- Xiaomi reported better-than-expected profit in the smartphone market as cost-cutting efforts and focus on more expensive devices paid off.
- The company’s net income doubled to 3.67 billion yuan in the three months ended June.
- The Beijing-based smartphone company has been spending on cuts that helped stabilize the bottom line during China’s faltering economic recovery.
- The executives have reaffirmed the company’s intention to expand in regions such as Latin America and Europe into new arenas.
- Billionaire Xiaomi co-founder Lei Jun has turned his attention to a $10 billion electric car venture, which recently won approval from China’s powerful state planning agency.
With the help of cost-cutting efforts and a focus on more expensive mobile devices, Xiaomi Corp. reported a better-than-expected profit in the smartphone market. The company’s net income doubled to 3.67 billion yuan in the three months ended June, according to a report published by Bloomberg News.
However, the average estimate of Xiaomi’s net income was 3.16 billion yuan. The report stated that revenue slid a less-than-projected 4% to 67.4 billion yuan, narrowing declines from previous quarters when the smartphone market slump was at its worst.
The Beijing-based smartphone company has been spending on cuts that helped stabilize the bottom line during China’s faltering economic recovery. The domestic mobile market is now showing signs of bottoming out, Bloomberg reported.
Xiaomi has sold more premium smartphones and its average selling price in China climbed more than 24%. The executives have reaffirmed the company’s intention to expand in regions such as Latin America and Europe into new arenas.
Speaking to media persons, President Lu Weibing said, “As a consumer electronics player, Xiaomi has to scale up in global markets. Xiaomi will firmly proceed with the legal actions in India. We’ve actually seen a pretty big improvement in Indian business, I believe you will see some indexes showing the change soon.”
Billionaire Xiaomi co-founder Lei Jun has turned his attention to a $10 billion electric car venture, which recently won approval from China’s powerful state planning agency, Reuters reported last week.
With the first vehicle planned for next year — pending a full set of regulatory licenses — the EV business could contribute as much as 5% of Xiaomi’s 2024 revenue, Bloomberg Intelligence estimates.
Meanwhile, Xiaomi also boosted its research spending by 21% to 4.6 billion yuan, of which more than a third went toward its EV project. It also hired some 3,000 people to propel AI development, joining a nationwide investment spree that accelerated this year with the advent of ChatGPT.
“Shipment remains soft given inventory digestion but likely reaching a healthier level,” Citigroup analysts including Kyna Wong and Andre Lin wrote ahead of the earnings release.
(With inputs from agencies)
