China’s Xiaomi posts 20 percent year-on-year drop in sales and 83 percent fall in operating profit as demand hit by Covid restrictions, economic woes
Chinese smartphone maker Xiaomi posted a steep drop in quarterly sales amidst Covid restrictions that affected the domestic smartphone market, as well as a broader international slump in smartphone demand.
Sales fell 20 percent year-on-year to 70.17 billion yuan ($10.31bn, £8.7bn), below analysts estimates and marking a steeper decline from the previous quarter in which the firm posted its first drop in revenue since it listed publicly in 2018.
Operating profit fell 83.8 percent year-on-year to 1.7bn yuan while net profit fell 67 percent to 2.1bn yuan, with both figures missing analysts’ predictions.
‘Difficult and weak’
On an earnings call Xiaomi president Wang Xiang said demand in China was “difficult and weak” due to the resurgence of Covid-19.
Overseas demand had been affected by rising fuel prices, input costs and inflation, he added, while net profit fell as the company cleared inventory via sales and promotions.
Xiaomi’s smartphone sales, which generate more than half of its total revenues, were down 29 percent for the quarter.
Consumer demand in China has struggled to recover from the pandemic amidst lockdowns in Shanghai and other cities in the first half of the year, with smartphones particularly badly hit.
Unit shipments of smartphones in China were down 10 percent year-on-year in the second quarter, according to Canalys.
Xiaomi is also facing restrictions in India, its strongest market outside China, which wants to bar Chinese firms from selling smartphones priced at under $150.
The firm said the reported policy change has not yet affected its sales in India.
“We are still shipping low-end phones in India,” Xiang told analysts.