Xiaomi reported slower revenue growth in the first quarter, with sales up 13.6 percent to CNY 49.7 billion. While volumes slowed due to the coronavirus outbreak, the company managed to improve its average selling price thanks a greater focus on premium 5G models and continued expansion in Europe. Gross profit jumped 44.9 percent to CNY 7.56 billion, and adjusted net profit increased 10.6 percent to CNY 10.3 billion.
Smartphone revenue increased by 12.3 percent to CNY 30.3 billion in the first quarter. Xiaomi said it sold 29.2 million smartphones in the period, up from 27.9 million a year earlier, while the average selling price rose to CNY 1,038.0 from CNY 968.3 in the first quarter of 2019 after the launch of new high-end, 5G models. The company said the flagship Mi 10 sold 1 million units within two months of its launch in February.
Revenues from other hardware rose a slower 7.8 percent to CNY 12.0 billion. Xiaomi said it saw continued growth in wearables and routers, but sales of smart TVs and laptops declined year-on-year, mainly due to lower sales activity and production due to the Covid-19 pandemic.
The company's bottom line fell to CNY 2.2 billion from CNY 3.2 billion, due to foreign exchange losses and lower gains on investments. R&D spending also increased 13.7 percent to CNY 1.7 billion, and sales and marketing costs jumped 42.3 percent to CNY 1.8 billion in order to promote the new 5G models and brand awareness.
Signs of recovery
The Covid-19 outbreak led to a slowdown in sales in China during the quarter and pushed international revenues to 50 percent of Xiaomi's sales for the first time. The company said production in mainland China has largely resumed, and smartphone demand has rebounded quickly. Since March, its mainland China smartphone shipments have gradually returned to the pre-pandemic level, and smart TV shipments have also largely recovered, it said.
Its second key market India has been affected by lockdown restrictions since late March, but the country is starting to show similar signs of recovery since early May, Xiaomi said. Europe shows a similar picture, with the number of smartphone activations in the market in the third week of May back to over 90 percent of the weekly average in January, according to the company.
