In Q1 2022, due to negative events such as the international situation and repeated epidemics, the supply and demand sides of the mobile phone industry were under pressure as a whole, and the global smartphone market declined significantly. Obviously, Xiaomi was not spared.
On May 19, Xiaomi group (1810.hk, Xiaomi group-w) released its financial report for the first quarter of 2022.
According to the financial report, the total revenue of the group was 73.4 billion yuan, a year-on-year decrease of 4.6%; The loss during the period was 530 million yuan, with a profit of 7.789 billion yuan in the same period last year and an adjusted net profit of 2.9 billion yuan, a year-on-year decrease of 52.9%. In addition, the innovation business cost was RMB 425 million, and the R & D expenditure was RMB 3.5 billion, a year-on-year increase of 16%.
At the telephone conference of the first quarterly report of Xiaomi group, Wang Xiang, President of Xiaomi group, admitted that the epidemic had an impact on Xiaomi’s production, sales, logistics and offline stores, Xiaomi’s costs and expenses had increased, and consumers’ willingness to consume was also insufficient.
“From the perspective of the global smartphone market, the market is declining, and we are facing a declining market today.”. For the rumor of “cutting orders”, Wang Xiang also revealed at the telephone conference that the biggest challenge in the first quarter was a large shortage of entry-level mobile phone chips, with a gap of more than 10 million, which had a great impact on Q1 revenue. This has also led the company to adjust its supply chain. In this regard, Xiaomi is still under evaluation. However, Wang Xiang believes that this will improve to a certain extent in the second quarter.
epidemic “black swan” impacts the industry, and Xiaomi mobile phone business is under pressure
According to the financial report data, Xiaomi has been affected by the shortage of core parts, the repeated covid-19 epidemic and the disturbance of the global macroeconomic environment caused by the international situation.
According to the financial report, the gross profit of Xiaomi group in the first quarter of 2022 was 12.7 billion yuan, down 10.2% from 14.16 billion yuan in the same period of last year and 13.3% from 14.66 billion yuan in the previous quarter; The operating loss was 911 million yuan, the profit in the same period of last year was 8.157 billion yuan, and the profit in the previous quarter was 4.416 billion yuan; The loss in the period was 530 million yuan, the profit in the same period of last year was 7.789 billion yuan, and the profit in the previous quarter was 2.443 billion yuan.
In addition, Xiaomi’s adjusted profit in the first quarter was 2.859 billion yuan, down 52.9% from 6.069 billion yuan in the same period last year and 36.1% from 4.473 billion yuan in the previous quarter.
For the main reason for the decrease in gross profit margin this year, Wang Xiang said that it was because some old products had to be cleaned up.
Specifically, Xiaomi’s smartphone business revenue in this quarter was 45.8 billion yuan, compared with 51.5 billion yuan in the first quarter of last year. The global smartphone market shipped 38.5 million units, down 22.1% from 49.4 million units in the same period of last year, down more than 10 million units.
However, in the case of declining mobile phone shipments, due to the implementation of Xiaomi’s high-end strategy, the proportion of high-end smartphone shipments in the total smartphone shipments has increased, making Xiaomi’s mobile phone selling price (ASP) continue to increase, reaching RMB 1189, a year-on-year increase of 14%.
At the same time, the global shipments of high-end smart phones priced at 3000 yuan or more in Chinese Mainland and 300 euros or more abroad reached nearly 4million.
As for Xiaomi’s IOT and consumer products segment, the revenue was 19.477 billion yuan, compared with 18.243 billion yuan from IOT and consumer products in the same period last year. As of March 31, 2022, the number of aiot connected devices (excluding smartphones, tablets and laptops) exceeded 478 million, with a year-on-year increase of 36.2%.
Smart TV bucked the trend again, and the global shipment increased by more than 15% year-on-year to 3 million units. According to ovicloud, the shipments of Xiaomi TV ranked first in China and top five in the world for 13 consecutive quarters.
In addition, the income from Internet services was 7.112 billion yuan, compared with 6.57 billion yuan in the same period last year.
TV Internet performed well this quarter. In March 2022, the number of monthly live users of Xiaomi smart TV (including Xiaomi box and Xiaomi TV stick) exceeded 50 million for the first time. As of March 31, 2022, the number of paying subscribers of Xiaomi TV has reached 5.5 million.
It is worth noting that many Xiaomi stores are closed due to the impact of the epidemic. Since 2021, Xiaomi has issued epidemic subsidies to its partners in offline stores, with a cumulative amount of RMB 120 million.
At present, Xiaomi’s online channels are not affected much.
According to third-party data, Q1 Xiaomi accounted for 32.3% of smartphone online channel shipments in Chinese Mainland in 2022, ranking first. At the same time, high-end smartphones accounted for more than 50% of the offline channel shipments in Chinese Mainland.
overseas market reaches 37.5 billion yuan, but uncertainty still exists
It can be seen from the financial report data that Xiaomi’s expansion in the overseas market is more effective. In the first quarter of 2022, Xiaomi’s overseas market revenue reached 37.5 billion yuan, accounting for 51.1% of the total revenue.
According to canalys data, in the first quarter of 2022, Xiaomi ranked the top three in smartphone shipments in 49 countries and regions and the top five in 68 countries and regions.
The scale of global smart phone users continues to grow. In March 2022, the global MIUI monthly live users reached 529million, and the Chinese Mainland MIUI monthly live users reached 136million. The overseas Internet revenue accounted for 21.9% of the total Internet revenue, both reaching a record high.
Among them, Xiaomi accounted for 19.7% of smartphone shipments in Europe in the first quarter of 2022, ranking third. In Western Europe, Xiaomi’s smartphone market accounted for 15.4%, ranking third.
Specific to countries, Xiaomi ranked second in the smartphone market share in Spain and Italy, third in France and Germany, and fourth in the UK for the first time.
For the European market, Wang Xiang, President of Xiaomi group, introduced that Europe is an important market for Xiaomi, and Xiaomi has accounted for nearly 20% of the European market. In the future, Xiaomi will continue to improve its products and brand strength, enhance its retail operation ability and channel expansion ability of operators, and strive to further improve its market share.
“Due to the stability of the epidemic in Hong Kong, China and the efforts from February to March, our logistics will no longer have any problems. The main challenge comes from the logistics cost, which is relatively high in the whole international logistics.”
Meanwhile, Xiaomi’s smartphone shipments in the Middle East accounted for 12.5%, also ranking third. In addition, the company has maintained steady development in emerging markets. In Southeast Asia, Latin America and Africa, Xiaomi’s smartphone market share reached 15.2%, 13.9% and 6.3% respectively, ranking third.
In addition, although Xiaomi maintained the first smartphone shipment in India for the 18th consecutive quarter this quarter, it is also full of challenges. Wang Xiang believes that affected by the epidemic and consumer confidence, India is a price sensitive market.
It was previously reported that India had frozen about 55.5 billion rupees (about 4.8 billion yuan) of Xiaomi on the grounds of illegal remittance to foreign entities to pay royalties. Wang Xiang responded at the telephone conference that Xiaomi has appealed through legal channels. At present, India has temporarily lifted the capital freeze of US $725 million for the company.
“The uncertainty in the first half of the year is that the supply gap of our low-end chips is more than 10 million, which has caused great trouble to us.” However, Wang Xiang also said that Xiaomi has a global market and can still see a lot of growth opportunities.
