Xiaomi’s revenue declines 10% after smartphone demand tanks

Bloomberg

Xiaomi Corp.’s quarterly revenue falls almost 10% as it battled a slumping global smartphone market and weak consumer
demand at home.
Sales of mobile devices fall 11%, leading declines across business divisions encompassing smart electronics and internet services. The Beijing-based company logged sales of 70.5 billion yuan ($9.9 billion), slightly above estimates. But it posted a surprise net loss of 1.5 billion yuan for the quarter through September, reflecting a writedown of almost 3 billion yuan on items such as investment losses. Adjusted net income, which strips out exceptionals, exceeded analysts’ estimates.
China’s Covid Zero policy has sown chaos across the country’s tech industry and supply chains, depressing economic activity. At the same time, electronics demand is cooling as shoppers react to elevated inflation and slowing economic growth. Global smartphone shipments are at their lowest in years thanks to depressed demand, but Xiaomi managed to gain market share in Europe, executives told the reporters on a
conference call.
“The challenge in China is Covid, the pandemic situation is still volatile,” President Wang Xiang said. “There’s still room for growth in overseas markets,” he added.
Global smartphone sales are set to decline 2.9% next year following a 12.2% slump in 2022, Jefferies predicted this month. Xiaomi’s unit sales will decrease this year and next before recovering slightly in 2024, Jefferies forecast.
That’s partly because phones sold in recent years have been well-built, leaving consumers with little need to purchase new ones, Jefferies analysts including Edison Lee and Nick Cheng said in the Nov. 9 note. And new models are adding few innovations, they said.
“Structural weakness is worse than expected,” the analysts wrote. The challenges are “compounded by a weak economy.”