Techtronic Industries’ (TTI) 25th year was marked with solid performance across all businesses resulting in excellent growth. This exceptional achievement was the result of strength in new products, continued geographic expansion, and significant operational efficiencies in a period of rising input costs.
Sales were HK$26.4 billion (US$3.4 billion) for the full year, representing a 10.0% increase over 2009. Our full year profit attributable to owners of the company was HK$740 million (US$95 million), an increase of 50.7% and earnings per share increased 45.1% to HK46.23 cents over the prior year.
TTI continued to invest in developing exciting new products, building our brands, expanding global operations, and implementing cost containment programs. These actions have further strengthened TTI’s market leadership position and have increased demand for our superior brands and products. Our strong growth and improvement in profit margins underscores the effectiveness of our strategies.
During the period, our gross profit margin increased to 32.2%, up from 31.3% in 2009. This was a result of ongoing new product introductions and efficiency gains through broad, systematic cost reduction and productivity programs put in place that countered rising input costs. SG&A expenses were reduced from 27.7% of sales in 2009 to 26.9% in 2010 through strategic spending cuts and greater volume leverage.
Earnings before interest and tax increased by 33.1% to HK$1,302 million (US$167 million) representing a margin improvement of 80 basis points. Additionally, we initiated the restructuring of our German power tool manufacturing and gradual relocation to our Czech Republic and China facilities which will further enhance profitability going forward. A non-recurring provision of HK$208 million (US$27 million) was taken for the full year and no further charges are expected. Earnings before interest, tax and one-time charges was HK$1,510 million (US$194 million), 54.4% above 2009.
We continue to manage our working capital with an improvement in inventory days. We are comfortable with our current working capital level to meet our service requirements and fund our business growth. Our gearing position improved to 72.9% at the end of the year from 78.6% in the first half of 2010.
The Board is pleased to recommend a final dividend of HK6.25 cents per share. Together with the interim dividend of HK3.75 cents per share, this will give a full-year dividend of HK10.00 cents per share, against HK7.50 cents per share in 2009, a double digit increase of 33.3%.
TTI’s portfolio of leading brands continued to generate outstanding growth through brand extensions into new products and categories. Our brands hold leading positions in their respective markets and have created a loyal following with end-users. We are expanding our brand reach into new product categories and under- represented markets.
Our commitment to launching new innovative products and our leadership position in cordless technology, particularly lithium-ion, continues to drive growth. New products accounted for approximately one third of global sales in 2010. TTI’s new product development process maximizes speed-to-market, with a deep understanding of our customers’ needs, allowing us to deliver a continuous stream of innovative new products that help grow our market share.
Our relentless focus on cost containment has been beneficial to the Group with gross margin improvements over the past two consecutive years. Value engineering projects and supplier initiatives across the Group continue to offset rising material and labor costs, building sustainable margin improvements. Product mix, volume leverage and accelerated integration of our production facilities are further improving operating performance.
Our recently constructed Asia Industrial Park has absorbed the increase in production volumes from the relocation of our outdoor products manufacturing into the facility in 2010 as well as higher volume from our businesses. At the beginning of 2011, the completion of our Asia Innovation Centre will bring R&D synergies and productivity efficiencies that will further enhance our already best-in-class, speed-to-market capabilities.
Entering 2011, our excellent product portfolio and superior brands give us strong confidence the Group will capitalize on the opportunities and drive further growth.
Our four Strategic Drivers of Powerful Brands, Innovative Products, Exceptional People, and Operational Excellence continue to be the foundation for strong performance and will help us achieve the goal of being number one in the industries we serve. These strategies have driven our transition from an Original Equipment Manufacturer to a global company with highly innovative products and powerful brands focused on exceeding the expectations of our customers.
I would like to thank our customers for their dedicated partnership, our world-wide team for working with enthusiasm and creativity, and our Directors for their strategic vision and support. TTI is at the beginning of the next 25 years of expansion and I am looking forward to the years ahead with excitement and passion.