Chinese smartphone maker Xiaomi on Friday reported a sharp decline in second-quarter revenue as the world’s largest smartphone market was hit by strict COVID restrictions. Sales fell 20 percent year-on-year to CNY 70.17 billion (about Rs 82,200 crore), missing estimates and marking a sharp drop from the previous quarter, when the company reported its first revenue decline since listing.
Missing analysts’ estimates, net income fell 67 percent to CNY 2.08 billion (about Rs 2,400 crore).
China’s consumer consumption has struggled to recover from the effects of lockdowns in Shanghai and other cities in the first half of the year.
China’s economy unexpectedly slowed in July, data from this week shows, with the world’s second-largest economy denting its June quarter growth from COVID restrictions and prompting a central bank rate cut. is fighting for.
China’s long-stagnant smartphone sector has been particularly hit by the slowdown, with unit shipments down 10 percent year-on-year in the second quarter, according to research firm Canalys.
Smartphone sales for Xiaomi, which generates more than half of the company’s total revenue, fell 29 percent.
In 2021, Xiaomi saw a surge in sales after grabbing market share from rival Huawei, whose ability to procure components was heavily weighed down by US sanctions.
Yet the bump was short-lived, and the company’s stock price has fallen nearly 40 percent since the beginning of 2022, hit by a slowing Chinese economy and weak overseas growth.
In India, Xiaomi’s strongest market outside China, the company is under government scrutiny for allegedly dodging tax regulators.
In April, Indian tax authorities seized $725 million (about Rs 5,800 crore) in assets from the company, claiming that money was illegally transferred abroad under the guise of royalty payments. Xiaomi has denied any wrongdoing.
The weak smartphone market in China and globally has prompted the company to look for new opportunities.
Xiaomi said earlier this month it had started testing self-driving vehicles in select cities in China.
© Thomson Reuters 2022