- Xiaomi posts a 13.6% increase in its sales to £5.72 billion in the first quarter.
- The smartphone manufacturer saw a sharp decline in its quarterly profit.
- The Chinese tech company says its 5G phones were greatly in demand in Q1.
Xiaomi Corp. (HKG: 1810) said on Wednesday that its sales came in 13.6% higher in the first quarter. Topping experts’ forecast, Xiaomi attributed the upbeat performance to a greater demand for its 5G phones that are traditionally priced higher.
Xiaomi’s increase in Q1 revenue came as a surprise as the Coronavirus pandemic that disrupted supply chains, hindered production, and weighed on demand was originally expected to hurt the company’s financial performance in the recent quarter. Xiaomi is scheduled to release its Redmi TV X series in China on 26th May.
Commenting on its Q1 earnings report, Xiaomi said:
“Our production in mainland China has largely resumed, and smartphone demand has rebounded quickly.”
Xiaomi tops analysts’ estimate for revenue in the first quarter
Xiaomi remained uneventful in the stock market on Wednesday. Shares of the Chinese tech company are roughly 15% up year to date. Learn more about day trading in the stock market.
Xiaomi’s hawkish statement was in contrast to its international competitors like Samsung and Apple. Both the global smartphone giants recently forecast a challenging year ahead. Apple’s iPhone shipments in China, however, climbed from 0.5 million in February to 2.5 million in March.
At £5.72 billion, Xiaomi’s Q1 sales were reported significantly stronger than £5.04 billion in the same quarter last year. Analysts were expecting the company to print £5.51 billion in revenue in the first quarter.
Thanks to the latest craze of 5G compatibility, the Chinese smartphone manufacturer said that its 5G phones were substantially in demand in the recent quarter both domestically and in the international market that helped push prices further up.
In terms of quarterly profit, however, Xiaomi saw a roughly 33% decline in Q1 ascribed to the devaluation of its investments in other businesses. Mobile phones are the primary source of revenue for the technology company, but part of it is also generated from selling advertisements online and a range of other consumer hardware products.
Xiaomi is focusing on its growth in the international market
In the domestic market, Xiaomi faces an intense rivalry from Huawei Technologies. Owing to the contraction in China’s local market for smartphones, Xiaomi is now increasingly focused on building a reputation in the international market.
According to Canalys, Xiaomi saw an over 25% year over year decline in its shipments to consumers in China in Q1. In comparison, smartphone sales at large were down 18% in China in the first quarter.
In March, the smartphone maker had announced that signs of recovery are already showing in the sales data as the outbreak started to get under control in China.
At the time of writing, Xiaomi is valued at £23.68 billion and has a price to earnings ratio of 28.62.