Xiaomi posts 15% rise in sales, misses estimates

Ruben Fields
August 21, 2019

Xiaomi reported a further slowdown in sales growth in the second quarter, hurt by the depressed smartphone market and weaker Chinese economy.

The company is facing tough times with the Chinese smartphone market being in a slump and Huawei growing pretty significantly in the domestic market.

Xiaomi's revenue in the second quarter ended June 30 rose to 51.95 billion yuan ($7.36 billion) from 45.24 billion a year earlier. Analysts expected revenue of 53.52 billion yuan, according to Refinitiv data. However, the company still managed to post a decent 3.64 billion yuan adjusted profit. The company shipped totaled 60 million smartphones in the first six months in 2019, achieving a 9.8% increase in the firm's income.

Xiaomi's market share in China declined by a fifth in the April-June quarter even as Huawei's share surged by 31%, according to research firm Canalys.

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The company, which listed a year ago, gets the majority of its revenue from mobile handsets, but also makes money selling online ads and other consumer devices. Xiaomi's annual revenue growth for 2018 was 52.6% and the year-over-year growth for the first quarter of 2019 was 27.2%. The company is tapping into the promising 5G sector as it has already released one smartphone capable of connecting to the 5G mobile networks and is to launch another in the second half this year. Contributions from overseas business provided 40% of Xiaomi's total revenue for the quarter.

Three of the companies Xiaomi invested in listed on China's newly-opened STAR market, and helped it generate asset-divestment gains of 551.8 million yuan.

Xiaomi's chief financial officer, Chew Shou Zi, said the investments stem in part from the company's hopes to build a "Chinese supply chain", while improving its internal research and development abilities.

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