• Tue
  • Jul 29, 2014
  • Updated: 4:44pm
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Competition from entry-level smartphones pushes TCL to likely loss

After first quarter losses, the handset maker expects growth to return after the launch of its new smartphone range

PUBLISHED : Wednesday, 27 February, 2013, 12:00am
UPDATED : Wednesday, 27 February, 2013, 1:34am

Mobile phone maker TCL Communication expects to see losses for the first quarter of 2013, although the company said growth might be restored in the following three months after a complete launch of its new smartphones.

The Hong Kong-listed company said the first quarter was traditionally a slack season for the handset business. It reported a net loss of HK$220 million for 2012, though revenue went up by 13 per cent to HK$12 billion.

Chief executive George Guo said: "A slowdown in the feature phone market caused by fierce price competition from entry-level smartphones drove down our feature phones margin." A feature phone is a mobile phone with basic telephoning and messaging functions.

A slowdown in the feature phone market caused by fierce price competition from entry-level smartphones drove down our feature phones margin

Guo expected the pressures on selling price and profit margin would continue this year, but "it shouldn't be as severe as in 2012".

The output of smartphones increased almost fourfold to 6.5 million units, accounting for 15.3 per cent of the total shipment, up from 3.2 per cent in the previous year.

Guo said it would still take time for the company's smartphone business to reach the level where economies of scale could be achieved. Smartphones made up 15.3 per cent of total shipments, and accounted for half of the company's revenue in the second half of 2012, and pushed up the average selling price of handsets to US$36.2 in 2012 from US$31.3 in 2011.

He said the revenue target this year was set to be a year-on-year growth of 25 per cent. Capital expenditure would stay at HK$300 million, roughly the same as last year.

Meanwhile, television maker TCL Multimedia Technology, a sister company also listed in Hong Kong, posted a doubling in net profit to HK$911 million for the past year, while revenue increased 20.5 per cent year-on-year to HK$39.7 billion.

In the fourth quarter, net profit rose more than fourfold year-on-year to HK$276 million.

The company, now the fourth largest television maker in the world by market share, according to Display Research, plans to sell 18 million LCD televisions in 2013. In the past year the company's LCD television sales volume reached 15.53 million sets, up 43 per cent year-on-year.

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