Xiaomi feels the sting of Covid curbs in China with second-quarter revenue down 20%, smartphone sales drop 29%

Chinese smartphone maker Xiaomi posted a sharp decline in second-quarter revenue on Friday as the world’s biggest smartphone market contracted, hit by tough COVID-related restrictions. Sales fell 20% year-on-year to 70.17 billion yuan (around Rs 82,200 crore), missing estimates and marking a steeper drop from the previous quarter, when the company recorded its first-ever decline in revenue since its IPO.

Net income fell 67% to 2.08 billion yuan (about Rs 2,400 crore), without analysts’ estimates.

Chinese consumer consumption struggled to rebound from the impact of shutdowns in Shanghai and other cities in the first half.

Data this week showed China’s economy unexpectedly slowed in July, indicating the world’s second-largest economy is struggling to shake off the hit to June quarter growth from COVID restrictions and causing a decline. central bank rates.

China’s long-stalled smartphone sector has been particularly hard hit by the recession, with unit shipments down 10% year-on-year in the second quarter, according to research firm Canalys.

Smartphone sales for Xiaomi, which generate more than half of the company’s total revenue, fell 29%.

In 2021, Xiaomi saw its sales increase after taking market share from rival Huawei, whose ability to source components has been severely crippled by US sanctions.

Still, the jolt was short-lived and the company’s share price has fallen nearly 40% since the start of 2022, hit by China’s slowing economy and weaker growth in the world. ‘foreign.

In India, Xiaomi’s strongest market outside of China, the company has faced government investigations for allegedly dodging tax regulators.

In April, Indian tax authorities seized $725 million (around Rs 5,800 crore) of assets from the company, claiming it was illegally transferring funds overseas under the guise of royalty payers. Xiaomi has denied any wrongdoing.

The weakness of the smartphone market in China and around the world has led the company to seek new opportunities.

Xiaomi said earlier this month that it had started testing self-driving vehicles in some cities in China.

© Thomson Reuters 2022

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