TCL Communication Technology, the maker of phones under the Alcatel Onetouch brand, reported a fall in revenues and profits for 2015, as weak economic conditions and fluctuating exchange rates hit results towards the end of the year. Revenues were down 23 percent year-on-year to HKD 8.275 billion in the fourth quarter, led by drops of nearly 80 percent in China and the rest of Asia. In the company's biggest market Latin America, sales fell 15 percent to HKD 2.943 billion, and North America sales were down 11 percent to HKD 1.860 billion.
Over the full year, revenues dropped 7 percent to HKD 28.558 billion, and net profit declined 5 percent to HKD 1.057 billion. Device shipments were still up 9 percent in 2015 to 80.0 million units, and smartphone shipments rose 7 percent to 44.5 million. However, smartphone growth slowed and better-than-expected feature phone sales led to a drop in the average selling price for the group to USD 46.0 from USD 53.5 in 2014. In the face of weaker market conditions, TCL said it focused on cost controls and managed to improve its gross margin to 21.1 percent from 19.3 in 2014.
The market slowdown and intense competition is expected to continue in 2016, leading to pressure on prices and gross margins. TCL said it will continue to invest in product development and brand building, which may result in a rise in the ratio of operating and R&D costs to revenue and a "significant" year-on-year decline in net profit for the first quarter. In the second quarter, the group expects improvement in smart device sales as new products come to market.
For the first two months of 2016, the company reported device shipments of 10.168 million, up 3 percent from a year earlier. However, smartphone shipments were down 11 percent year-on-year to 6.518 million units.
