating rate debts, which are the more expensive debts, reduced it by 54% while fixed rate debts reduced by 21%. Long term, lower cost debt now account for 60% of our total debts with debts due within one year, the balance 40%. And now I would like to pass the floor to our CEO, Mr. Steve Fishman.