Xiaomi, a Chinese manufacturer of electronics and home appliances, today revealed a sharp decline in second-quarter sales. The company blamed its failures on a number of lockdowns that the Chinese government was compelled to implement after the pandemic got worse in a few different areas.
Sales for the company decreased 20% year over year to 70.17 billion yuan ($10.31 billion); these figures are significantly lower than analysts’ projections. Even with the previous quarter’s first revenue decline reported by Xiaomi, financial results accelerated negative dynamics. does not meet the net profit of the company as well as analyst expectations. which came to 2.08 billion yuan ($306.34 million), a 67% decrease.
Xiaomi reports a 20% drop in revenue due to China’s COVID restrictions
The lockdowns introduced due to the spread of the pandemic in Shanghai and other cities of China caused serious damage to the consumer activity of citizens, by the end of July it became clear that the growth of the second-world economy had slowed down, and the Central Bank of China had to reduce the key rate. The smartphone market in China, which has been in a state of stagnation for a long time, also reacted negatively to macroeconomic factors. In the second quarter, sales of gadgets decreased by 10% compared to the same period last year. Sales of Xiaomi smartphones fell by 29%, and they bring more than half of the company’s income.
In 2021, Xiaomi sales showed a sharp increase – the company pulled over a fair share of the market from Huawei. Which drastically limits its activities due to US sanctions. But the effect of this was short. And since the beginning of 2022, the company’s shares have lost almost 40% in price. Investor pessimism was due to a slowdown in the Chinese economy and a weakening of the company’s growth abroad. In May, India, Xiaomi’s largest market outside of China, initiated a series of investigations against the company, accused it of hiding funds from the tax authorities and confiscated $725 million.