Vertical Divider
Musing on Financials
Xiaomi Sees Signs of Recovery at the End of the Tunnel
April 05, 2020
Xiaomi Corp is seeing signs of a sales recovery in China, as the country starts to return to normal following the coronavirus lockdown. “The (Chinese) market has entered a full recovery stage, and... has already recovered to 80 to 90% of the normal level,” Chief Financial Officer Shou Zi Chew said on an earnings call.
He said sales in China fell in the first quarter due to the economic impact of the virus, but did not say by how much. Chew said he expected demand for smartphones to be resilient globally even though the virus was spreading to other countries. The company will take a hit in global sales during March and April, he said, but expects to see signs of recovery in May. “If we take reference from China’s experience, I think smartphone demand is resilient,” said Chew. “I think it will rebound quickly.”
Xiaomi reported on Tuesday a 27% jump in revenue for October-December 2019, above analysts’ expectations. Sales in the fourth quarter jumped to 56.5 billion yuan ($8 billion) from 44.42 billion yuan a year earlier, beating analysts’ expectations of 55.6 billion yuan, according to Refinitiv data. The company derives roughly 60% of its revenue from mobile handsets, and also sells online ads and other consumer hardware. Revenue from smartphones jumped 23% in the period to 30.8 billion yuan. Excluding one-time items, Xiaomi earned 2.34 billion yuan in the fourth quarter, above analysts’ estimates of 1.88 billion. For the whole year, Xiaomi’s profit attributable to shareholders fell by a quarter to 10.04 billion yuan.
Chinese mobile device (smartphones make up between 94% and 98.7% of total mobile shipments) shipments in February
Figure 1: February Mobile Phone Shipments - China
Xiaomi Sees Signs of Recovery at the End of the Tunnel
April 05, 2020
Xiaomi Corp is seeing signs of a sales recovery in China, as the country starts to return to normal following the coronavirus lockdown. “The (Chinese) market has entered a full recovery stage, and... has already recovered to 80 to 90% of the normal level,” Chief Financial Officer Shou Zi Chew said on an earnings call.
He said sales in China fell in the first quarter due to the economic impact of the virus, but did not say by how much. Chew said he expected demand for smartphones to be resilient globally even though the virus was spreading to other countries. The company will take a hit in global sales during March and April, he said, but expects to see signs of recovery in May. “If we take reference from China’s experience, I think smartphone demand is resilient,” said Chew. “I think it will rebound quickly.”
Xiaomi reported on Tuesday a 27% jump in revenue for October-December 2019, above analysts’ expectations. Sales in the fourth quarter jumped to 56.5 billion yuan ($8 billion) from 44.42 billion yuan a year earlier, beating analysts’ expectations of 55.6 billion yuan, according to Refinitiv data. The company derives roughly 60% of its revenue from mobile handsets, and also sells online ads and other consumer hardware. Revenue from smartphones jumped 23% in the period to 30.8 billion yuan. Excluding one-time items, Xiaomi earned 2.34 billion yuan in the fourth quarter, above analysts’ estimates of 1.88 billion. For the whole year, Xiaomi’s profit attributable to shareholders fell by a quarter to 10.04 billion yuan.
Chinese mobile device (smartphones make up between 94% and 98.7% of total mobile shipments) shipments in February
Figure 1: February Mobile Phone Shipments - China
Source: SCMR LLC, CAIST
February is an unreliable month due to the New Year holiday, but 2020 was outside any norm. Reports that smartphone shipments on a worldwide basis were down 38% in February, is demonstrative of the confusion in the market. February reflected what was happening in China while March and April will represent what is happening across the globe, so while February data on a worldwide basis reflects the fallout from the virus in China, March and April should reflect the effects as the disease spreads globally.