Smartphone sales, Huawei sanctions aid Xiaomi’s 19% net profit rise
Chinese smartphone maker Xiaomi on Tuesday posted a better-than-expected 18.9% increase in net profit to 4.1 billion yuan (US$624 million) in the third quarter as smartphone sales surged 47.5%.
The year-on-year results beat a previous estimate that put the net profit of the Beijing-headquartered company at 3.3 billion yuan.
Smartphone revenue climbed to 47.6 billion yuan as sales started to recover from the COVID-19 pandemic, the company said. It sold 46.6 million devices in the third quarter.
Overall, Xiaomi’s total revenue for the quarter rose 34% year on year to 72.1 billion yuan.
Internet of Things and lifestyle products contributed income of 18.1 billion yuan, up 16.1% year on year, as global shipments of its smart television reached 3.1 million units, Xiaomi said.
Xiaomi is seen to be benefiting from sanctions imposed by the United States government on Huawei, another Chinese smartphone maker. As Huawei faces cuts to its supply chain, Xiaomi has managed to grab some of its market share, observers say.
When asked how much longer this trend would continue, Xiaomi president Wang Xiang told reporters the company would pay attention to any changes in the market.
Wang said a shortage of components observed in the second and third quarters due to COVID-19 would likely continue in the fourth quarter or even into next year.
Xiaomi was expected to focus on producing mid-tier smartphones to raise profit margins, said Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai. Wen said he believed Xiaomi would continue to dominate India’s smartphone market despite a drop in sales in the first half.
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