Shulou(Shulou.com)11/24 Report--

November 6 news, due to the impact of a strong dollar and exchange rate fluctuations, for buyers in many countries, Apple's new flagship smartphone iPhone 14 series prices are rising sharply, only Chinese and American consumers are not affected.

Apple's new iPhone 14 series comes with a better screen, camera, satellite communications support and other new features. Before the launch, many analysts had expected Apple to raise prices across the board for the latest iPhone due to ongoing supply chain challenges and inflation. But in the U.S. and China, the price of Apple's new models hasn't risen much compared to the iPhone 13 series.

However, for consumers in countries such as Britain, Japan, Germany and Australia, Apple's new phones have seen significant price increases. For example, the iPhone 14 starts at $799 in the U.S., the same price as the iPhone 13 released last year. In the UK, the iPhone 14 starts at £ 849 ($975) and the iPhone 13 starts at £ 779 ($886), up about $90.

In Australia, iPhone 14 starts at AU$1349 ($904) iPhone 13 starts at £ 1,349 In Japan, iPhone 14 starts at 119800 yen ($817), iPhone 13 starts at 98800 yen ($674); in Germany, iPhone 14 starts at 999 euros ($990), iPhone 13 starts at 899 euros ($890)

This price difference is only for entry-level models, and the price difference is even larger for higher-end models. For example, the iPhone 14 Pro Max costs £ 150 ($170) more in the UK than it did when the iPhone 13 Pro Max was launched last year.

The reason why Apple is raising the price of mobile phones in some countries is related to exchange rate fluctuations. "Basically, all the currencies in the world are depreciating against the dollar," chief financial officer Luca Maestri said last week on the company's fourth-quarter earnings call. A strong dollar challenges us in several areas. Obviously, this makes it harder for us to price in emerging markets, and it also affects the conversion of these revenues back into dollars. "

While Apple reported an 8% increase in revenue to $90.15 billion for its fiscal fourth quarter, CEO Tim Cook argued that Apple would have achieved double-digit revenue growth for the quarter had it not been for the stronger dollar. "The negative impact of foreign exchange fluctuations in the fourth quarter exceeded 600 basis points," Cook said. We could have achieved double-digit growth without the impact of exchange rates. "

Exchange rates are a very important factor in apple's performance, both in terms of revenue and gross margin, maestri said. Apple does hedge its currency exposure "in as many places in the world as possible," he said, but that protection does start to wane as the company needs to keep buying new contracts. He added that Apple also considers currency conditions when launching new products, which has contributed to recent price increases.

While recent currency fluctuations have caused consumers in some countries to pay higher prices for iPhones, there are also examples where Apple bears some of the costs. In 2019, when the U.S. dollar also appreciated against other currencies, Apple adjusted prices in some foreign markets and reset them to levels comparable to those of a year ago in local currencies.

However, Apple did so because of lower sales due to price increases. In Turkey, for example, Apple's sales fell $700 million as the local lira fell 33 percent against the dollar in 2019. "We decided to realign iPhone prices to be more in line with local prices a year ago in an effort to help boost sales in those regions," Cook said in an interview at the time. "

But Apple said there was no decline in demand in those markets in 2022. Even in local currency terms, India, Indonesia, Mexico, Vietnam and other countries saw double-digit revenue growth, Maestri noted.

"It's important for us to look at how these markets perform in local currency because it really gives us a better understanding of customer reaction to our products, engagement with our ecosystem and overall brand strength," he said on the earnings call. We have to say that in this regard we are very pleased with the progress we have made in many markets around the world. "

The dollar has also risen steadily against the renminbi over the past six months, but there are signs that demand for the new Apple iPhone may be waning in China. While Maestri highlighted Apple's new revenue record in Greater China in its fiscal fourth quarter, Jeffries recently released a research report saying that sales of the four new iPhone 14 models in the first 38 days of launch in China fell 28% compared with iPhone 13 sales in the same period.

Apple isn't the only company acknowledging that currency fluctuations have an impact on its business and pricing decisions. McDonald's reported that currency fluctuations reduced revenue by 7 percentage points, resulting in a 5% year-over-year decline in revenue. Without the currency effect, revenue would have grown 2%. McDonald's Chief Financial Officer Ian Borden said on an earnings call last week that 60 percent of the company's revenue comes from outside the U.S., and apparently that revenue has declined when converted into dollars.

Exchange rate fluctuations are hitting P & G harder and harder. The consumer goods company reported a 6% drop in net sales due to adverse currency effects, compared with 3% and 4% in the previous two quarters. The company had to raise its forecast for currency negativity this year to $1.3 billion, and Chief Financial Officer Andre Schulten said on the company's earnings call last week: "Currency continues to work against us. "

Coca-Cola Chief Executive James Quincey said the strong dollar has been a liability this year, with about 80 percent of the company's profits coming from outside the U.S. Quincy expects that next year will likely have a bigger negative impact. Like Apple, Coke hopes to offset some of the currency fluctuations by raising prices.

So far, Coke hasn't reported a drop in demand due to higher prices, but Quincy acknowledges that many potential consumer concerns are on the horizon. "We do see consumers starting to react the way they usually do in a recession, delaying purchases of non-essential items and perhaps turning to more private label or discount channels," he said. The impact of the decline in market purchasing power is gradually becoming apparent. "

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