Xiaomi’s revenue drops in the third quarter as COVID-19 takes hold

SHANGHAI (Reuters) – Chinese smartphone maker Xiaomi Corp reported a 9.7 percent drop in third-quarter revenue on Wednesday, hit by China’s restrictions on the novel coronavirus and waning consumer demand.

Sales in the third quarter came to 70.17 billion yuan ($9.81 billion), down from 78.063 billion yuan in the same quarter last year, slightly exceeding analysts’ expectations of 70.52 billion yuan.

Net income fell 59.1% to 2.12 billion yuan over the period, from 5.176 billion yuan a year earlier.

Consumer consumption in China remained weak as cities across the country continue to implement lockdowns to prevent the spread of the Omicron variant.

The electronics sector also took a big hit. Research firm Canalys said that smartphone shipments in the third quarter fell 11% in China and 9% globally.

People walk past Xiaomi, the Chinese consumer electronics maker, and its store in Mumbai, India, on May 11, 2022. REUTERS/Francis Mascarenhas

Revenue from smartphones, which make up nearly 60% of Xiaomi’s total sales, fell 11.1% year-on-year.

In 2021, Xiaomi saw sales rise after it grabbed market share from rival Huawei Technologies Co Ltd (HWT.UL), whose ability to procure components has been hit by US sanctions.

However, the reinforcement did not last long. In May, Xiaomi reported its first-ever quarterly decline since its 2018 listing. And in August, second-quarter revenue fell 20% year-on-year.

Xiaomi’s share price has fallen by almost 50% since the beginning of the year.

The company, in turn, looked at new areas for growth. Last year, it officially announced the breakthrough of electric vehicles, and committed to entering mass production in the first half of 2024.

($1 = 7.1545 CNY)

(Covering) By Josh Horowitz, Editing by Louise Heavens and Jane Merriman

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