Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

China smartphone maker Xiaomi beats profit view, sees more global expansion

Published 03/19/2019, 07:47 AM
Updated 03/19/2019, 07:47 AM
© Reuters. People walk past a Xiaomi store in Shenyang

© Reuters. People walk past a Xiaomi store in Shenyang

SHANGHAI (Reuters) - Chinese smartphone maker Xiaomi Corp said on Tuesday its fourth-quarter net profit more than tripled to 1.85 billion yuan ($275.59 million), on stronger revenue.

That exceeded the 1.7 billion yuan average estimate of 10 analysts, according to Refinitiv data.

Revenue for the period increased 27 percent to 44.4 billion yuan, lower than the 47.4 billion yuan average estimate of 13 analysts, according to Refinitiv data.

The results show Xiaomi is weathering fairly well a slowing Chinese smartphone market, the world's biggest, by increasing its focus on markets such as India and Europe.

For the full 2018 calendar year, Xiaomi brought in revenue of 174.9 billion yuan and made a net profit of 8.6 billion yuan.

This marks the third set of financial results for the company since its IPO in Hong Kong. Xiaomi shares have rallied nearly 30 percent since their 2019 lows in January, though they remain well below their July listing price

To compensate for its slowing home market, the company has aggressively expanded in Europe. After broadly rolling out in the continent in early 2018, the company now ranks as the region's fourth-largest phone vendor.

Speaking on a call with reporters, Xiaomi CFO Shou Zi Chew said that sales from outside of China made up 40 percent of the company's revenue in the fourth quarter of 2018, adding that global expansion would be a priority for 2019.

"We will continue to explore the global markets and replicate the success in India in other key markets such as Indonesia and Western Europe," he said. "We will also expand into more new international markets in 2019."

Xiaomi has also revamped its smartphone lineup, paving the way to sell more expensive devices that can raise profit margins. In China, the average selling price of the company's phones increased 17 percent, while overseas they increased 10 percent, according to the company's earnings report.

In February, upon the launch of Xiaomi's new flagship Mi 9 phone, founder Lei Jun said the device would be the company's last such handset priced at under 3,000 yuan ($446.99).

Sales from smartphones made up 65.1 percent of Xiaomi's overall revenue in the fourth quarter. Money from other hardware made up 25.1 percent while internet services made up 9.1 percent.

The latter segment was pivotal to Xiaomi's pitch to investors in the run-up to its IPO. The company touted its so-called "triathlon business model", wherein consumers who purchase smartphones go on to use apps and services that generate revenue via advertisements or micropayments.

Xiaomi also stressed it would increase research and development, and plans to invest over 10 billion yuan in artificial intelligence throughout the next five years.

(This story corrects 10 million yuan to 10 billion, paragraph 14)

© Reuters. People walk past a Xiaomi store in Shenyang

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.