Good afternoon, ladies and gentlemen, and welcome to all of our viewers online. Today, VTech Holdings Limited is announcing its interim results for the six months end, 30th September 2018. For your reference, the webcast of this announcement, accompanied by the presentation you will see shortly, will be available on VTech's website starting at 10:30 this evening, Hong Kong time. Here to present the results on my left are Mr. King Pang, Executive Director and Group President, Mr. Allan Wong, Chairman and Group CEO of VTech Holdings, Mr. Andy Leung, Executive Director and CEO of Contract Manufacturing Services, and Ms. Shereen Tong, Group Chief Financial Officer.
First of all, Ms. Tong will present the group's financial performance. Next, Mr. Leung will review the group's operations. Mr. Pang will then give the management's outlook for the coming year. We will finish our presentation with a Q&A session. Now, may I invite Ms. Tong to open today's presentation.
Thank you, Corinna. Good afternoon, ladies and gentlemen and all viewers online. First of all, I would like to share with you the financial highlights of the group for the six months end of 30th of September 2018, compared with the same period of last year. As you see from the slide, the revenue of the group reduced by 3.5% to $1,003.5 million. The decrease in revenue was mainly due to the lower sales in North America, Europe, and other regions, which offset the increase in revenue in Asia Pacific. The gross profit of the group reduced by 11.6% to $296.5 million, and our gross profit margin also reduced from 32.3% to 29.5%. The decrease in gross profit and gross profit margin was mainly due to the product mix and higher material prices.
As for the direct labor cost and manufacturing overhead as a percentage of the group's revenue, they were also higher than the same period of the last year, as the higher wages in China offset the positive impact from the further productivity gains. Our operating profit reduced by 12.6% to $100.3 million, and our operating profit margin also reduced from 11% to 10%. The decrease in operating profit and operating profit margin was mainly due to the lower gross profit and gross profit margin, which offset the decrease in total operating expenses. The reduction in operating expenses was mainly due to the lower selling and distribution costs arising from the reduced spending on advertising and promotional activities, and the lower distribution expenses. Our employee-related costs and legal and professional expenses were also lower than the same period of last year.
Our operating profit in the first half of the financial year also included a gain on disposal of tangible assets. Our profit attributable to shareholders reduced by 30% to $19.1 million USD, and our net profit margin also reduced from 10% to 9%. As a result, our basic earnings per share reduced by 20.1% to $0.358, and our board of directors has declared an interim dividend of $0.17, same as the last financial year. Turning to the revenue by region. North America remained the largest market of the group, accounting for 46.8% of the group's revenue. Our sales in North America reduced by 5.9% to $417.1 million USD. The decrease in revenue was mainly due to the lower sales of our telecom products and contract manufacturing services, which offset the higher sales of our electronic learning products.
Our sales to European market reduced by 3.2% to $400.4 million USD. The sales decrease in Europe was mainly due to the lower sales of our electronic learning products and telecom products, which offset the increase in revenue in contract manufacturing services. In Asia Pacific region, the revenue of the group increased by 11.4% to $112.1 million USD. The increase in revenue was mainly due to the higher sales of our electronic learning products and contract manufacturing services, which offset the lower sales of our telecom products. Other regions include Latin America, Middle East, and Africa. The gross revenue in other regions reduced by 18.7% to $20.9 million USD. The decrease in sales in other region was mainly due to the lower sale of all our three product lines.
Our stock balance as at 30th September 2018 increased from $456.9 million USD to $492.6 million USD, compared with the same period of last year. Our stock turnover day also increased from 128 days to 138 days compared with the same period of last year. The highest stock level was mainly due to the higher demand of the group's product in the second half of the financial year, the seasonality of most of the group's business, as well as the increase in in-house productions of our own products. We have also arranged early production of the group's product in order to better utilize the group's production capacity. Our trade debt balance as at 30th of September 2018 increased from $462.9 million to $471.1 million compared with the same period of the last year. Our trade debt turnover days, however, improved from 64 days to 63 days.
Our financial position remains fairly strong. We were debt-free, and our net cash balance as at 30th of September 2018 was $74.3 billion. That's all of my presentation. I would now invite Mr. Andy Leung to share with you our operation review. Mr. Leung, please.
Thank you, Shereen. Welcome to everyone. I will start by talking about cost. The gross profit margin in the first six months of the fiscal year 2019 decreased from 32.3% to 29.5%, comparing with the same period of last year. The decline was mainly due to the product mix, high material price, as well as increase in direct labor cost and manufacturing overheads. This offset the positive impact of further productivity gains. We have been monitoring the trade tension between the U.S. and China. During the first half of the fiscal year 2019, the U.S. government imposed three rounds of tariff on Chinese imports amounting to $250 billion of goods. Neither our ELP nor our telecom product are included in the list of target items. However, the tariff affects some of our contract manufacturing services customer who export products from VTech manufacturing facility from mainland China to the U.S.
As a contingency, we are offering such customer the alternative use of our newly acquired manufacturing site in Malaysia, in case they wish to take advantage of the different location. Let us now turn to talk about operation. I will start talking about North America. Group revenue in North America fell by 5.9% to $470.1 million in the first six months of the fiscal year 2019. Lower sales of telecommunication product and CMS offset higher sales of ELP during the period. North America remained our largest market, accounting for 46.8% of the group revenue. ELP revenue in North America rose by 9.6% to $210.9 million, with growth in both standalone and platform products. The increase resulted from strong sales in Canada and good growth in the U.S. This was achieved despite the closure of Toys "R" Us in the U.S.
During the period, existing customer of the group expanded their sales space and the shop assortment of toys to capture the business period conducted by the retailer. Furthermore, the positive reception of new VTech and LeapFrog brand product allowed us to consolidate our market leadership. During the first six months of the calendar year 2018, the group maintained its position as the number one manufacturer of electronic learning toys from infancy, through toddler, and preschool in the U.S. and Canada. Growth in standalone product was led by sales increase of both VTech and LeapFrog brand product. For the VTech brand product, higher sales of infant and preschool product, the KidiZoom series, and KidiZoom camera offset lower sales of Go! Go! Smart family of products. Among the new standalone product launch, Chase Me Casey and Stroll & Discover Activity Walker sold particularly well.
Strong growth of LeapFrog product also reflected higher sales of infants and preschool products. This followed effort by the group to support the LeapFrog brand through the launch of new learning products such as Learning Friends 100 Words Book. Platform product also registered higher sales during the period, with growth across both the VTech and LeapFrog brand. VTech saw higher sales of KidiZoom Smartwatch DX2 and KidiBuzz. In August this year, the new Explore and Write Activity Desk also hit the market, which is an update of the popular Touch & Learn Activity Desk. Growing LeapFrog brand was driven by higher sales of both reading system, including the newly launched LeapStart 3D and children's educational tablet. There was also a sale contribution from LeapFrog Academy, which was introduced to the major English-speaking country in August 2017.
Telecommunication product revenue in North America decreased by 21.2% to $131.3 million during the first six months of fiscal year. Residential phone, commercial phone, and other telecommunication products registered lower sales. Sales of residential phones were lower during the period, mainly due to the fixed-line telephone market in the U.S. continuing to contract. Loss of sales base in the club channel also contributed to the sales decline. During the period, VTech continues to maintain its leadership position in the U.S. residential phone market. Sales of commercial phone and other telecommunication products were lower because higher sales of hotel phone and wireless monitoring system were unable to compensate for lower sales of baby monitor and voice-over IP phone. Sales of hotel phone rose as we continued to win more new hotel projects. Wireless monitoring system benefited from the launch of new Wi-Fi camera.
Sales of baby monitor decreased due to inventory adjustment by one major customer. Sales of voice-over IP phone remained low, primarily due to the delay of new voice-over IP phone series, which began shipping in September. Sales of headsets held steady during the period. CMS revenue in North America declined by 9.1% to $129.9 million. This was mainly due to the lower sales of solid-state lighting, communication product, and professional audio equipment. Solid-state lighting was affected by less favorable business conditions at the group customers. Communication product registered a further sales decline as customer product line reached the end of its life cycle. Professional audio equipment saw a reduction in order from a major customer as it worked through excess inventory. The sales of industrial product increased owing to good order for item, including PCB assembly for industrial printers and note-counting device. Let us now turn to Europe.
Group revenue in this region decreased by 3.2% to $400.1 million in the first six months of the fiscal year 2019. The lower sales of ELPs and telecommunication product offset an increase at CMS. Europe remained VTech's second-largest market, accounting for 39.9% of the group revenue. ELP revenue in Europe declined by 17.1% to $129.1 million, with lower sale of both standalone and platform products. Geographically, sales in the U.K. were stable despite the closure of Toys Us in the country. France, Germany, the Netherlands, and Spain all record sales decreased. During the period, we engaged a new third-party logistics vendor for Continental Europe, who relocated to a new warehouse. The transition resulted in reduced shipment of VTech branded product in the region, significantly impacting sales. However, LeapFrog branded product were unaffected because most of its products are marketed in the U.K.
In the first nine months of the calendar year 2018, VTech maintained its position as the number one infants and toddler toys manufacturer in France, the U.K., and Germany. Standalone products saw lower sales in Europe in the first six months. Sales of VTech standalone product were lower. However, good growth was achieved in LeapFrog standalone product as new product introduction drove sale higher in the infant and preschool category. During the first six months of the fiscal year 2019, VTech ELP won a number of awards in Europe. Platform product sale in Europe decreased during the period. Among VTech platform products, higher sales of KidiCom MAX were offset by lower sale of KidiZoom Smartwatch and children educational tablet. Sales of LeapFrog platform product post growth as continuous growth in the LeapStart, MagiBook, and the introduction of LeapStart 3D in the U.K. offset a decline in children educational tablet.
Revenue from telecommunication products in Europe decreased by 10.2% to $62.4 million in the first six months of the fiscal year 2019. Residential phone and other telecommunication products saw sales decline. Voice-over IP phone posts a slight growth. Sales of residential phone were lower as the fixed line telephone market continues to contract. In commercial phones and other telecommunication products, voice-over IP phones saw continuous growth. This was supported by positive reception from customers for those new color display phone under the Snom brand. As a result of the order from a major customer reduced, sales of baby monitor declined. Another customer project delay led to lower sales of CAT-iq handsets. IAD device sales also registered decline due to a reduction in order by a telephone company customer. CMS revenue in Europe rose by 10.8% to USD 208.9 million.
The increase was mainly due to higher sales of hearables, professional audio equipment, and communication products. This offsets lower sales of medical and health products. Sales of industrial products and switching mode power supply held steady. In hearables, market share gains and new product launch by our existing customer led to growth. Order for professional audio equipment increased as customer launched new product that were well received by the market. Communication products benefit from increased order for Wi-Fi router and voice-over IP phone. Medical and health products, however, were negatively impacted by lower order for hair removal device and hearing aids. Sales of industrial product and switching mode power supply held steady. Group revenue in Asia Pacific increased by 11.4% to $112.1 million in the first six months of the fiscal year 2019. Higher sales of ELP and CMS offset lower sales of telecommunication products.
The Asia Pacific region accounts for 11.2% of the group revenue. Revenue from ELP in Asia Pacific increased by 16.5% to $40.7 million, led by growth in mainland China and Australia. In mainland China, growth was driven by new product launch and channel expansions. In Australia, the group performed well despite the closure of Toys Us in the country. The group focus on channel management drove sale increase in both VTech and LeapFrog branded products. Telecommunication product revenue in Asia Pacific declined by 17.5% to $17.9 million. The decrease was mainly due to lower sales in Japan, Australia, and Hong Kong. In Japan, the decline was the result of an order reduction by customer. In Australia, the continued contraction of fixed line telephone market led to sale decline. Hong Kong was affected by lower sales of cordless phone and IAD.
During the period, the group increased its sales in Malaysia and Philippines. CMS revenue in Asia Pacific increased by 21.9% to $53.5 million. Professional audio equipment and medical and health products post higher sales offsetting the sale decline of hearables. The performance of high precision metal parts business, home appliance, and communication product were stable. Order for professional audio equipment increased as we were appointed to design and manufacture professional audio interface product for a new Japanese customer. A new DJ equipment business that was part of the acquisition of the Malaysian manufacturing facility also contributed to the growth in the product segment of professional audio. Medical and health products benefit from more order from diagnostic ultrasonic system. In contrast to the overall growth, keen competition in the wireless headset market resulted in lower order of hearables from existing customers.
On August 21, 2018, we announced that we have completed the acquisition of a manufacturing facility in Malaysia, owned by a subsidiary of Pioneer Corporation. The acquisition, which was for a consideration of approximately $19.9 million, included a business manufacturing high-performance audio equipment for DJs, producers, and artists. In addition to strengthening CMS position as a leading global manufacturer of professional audio equipment, the new facility expanded VTech's global footprint, allowing us to serve our customer better. Other regions comprise Latin America, the Middle East, and Africa. Revenue declined by 18.7% to $20.9 million in the first six months of the fiscal year 2019. ELP, telecommunication products, and CMS all posted sales decline. Other regions accounted for 2.1% of the group revenue. ELP revenue in other regions declined by 13.2% to $9.2 million for the period, with sales lower in all three regions.
Telecommunication product revenue in other regions decreased by 21.4% to $11.4 million. The decline was mainly coming from the sales decrease in Latin America and the Middle East. CMS revenue in other regions was $0.3 million in the first six months of the fiscal year 2019, as compared to $0.6 million in the corresponding period of the previous fiscal years. Thank you. That concluded my presentation of the operation. I will now turn over to King to talk about the outlook.
Thank you, Andy. Good afternoon, ladies and gentlemen. I am pleased to share our management outlook for the financial year. I will first make some high-level comments, then I will go into the specifics of each of our three businesses. All considered, it is difficult to forecast group's revenue for the full financial year 2019. For CMS, revenue for the full financial year is expected to grow. For telecoms, revenue is anticipated to decline year-on-year. ELP's performance is tough to forecast. Sales in the second half may still be affected by the lingering effects of the closure of Toys "R" Us and the logistic issues that we experienced in continental Europe. Looking geopolitically, the continuous trade tension between the U.S. and China adds to the uncertainty, especially with the threat that the U.S. tariffs may be applied to more imports from China. Turning to margin.
Facing the continuing pressure on labor and material costs, plus the aforementioned anticipated telecoms revenue drop and logistic issues that the ELPs experienced in continental Europe, gross margin is projected to decline year-on-year. ELPs. As stated earlier, ELP's revenue for the full financial year 2019 is difficult to gauge. In North America, despite the good growth achieved in the first half, sales in the U.S. during the upcoming holiday season may still be affected by the lingering effect after the complete closure of Toys "R" Us. In Europe, we would expect sales in the second half to be higher than the first half as the logistic issues in continental Europe are being resolved. In Asia Pacific, we would expect Australia and China, in particular, to continue their good performance. Despite this year's challenges, the longer-term prospect for our ELPs remains positive.
A brand new range of interactive building sets has been launched in our major European markets. In the U.K., it is sold under the LeapFrog brand, and it is called LeapBuilders. In continental Europe, it is sold under the VTech brand, and it is called BlaBlaBlocks. I did my best. The line is expected to be subsequently launched globally in all our major markets in calendar year 2019. The LeapBuilders line is designed for children aged 12 months and up. It marks our expansion into the building sets category, opening up a new growth avenue. Looking a little further out, the calendar year 2019 lineup of new VTech and LeapFrog products has already been unveiled to key retailer customers. The favorable reception it has received signifies that ELPs are well positioned for a solid performance in the coming financial year Telecoms.
Sales of telecommunication products are expected to pick up in the second half. For the full year, revenue is projected to be lower than the prior financial year. Turning to specific telecoms product categories. Full-year sales of commercial phones and other telecommunication products are expected to rise year-on-year. The voice-over IP phones business in the second half is forecast to increase over the first half of the financial year. It will be supported by the introduction of additional new models and aggressive promotional programs. New product launches and increasing orders from a major customer in the second half will lead to a resumption of growth in baby monitors. Sales of CAT-iq handsets is also expected to pick up in the second half. The headset business will grow further, propelled by shipment of new products, including the world's first fully voice-controlled headset.
Finally, sales of integrated access devices is also expected to improve in the second half. CMS. CMS is expected to achieve growth for the financial year 2019. The increase in revenue will be across the board. We forecast higher sales for professional audio equipment, hearables, industrial products, home appliances, as well as medical and health products. Existing customers in these segments are expanding their business through new product launches as new customers are being added. Further growth opportunities include Internet of Things, so-called IoT, products, a new category for which VTech's CMS is well-positioned. We are now manufacturing IoT products for current and new customers, with products that include internet-connected smart thermostats and smart air conditioning controls for energy savings.
Geographically, with the acquisition of the manufacturing facility from Pioneer Corporation in Malaysia, our CMS will immediately benefit from the sales contribution of high-performance DJ equipment manufactured in that facility. Additionally, this new Malaysia facility will enable our CMS to capture new businesses from customers seeking alternative manufacturing sites outside mainland China. This concludes our presentations. Thank you very much, ladies and gentlemen.