Despite Sharp Decline In Phone Sales, Xiaomi Achieves Profits

As the third-largest smartphone manufacturer in the world survived a challenging quarter to end the year, Xiaomi Corp.'s profit exceeded expectations.

‍

The Beijing-based firm still managed to post net profitability of 1.5 billion yuan ($218 million), exceeding the typical expert expectation of 800 million yuan, despite the fact that smartphone shipments were drastically down in the three months ending in December. According to a filing the company made on Friday, revenue for the quarter was 66 billion yuan. 65 billion yuan was the estimate of analysts.

‍

Xiaomi, once the top smartphone manufacturer in China, lagged behind Vivo and Honor in domestic shipping volume. Yet, the company's attempts to diversify its investments and product lines helped it get through a period when China's Covid Zero limits were in place and the commotion they caused when they were abruptly lifted.

‍

According to the filing, the company is on track to meet its target of mass-producing smart electric cars in the first half of 2024. Lei Jun, a millionaire co-founder of Xiaomi, has made investing in the developing EV market a top priority and committed billions of dollars to the effort. As it works to keep its promise to produce its own automobiles, the company is in discussions with Beijing Automotive Group Co. to work together on EV production.

‍

Xiaomi's plans to manufacture automobiles have so far been hampered by the need for project permission from the government. One of the later prospective competitors in the Chinese EV market, where BYD Co. and Nio Inc. are more well-known brands, is Xiaomi. Lei, who has described electric automobiles as his career's final startup project, is relying on his business's experience with linked technologies and cultivating devoted user groups to succeed even without an advantage. According to the filing, it invested 3.1 billion yuan in smart EVs and related projects in 2022.

‍

In the fourth quarter, Xiaomi shipped 26.3% fewer smartphones globally than all other manufacturers as demand declined globally. Yet, according to market research firm IDC, the company's 33.2 million devices shipped over the time period were sufficient to defeat regional rivals and retain its position as the third-most popular smartphone brand in the world, after Apple Inc. and Samsung Electronics Co.

‍

Lei has also promised investors that he will increase Xiaomi's profitability while retaining the company's size. This is a difficult goal to achieve because it calls for stronger investment returns, higher profit margins from investments, and more lucrative online services.

‍

Although Xiaomi made some progress in higher-end markets, it makes sense to turn attention to profitability, according to a research by Zhongtai International Securities analyst Angela Qin. The initiative will aid in reducing the pressure that the macroeconomics and new businesses are putting on us.