Apple India's FY19 revenue down 19%, profit plunges 70% amid low iPhone sales
BusinessToday.In October 29, 2019
At a time India is holding sway as one of the fastest growing smartphone markets worldwide, Apple has been struggling to hang on to its already miniscule under 2 per cent market share. Last fiscal, slowing iPhone sales made Apple India's revenue as well as net profit dip for the first time. Ironically, three years ago, Apple was betting on India for growth amid slowing sales elsewhere in the world, prompting its CEO Time Cook to make a public statement that his commitment to India was going to be of 1,000 years.
As per the latest regulatory filings made to the Registrar of Companies (RoC), Apple India's profit plummeted over 70 per cent to Rs 262.3 crore in FY19. "Following the global trend, Apple India's revenue has declined by 19 per cent last fiscal [to Rs 10,538.3 crore] in contrast to its gain of 19 per cent in FY18," Mohit Yadav, founder of business intelligence platform Veratech Intelligence, told The Economic Times. He added that the company is understandably taking a conservative approach, which had an impact on employee benefits expense, too. The latter jumped 48 per cent in FY19 against 66 per cent in FY18.
For the price-sensitive Indian buyers, the increased pricing of iPhones in the country is a major deterrent but the high import duty that the government levies on smartphones not manufactured in India -- coupled with the company's small local assembling operations here -- and the weakening Indian currency against the US dollar don't help.
According to market trackers, Apple's iPhone sales in India last year were one of the worst amid declining shipments. Hong Kong-based Counterpoint Technology Market Research pegged Apple's India shipments at 1.6-1.7 million in 2018, up to 50 per cent lower than the 2017 level. In contrast, 2016 had seen the company report a 50 per cent jump year-on-year to 2.6 million iPhone shipments in India. CyberMedia Research estimated that shipments fell from 3.2 million units in 2017 to about 2 million last year.
The speedbreaker notwithstanding, Apple is likely to be able to claw back lost ground this year. Analysts expect revenue and profit to revive in the current fiscal on the back of growing sales of iPhones thanks to price cuts and lower pricing for the new models like iPhone 11, unlike last year. In fact, Apple reportedly made an entry into the top 10 smartphone brands in the country during the July-September quarter due to price cuts on iPhone XR model.
Moreover, Apple is reportedly ploughing back savings from 20 per cent import duties by expanding local assembly to more models such as iPhone XR in this fiscal. As Counterpoint Research associate director Tarun Pathak puts it, "Apple has got all the ingredients right for a turnaround in India this fiscal". The company will announce its July-September global results this week.