TCL profit rises but margin falls ( 2003-08-21 09:27) (eastday.com.cn)
TCL Communication Equipment Co Ltd yesterday said its profit jumped by nearly
30 percent in the first half of this year. But the second-largest domestic
mobile phone maker said its profit margin shrank in the period, as China's
handset market became increasingly crowded.
TCL Communication's first-half net profit hit 145.18 million yuan (US$17.49
million), or 0.77 yuan per share, 28.2 percent higher than the year-ago level.
The company posted sales of 5.26 billion yuan during this period, 51.2 percent
higher than a year ago.
However, the Guangdong-based company said its gross profit margin slid by
almost 6 percentage points to 21.19 percent as the competition in China, the
world's largest mobile phone market, became more intense.
"We cut our products' price to boost our revenue so that we can survive the
intense competition. But our profit margin dropped," said Wan Mingjian, chief
executive of TCL Communication, in the financial report released yesterday.
Recently, TCL Communication slashed the prices of its two color-screen
handsets by half to about 1,500 yuan.
Currently, TCL Communication occupies 11.64 percent of China's mobile phone
market in the first half of this year, ranking it the third after the 15.01
percent of Ningbo Bird Co Ltd and 14.21 percent of Motorola Inc, according to
the Ministry of Information Industry.
TCL Communication is not the only one to suffer a price cut as the average
price of a mobile phone has slid to 1,767 yuan, 13.2 percent lower than a year
ago, according to IT consultant, CCID Consulting Co Ltd.
The Beijing-based firm also said the fierce competition will change the
landscape of China's mobile phone market, as companies cut prices and expand
production capacity to survive.
TCL Communication opened its second manufacturing plant in Hohhot, the
capital city of Inner Mongolia Autonomous Region, on Monday. The
48,000-square-meter plant has an annual capacity of 5 million handsets, almost
doubling its current production capacity.
