Chinese smartphone maker Xiaomi reported a 4% drop in second-quarter revenue as China’s mobile phone market shrank, but said its push into electric vehicles was ahead of schedule.
Sales fell to 67.4 billion yuan (nearly 764.5 billion rupees) from 70.17 billion yuan (nearly 806.5 billion rupees) in the same period last year, but were higher than analysts’ expectations of 65.13 billion yuan (nearly 748.6 billion rupees).
Net profit during the period increased to 5.14 billion yuan (nearly 58.3 billion rupees), an increase of 147% from 2.08 billion yuan (nearly 23.9 billion rupees) in the same period last year, which also exceeded expectations. The company attributed the growth to cost cutting and efficiency gains, particularly in brick-and-mortar stores.
“We continue to expand our business despite macroeconomic headwinds facing global markets,” Xiaomi President Lu Weibing said on the earnings call.
“In this challenging environment, some of our peers have exited certain areas, but no matter how difficult it is, we will strengthen our presence in regions and markets,” Lu said.
Data from Canalys, a consulting firm that tracks the smartphone industry, showed that consumer demand in China’s smartphone market continued to shrink in the second quarter, falling 5% to 64.3 million units.
Canalys said Xiaomi’s shipments fell 19% to 8.6 million units, while in India, its main overseas market, shipments fell 22% to 5.4 million units.
Reuters reported this month that Xiaomi plans to expand into electric vehicle (EV) manufacturing and has received approval from China’s state planning authorities amid declining mobile phone sales.
The company has pledged to invest $10 billion (nearly Rs 82,600 crore) in the automotive business over ten years.
Lu said the company’s plan to start mass production of electric vehicles in the first half of 2024 remains unchanged. “We are currently progressing beyond expectations and beyond our original production plan,” he said.
© Thomson Reuters 2023
