Chinese smartphone maker Xiaomi reported a 4% drop in second-quarter revenue as the country’s mobile phone market shrank, but said its foray 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 a year earlier, but topped 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, and also exceeded expectations. The company attributed the growth to cost cutting and efficiency gains, especially in brick-and-mortar stores.
“Despite the macroeconomic headwinds facing global markets, we continued to expand our business,” Xiaomi President Lu Weibing said on an earnings call.
“In this challenging environment, some of our peers have withdrawn from certain fields, but we will strengthen our presence in regions and markets no matter how difficult it is,” Lu said.
Consumer demand in China’s smartphone market continued to shrink 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% to 8.6 million units, Canalys said, while in India, its main overseas market, shipments fell 22% to 5.4 million units.
Reuters reported this month that Xiaomi plans to move into electric vehicle (EV) manufacturing and has won approval from China’s state planning department amid falling phone sales.
The company has pledged to invest $10 billion (nearly Rs 8,260 crore) in the auto business over a decade.
Lu said the company’s plan to start mass producing electric vehicles in the first half of 2024 remains unchanged. “Our current progress has exceeded expectations and exceeded the original production plan,” he said.
© Thomson Reuters 2023
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