Chinese smartphone maker Xiaomi reported a 4 percent drop in sales in the second quarter, tracking a contraction in China’s mobile phone market, but said its move to making electric vehicles was ahead of schedule.
Revenue fell to CNY 67.4 billion (almost Rs. 76,450 crore) compared to CNY 70.17 billion (almost Rs. 80,650 crore) in the same quarter a year earlier, but surpassed analysts’ estimates of CNY 65.13 billion ( nearly Rs. 74,860 crore).
Net profit rose to CNY 5.14 billion (nearly Rs. 5,830 crore) over the period, a 147 percent increase from CNY 2.08 billion (nearly Rs. 2,390 crore) a year earlier, and also surpassed the expectations. The company attributes the increase to cost savings and efficiencies, especially in its brick-and-mortar stores.
“Despite the macroeconomic headwinds in the global market, we continue to increase our footprint,” Xiaomi president Lu Weibing said on an earnings call.
“Several of our colleagues have already left certain areas in this challenging environment, but as difficult as it will be, we will strengthen our presence in regions and markets,” said Lu.
Consumer demand in China’s smartphone market continued to contract in the second quarter, falling 5 percent to 64.3 million units, according to Canalys, a consultancy that tracks the smartphone industry.
Xiaomi’s shipments fell 19 percent to 8.6 million, while shipments in the large overseas market of India fell 22 percent to 5.4 million units, Canalys said.
In the face of declining mobile phone sales, Xiaomi plans to move into electric vehicle (EV) production and has received approval from China’s state planner, Reuters reported this month.
The company has committed an investment of $10 billion (nearly Rs. 82,600 crore) over ten years in the automotive industry.
Lu said the company’s plans to begin mass production of electric vehicles in the first half of 2024 remain unchanged. “Our current progress is ahead of expectations and ahead of the original production schedule,” he said.
© Thomson Reuters 2023
