Mobile phone production declines further in October

Mobile phone makers in Bangladesh saw sales fall further in October, causing manufacturing and assembly of equipment to fall 1.25% month-on-month.

According to data from the Bangladesh Telecommunication Regulatory Commission (BTRC), the number of mobile phones manufactured and assembled was around 2.2 million in October. In September it was 2.27 million.

Industry insiders said that lower sales volume in recent months, caused by rising dollar prices and rising inflation, has prompted people to cut back on spending, affecting their purchasing power and forcing manufacturers to ramp up production throttle.

Total cell phone production has more than halved in ten months – from 4.45 million units in January to 2.2 million units in October, BTRC data showed.

They also say disruptions in the opening of LCs for commodities linked to foreign exchange reserve requirements have had a negative impact on the sector.

Demanding anonymity, an official from one of the country’s top cellphone makers said the LC opening had become difficult and time-consuming due to policies to secure reserves, leading to disruptions in production.

Walton Hi-Tech Industries PLC reported a loss of Tk46.05 billion for the first quarter of 2022, compared to a profit of Tk281.12 billion in the same three-month period last year.

Although it made an operating profit of Tk275.72 crore, the company nonetheless posted a loss.

Regarding these financial problems, Walton authorities said the recent European geopolitical crisis is one of the reasons for the decline in sales and production. They also said the global economy is weakening due to significant trade disruptions, food and fuel price shocks contributing to high inflation and subsequently tightening global financing conditions.

The company’s overall profitability fell as a result of sharp increases in material and freight costs, uncertain conditions in international markets and the devaluation of the Bangladeshi taka against the US dollar.

In addition, increasing operating expenses due to the volatile dollar market meant the Company’s financial results were negatively impacted in the first quarter of the current fiscal year compared to a year ago.

Due to the devaluation of the taka, Walton suffered currency losses of Tk262.45 billion in the first quarter of the current fiscal year, down from only Tk10.11 billion in the same period of the previous fiscal year.

In the first quarter, the total financing cost was Tk322.42 billion, which was Tk39.55 billion in the comparable period.

The company would have been profitable in the first quarter of the current fiscal year had the US dollar exchange rate not increased abnormally, and at that point Walton’s earnings per share would have been at least Tk7.14 with net income in excess of Tk200.

According to a statement shared with the Dhaka Tribune, Walton authorities hoped the situation would improve soon and the company would return to profitability in the next few quarters.

Rising device prices also depressed sales.

According to local players in the mobile manufacturing and assembly industry, their sales fell by over 20% in the first half of this year.

Due to the expensive dollar, the price of a 10,000 Tk mobile phone has increased to 12,500 Tk, cutting into manufacturers’ profits.

Although the smartphone segment has been the recipient of the blow caused by the various disruptions, feature phone sales also appear to have declined due to consumers’ falling purchasing power, data showed.

“In the first half of the year, smartphone prices rose twice. In May, the price increased by 8-10% against the dollar price, while in June the price was increased again to include VAT,” Morin Talukder, co-founder and CEO of Pickaboo.com, told the Dhaka Tribune.

“We’re seeing demand for smartphones down 35-40% over the last two or three months, with sales down significantly even with Eid. Sales during the holiday season have not been satisfactory despite huge discounts and EMIs available for purchase,” added the Pickaboo top brass.