Chinese smartphone maker Xiaomi on Friday reported a record drop in fourth-quarter revenue as the company weathered a slowdown in consumption and disruptions due to China’s COVID-19 curbs.
Early signs suggest China’s economy will only rebound slowly, as consumers remain cautious about spending money despite an easing of restrictions on domestic and international travel.
Xiaomi group president Lu Weibing, speaking on a company earnings call, said China’s consumer electronics was seeing early signs of a recovery at present but “it will take time.”
Year-on-year declines may continue in the first half of the year before a rebound occurs, he added.
Xiaomi’s sales in the fourth quarter of 2022 reached CNY 66.05 billion (nearly Rs. 79,200 crore), down 22.8 percent from CNY 85.58 billion (nearly Rs.1,02,600 crore) a year earlier.
The numbers were slightly ahead of analyst expectations, but they mark the fourth consecutive revenue drop for the company, and its steepest on record yet.
Net income fell to CNY 1.46 billion (nearly Rs. 1,750 crore) over the period, down 67.3 percent from CNY 4.473 billion (nearly Rs. 5,360 crore) a year earlier.
The company’s revenue for 2022 was CNY 280.04 billion (nearly Rs. 3,35,800 crore), a drop of 14.7 percent, while net income came in at CNY 8.52 billion (nearly Rs. 10,200 crore), down 61.4 percent. Both figures fell short of analyst expectations.
Overall consumption in China dragged on most product categories in the fourth quarter, as the abrupt lifting of strict COVID-19 curbs led to a rapid spread in infections across the country.
All major smartphone brands experienced a sales slump in China over the period, based on research firm Canalys. Xiaomi, however, took the biggest hit with shipments dropping 37 percent year on year, the Canalys data showed.
China’s smartphone sales will endure a record decline in 2022, down 14 percent to 287 million units, Canalys data shows. That marked the first time in ten years that shipments fell below 300 million units.
Xiaomi is also facing headwinds in India, where it failed to notice a rising consumer preference for higher-end devices and ended up losing its position as the top-selling phone brand to South Korea’s Samsung in the fourth quarter.
The company, along with its rivals, could also face new security probes from Indian authorities due to national security concerns over pre-installed apps.
India is Xiaomi’s largest overseas market and the world’s second largest market for smartphones.
Xiaomi is also expanding into electric vehicles. The company said on Friday that it is “on track” to reach its goal of mass producing its first cars in the first half of 2024.
© Thomson Reuters 2023