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Xiaomi’s earnings fall short of expectations as competition from Oppo, Vivo intensifies

Chinese smartphone maker Xiaomi on Tuesday reported smaller-than-expected 8.2% revenue growth in the third quarter, fueled by increased competition from domestic rivals Oppo and Vivo.

Sales rose to 78.06 billion yuan (approximately Rs 90,910) in the three months to 30 September. Analysts were expecting 79.20 billion yuan (roughly Rs 92,300), Refinitiv data showed.

Profit fell 84 percent to 788.6 million yuan (roughly Rs 920 crore), which Xiaomi attributed to changes in the valuation of companies in its investment portfolio.

Excluding one-time gains and losses, Xiaomi earned 5.18 billion RMB (approximately Rs 6,040) in profit, which is largely in line with analysts’ average expectations of RMB 5.09 billion (approximately Rs 5,930).

Xiaomi’s smartphone revenue rose just 0.4 percent to 47.8 billion yuan (roughly Rs 55,655).

According to research firm Canalys, total smartphone sales in China fell 5% between July and September.

Xiaomi managed to gain market share this year due to the retreat of its main rival Huawei, which suffered a disruption in its smartphone business following US sanctions.

But the company did not grow at the same pace as top-selling rivals Oppo and Vivo, while Huawei’s subsidiary Honor surpassed Xiaomi in the third quarter to become China’s third-largest smartphone manufacturer in terms of market share.

Xiaomi’s shipments in China in the third quarter grew by just 4 percent year on year, according to Canalys.

Faced with stiff competition in a shrinking market, the company has responded with aggressive advancements in the retail industry, in which it has long fallen behind.

At the end of October, Xiaomi announced that it had opened its 10,000th store in China and intends to triple that number over the next two to three years.

© Thomson Reuters 2021

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