Mobile phone manufacturers in Bangladesh have seen their sales continue to decline in October, causing manufacturing and assembling of devices to fall by 1.25% when compared to a month earlier.
The number of mobile phones manufactured and assembled stood at around 2.2 million in October, according to data from the Bangladesh Telecommunication Regulatory Commission (BTRC). The figure was 2.27 million in September.
Industry insiders said that lower sales volume in recent months caused by the rising dollar prices and soaring inflation have pushed people to cut down on expenses, impacting their purchasing power and forcing manufacturers to cut production.
The total production of handsets 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 that disruption in the opening of letters of credit (LCs) for raw materials, coupled with foreign currency reserve conditions have had adverse impacts on the sector.
Seeking anonymity, an official of one of the country's top mobile phone manufacturers said that due to policies aimed at safeguarding reserves, the LC opening has become difficult and time-consuming, causing disruptions in production.
A loss of Tk46.05 crore was reported in the first quarter of 2022 by Walton Hi-Tech Industries PLC, compared to a profit of Tk281.12 crore in the same three-month period last year.
Although it made an operating profit of Tk275.72 crore, the company, nonetheless, recorded a loss.
Dwelling on these financial issues, Walton authorities said that the recent European geo-political crisis is one of the reasons for reduced sales and manufacturing. They also said that the global economy is getting weaker due to significant disruptions in trade, food and fuel price shocks, which are contributing to high inflation and subsequently tightening the global financing conditions.
The company's overall profitability fell as a result of the sharp rise in material and freight costs, shaky conditions on the international market and the depreciation of the Bangladeshi taka against the US dollar.
Moreover, the rising operational costs due to the volatile dollar market led to the financial profit of the company being negatively affected in the first quarter of the current financial year compared to the previous year.
Due to the devaluation of the taka, Walton suffered foreign currency losses amounting to Tk262.45 crore during the current fiscal year's first quarter, which was only Tk10.11 crore in the same period of the previous financial year.
In the first quarter, the total finance cost was Tk322.42 crore, which was Tk39.55 crore in the comparative period.
The company would have been profitable in the first quarter of the current financial year if the US dollar exchange rate had not increased abnormally and at that time, Walton's EPS would have been at least Tk7.14 with a net profit of more than Tk200 crore.
The Walton authorities hoped that the situation would improve soon and the company would return to profit in the next quarters, according to a statement shared with Dhaka Tribune.
The rising price of devices has also pushed down sales.
According to local mobile manufacturing and assembling industry players, their sales declined by over 20% during the first half of this year.
Owing to the costly dollar, the price of a Tk10,000 handset has gone up to Tk12,500, eating into the profits of manufacturers.
Although the smartphone segment found itself to be the receiving end of the blow caused by the various disruptions, feature phone sales also seem to be declining due to the declining purchasing power of consumers, data showed.
“During the first half of the year, smartphone prices have increased twice. In May, the price increased by 8-10% for the dollar price, while in June, the price was again increased for the inclusion of stage VAT,” Co-founder and CEO of Pickaboo.com Morin Talukder told Dhaka Tribune.
“We see the demand for smartphones has dropped by 35-40% in the last two or three months with sales declining significantly even with Eid. Sales during the festive season were not satisfactory despite huge discounts and EMIs being offered for purchases,” the Pickaboo top-brass added.
