Coface: Companies in sector of household appliances and consumer electronics cautious when it comes to making long-term plans

The business climate in Serbia is still stable and has been rated A4 by the Coface country risk assessment. The ICT sector, to which the sector of household appliances/consumer electronics belongs, has been characterized as a medium-risk sector in Central and Eastern Europe, says the latest sector-based analysis of Coface which pertains to electronic devices and household appliances in Serbia.

As pointed out in the analysis, according to the Statista portal, the consumer electronics market is projected to grow annually by 1.64% in the 2024-2028 period. In addition to that, Serbia's consumer electronics market is witnessing a surge in demand for affordable smartphones, driven by the growing tech-savvy population.

– The main strengths to be highlighted regarding this sector are that the globalization of internet access and market penetration opportunities are accelerating because of the physical distancing linked to the COVID-19 pandemic, the exponential growth of connected goods and strong innovation, with AI having a growing impact on all sectors and future 5G technology – the analysis points out.

On the other hand, some of the main weaknesses are saturation of some hardware in large markets (tablets, smartphones, PCs), long-term challenges regarding rare mineral reserves, tougher regulatory environment in the future for ICT giants, notably in terms of taxes, data protection, freedom of speech and CO2 emissions and concerns about semiconductors shortages and supply chain disruptions.

– As the news which stood out at the beginning of this year, we can say that Tehnomanija has become part of Prointer Group. Prointer announced that the strategic integration was an important step toward the forming of an even stronger team and a better provision of technological innovations to their clients. The merging of those two companies is bringing a synergy of expertise and experience, which will help create a more efficient response to the growing needs of the modern market – the analysis points out.

When it comes to the estimate of companies at Coface, as added, there is an effort to understand the overall current state of individual business entities and the main factors that had the dominant factor on their business operations.

– Not just looking at the financial indicators, but gaining an insight into the reasons which transcend the performances of a certain company, we consider a certain sector, as well as the country and the business climate/environment in which the company operates. The increase of operating expenses (OPEX) such as: salaries, rent, utilities and electrical energy is highlighted as one of the main factors that has had an impact on the business operations. In addition to that, the reduced purchasing power of the populace due to the growing inflation is highlighted, which is why people are not able to buy products of a better quality and focus more on production for everyday consumption. In the electronics manufacturing process, the change of the consumers’ preferences is one of the biggest challenges that companies are facing, mostly because of the fact that the purchasing power has been reduced – points out the analysis.

Companies, as emphasized, also point to the influence of the Russian-Ukrainian conflict, which has caused the inflation, which is why they avoid making long-term predictions.

– Economic crises and certain economic conditions have a considerable impact on the consumers’ behavior. People are focusing on a rational spending of their home budget, and the companies which primarily sell their products to natural persons are affected by the changes of the economic situation. Certain companies have resorted to investments such as opening premium stores, but it is still questionable how this reflects on the company’s overall results considering the drop of the purchasing power of the populace – the analysis says.

According to the data of the Statistical Office of the Republic of Serbia, as specified, in 2023, the average monthly income in money and in kind, per household (all households), amounted to RSD 87,973 and the individual consumption expenditures of the households (all households) amounted to RSD 88,244. Relative to 2022, the average monthly income in money and in kind increased by 12.2% and the individual consumption expenditures of the households increased also by 12.2% in nominal terms. The largest share of the individual consumption expenditures (all households) relates to expenditures for food and non-alcoholic beverages – 36.8%, followed by expenditures related to housing, water, electricity, gas and other fuels – 16.4%. Expenditures for transport amounted to – 8.7%, for miscellaneous goods and services – 5.9%, for communication – 5.3%, for recreation and culture – 5.1%, for clothing and footwear – 4.7%, for alcoholic beverages and tobacco – 4.5%, for health – 4.2% and 8.4% relates to other groups of individual consumption.

– As we noted in our previous article about the agricultural-food sector, companies in the sector of household appliances/consumer electronics are also cautious when it comes to making long-term plans. However, it seems that they are ready to follow how the preferences in the market are changing so that they would find new ways of approaching potential clients – the analysis emphasizes.

Companies in the sector of household appliances, the analysis points out, are facing big competition and low profit margins. However, the consumers’ trust is expected to grow if, in the coming period, there is a reduction of the inflation and the key policy rate at the National Bank of Serbia.

Coface Srbija d.o.o. Beograd

Narodna banka Srbije Beograd

Tehnomanija doo Beograd

Prointer sistem doo Beograd

Coface

National Bank of Serbia

Tehnomanija

Prointer Group

sector based analysis of Coface regarding electronic devices and household appliances

business climate in Serbia

ICT sector

artificial intelligence