Chinese hard landing? What Chinese hard landing? British vacuum cleaner maker Dyson has reported a 13% rise in earnings (EBITDA) to £367m for 2014, driven in part by rapid expansion in Asia, which now accounts for a third of its business.
Japan is now Dyson’s second biggest market after the US, Korea’s in its top ten and it’s the market leader by value in Taiwan, Singapore and Hong Kong. Profits in China, meanwhile, doubled in 2014. Dyson chief executive Max Conze didn’t seem too concerned by the prospect of a Chinese slowdown.
‘I see China as being one of our largest markets,’ he said. ‘The recent stock market movements haven’t affected consumer attitudes yet.’
It’s possible that this is because China’s still teetering on the precipice of something much worse – the answer may be very different in six months’ time – but it adds to the confusion about just how severe the downturn in the world’s second largest economy is.
If China doesn’t implode, though, the potential for a firm like Dyson there is vast. Conze pointed out that the country is still underdeveloped in 'floor care' – only 12% of households have a vacuum cleaner.
Worldwide, Dyson’s revenues rose 10% to £1.4bn, driven by a 68% increase in sales of cordless cleaners, which are now responsible for half of the firm’s turnover. This would have translated into an even bigger earnings boost had the strong sterling not shaved 8% off profits (Conze didn’t mention the depreciating yuan, which has lost 4.4% of its value against the sterling in just the last fortnight).
Dyson made two interesting investments this year, which give an idea of where it’s going in the future. It bought Jake Dyson Lighting, the LED light business of founder and owner Sir James Dyson’s son, which has been interpreted as an indication on succession (family ownership for the win?), and also made a $15m (£10m) investment in a joint venture with US firm Satki3, which is working on next generation batteries.
This first external investment by the billionaire complements his cordless cleaners well, but it also raises the question of whether there might be other uses for such high-power batteries, in a somewhat bigger capacity. Would Dyson consider building a car (presumably a sleek, grey, yellow and clear plastic number)?