Consumer durables is a cataloguing of consumer goods that are not essential to be bought very often as they are fashioned in a way so as to last for an extended period of time. Profits in the consumer durables sector were most profoundly…
BMI View: The UK Brexit referendum result produced a sharp depreciation of sterling against the US
dollar, as a consequence of which we have downgraded the outlook for consumer electronics device sales in
2016 and over the medium term. Several vendors announced device price rises in the weeks following
Brexit, and we expect more to follow in all three segments, but with the PC and AV categories forecast to be
worst effected where margins are narrowest so the scope for absorbing cost increases are most limited.
Over the medium term, we consider the consumer electronics market to be one of the least directly affected
by political and regulatory uncertainty, but there will nonetheless be negative spill over from any impact on
growth and investment that arises if UK-EU negotiations are prolonged or fractious.
Latest Updates & Industry Developments
? Computer Hardware Sales: USD22.2bn in 2016 to USD22.4bn in 2020, a CAGR of 0.2% in US dollar
terms. The growth outlook was already subdued as a result of the peak in tablet first time buyers having
passed, but Brexit made us downgrade the outlook for both 2016-2017 when price rises will result in
deferred replacement purchases.
? AV And Gaming Sales: USD7.4bn in 2016 to USD7.4bn in 2020, a CAGR of -0.1%. A mature TV set
market was expected to be boosted by UHD upgrades, but with price rises the short-term outlook is weak
for non-essential purchases, though tariff reductions could catalyse UHD upgrades over the medium term
if Chinese vendors intensify price competition.
? Mobile Handset Sales: USD10.7bn in 2016 to USD11.0bn in 2020, a CAGR of 0.7%. Higher margins in
the handset segment should mean it is the most insulated from sterling depreciation, but this is largely
restricted to the premium segment and mid-range Android vendors will have to pass on higher costs to